Residential aged care occupancy rates have returned to pre-COVID levels and are trending higher and will continue to do so as demand for residential aged care is buoyed by the ageing population.
To meet growth in future demand, supportive policy settings - which are currently unknown due to delays in the release of a complete draft new Aged Care Act - are required to ensure there are sufficient residential aged care services.
From 2020 there was a decline in occupancy in residential aged care, caused by the Royal Commission into Aged Care Quality and Safety, and then the COVID-19 pandemic.
But in the last 12 months, residential aged care has staged an occupancy recovery.
As of 22 February 2024, the occupancy for Regis Healthcare, which operates 68 aged care homes in every state and territory except the ACT, was at 94.5%, up from 93.6% as of 31 December 2023, and 91.1% as of 31 December 2023.
The occupancy of Australia's largest aged care provider Opal Health Care - which operates 101 care communities (set to increase to 132 when the BlueCross acquisition completes in the middle of the year) across NSW, SA, Vic, Qld and WA - is 95%, excluding newly opened homes or homes in the process of ramping up.
The occupancy for Estia Health, which operates 75 aged care homes across Vic, SA, NSW and Qld, was 92.3% for the 2023 financial year, and today is tracking above pre-COVID levels, a spokesperson for Estia told The SOURCE.
As of 31 December 2023, the occupancy for BUPA, which operates 58 aged care homes Qld, NSW, SA and Vic, was 91% - a seven percentage point increase from the previous year.
Data from aged care accountants StewartBrown (based on available beds rather than approved beds, the metric used by the Department of Health and Aged Care) shows occupancy for the six months to 31 December 2023 averaged 92.8% - the highest since 2020 and up from 90.8% at the same time the previous year.
"It is estimated that the gain in occupancy improved the average operating result by $2.32 per bed per day by spreading indirect care and accommodation services costs across the higher number of occupied days," the report notes.
The UTS Ageing Research Collaborative (UARC) Report for 2022-23 showed that occupancy rates had "stabilised", with mature homes reporting an average occupancy rate of 91.1% in FY23.
"The picture regarding occupancy is mixed and often dependent on a range of factors, including financial viability, access to capital to refurbish or expand, availability and affordability of workforce and other local circumstances," Tom Symondson, CEO Aged and Community Care Providers Association (ACCPA) told The SOURCE.
Sometimes providers cannot make more beds available because they simply don't have the workers to staff them, or it is not financially viable to do so, Tom added.
The UARC report identifies that residential aged care homes in metropolitan and regional areas tend to have higher occupancy rates, whereas those in rural towns experienced "sharp declines in occupancy down to levels commensurate with more remote homes", said Tom.
Ageing population will drive future demand
Demand for residential aged care is predicted to grow strongly in the years ahead. Older people currently comprise 16% of the Australia's population. By 2066, that figure is set to rise to between 21% and 23% of the population. The number of people expected to be living with dementia is expected to increase from 421,000 in 2024 to more than 812,500 by 2054.
"There will be an increasing need for quality residential care in the coming decades," Tom said.
Meeting future demand
"In order to meet demand, we first need to address systemic issues such as building a sufficient skilled workforce and improving the sector’s financial sustainability," ACCPA's CEO continued.
"We need to get the financial and policy settings right to ensure aged care facilities can meet demand now and into the future," Tom concluded.
A number of aged care reforms are shrouded in uncertainty, with many still to be announced and with building costs rising sharply, there are low levels of new developments.
"We currently have one 29-place expansion underway at our Lockleys home in SA," Estia's spokesperson told The SOURCE.
However, they added, "The timeframe for other opportunities in our pipeline, which includes both new homes and expansions, will be determined once the outcome of the Government’s Taskforce become clearer, which is likely to be the key to the ongoing viability of aged care development."
