2018-2019 Aged Care Approval Round (ACAR)

Aged care providers still have to tender for places they can offer in new aged care facilities that they build. The number of places allocated was 13,500 (9,911 in 2017). Demand by providers in this round was lower than in previous rounds (2.8 offers per place versus 4.5 in 2016-17).

The reduced demand is an indication of providers delaying investment in new facilities because of worries about government funding and the likely recommendation of the Royal Commission into Aged Care.

Most places were allocated to for-profit providers with 66% of places allocated to for-profit providers, with Opal getting 3,208 places, Signature Care 2,842 places, BUPA 1,972 places, Regis 1,355 places, Japara 1,379 places and Arcare 1,286 places.  The largest number of places allocated to a not-for-profit provider was RSL with 353 places.

A worrying aspect of the large number of aged care places allocated to for-profit providers is that we could be building up to some major busts at some time in the future if these providers cannot make the return they require. Commonwealth government funding cuts per resident and a freeze on the funding model saw the share price of stock exchange-listed operators Regis and Japara fall by over 40% from 2016 to 2019.

In the UK more than 100 care home operators collapsed in 2018, taking the total over five years to more than 400. The story is a familiar one with government funding cuts, huge debt levels and escalating costs. In Australia Commonwealth governments will need to rein in aged care costs which will be difficult with the growth in older citizens.

A worry we have is that the concept of private sector providing public services is an oxymoron. They will run the services only so long as they make profits, and will feel under no obligation to residents or staff, unlike their not-for-profit counterparts.

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