For Not For Profit aged care provider Respect, which is based in Devonport, Tasmania, "acquisitions will go on", but the fact the sector isn't adding new beds is becoming "a critical issue", CEO Jason Binder told The SOURCE this week.
"I don't think the 1 July 2025 changes will be enough to trigger the amount of new builds we need to meet the baby boomer demand," he said.
Respect Aged Care has grown from 12 aged care homes in 2021 to 26 today, and is known for its rapid expansion based on acquiring struggling aged care homes and turning them around.
While the reforms will generate "increased income", it won't be enough to "make a business case to build new facilities," Jason said.
It's estimated that Australia will need an additional 50,000 aged care beds by 2030, which means building an additional 8,000 beds a year. Part of the reason for the aged care reforms was to improve sustainability of the aged care sector to encourage more building.
"When it's costing $500,000+ to build a bed and $250,000 to $350,000 a bed to acquire good quality facilities, it's really a no-brainer to acquire," Jason said.
It costs $60 million, inclusive of land, to build a 100-bed facility. "You could get a much better return on that $60 million putting it into a different investment vehicle," he said.
"We can't get homes out of the ground quickly enough": Melissa Argent, CEO of Rockpool.
But Melissa Argent, CEO of Queensland-based private aged care operator Rockpool, said the funding reforms in the Aged Care Bill 2024 will "assist with viability and survival" as they pursue an aggressive development program.
Their Rockpool Songbird Oxley 150-bed home 8km from Brisbane's city centre will open in March 2025.
Rockpool also has a site in Hamilton Northshore, 8km from the Brisbane CBD, where construction will begin in February 2025, and another in Kedron, 7km north of Brisbane, where the DA approval is expected any day now and building set to start in July 2025.
"There's so much need for these homes that we just can't get them out of the ground quick enough," Melissa said.
However, Rockpool is watching "the ever-increasing cost of capital" closely, particularly building costs and access to trades.
"It's very close to a project being not feasible in this environment," she said.
Government to support new builds: Russell Bricknell, CEO of Juniper
Russell Bricknell, CEO of Western Australia's Not For Profit aged care provider Juniper, which operates in metropolitan Perth and remote locations such as Fitzroy Crossing, Kununurra, and Derby, will continue "exploring growth opportunities" as demand for care and accommodation grows from the ageing population.
Bricknell said he would like to see more information from the Government about how they will be "supporting new residential aged care home builds" so providers like Juniper can "can meet the growing waitlist" for residential aged care beds. See today's announcement from the Minister for Aged Care Anika Wells the Government is investing another $250 million for rural and remote aged care infrastructure.
Small aged care providers "will struggle": Alasdair Croydon, CEO of Holy Family Services
For small operators like Holy Family Services, which operates a stand-alone aged care home in Marayong, 38km west of the Sydney CBD, the aged care reforms will not assist with growth "in the short term", says CEO Alasdair Croydon.
The increase in the administrative load for small providers has been "ignored", he said.
"Small organisations will struggle," he predicted. "They will have no capacity in the short term to think about how to grow, just how to survive."
Reforms provide no scope for growth: Russell Egan, CEO of Superior Care Group
Russell Egan, CEO of family-owned Superior Care Group, which has an aged care home in Wellington Park, in Brisbane's south east, and another in Merrimac Park, on the Gold Coast, told The SOURCE the financial sustainability of residential aged care is "still not resolved".
"I am not confident enough in the future of residential aged care at this stage to build more places presently as the financial returns remain poor and the labour demand on the sector remains extreme."
"We will focus our energies on improving the quality and staffing in our homes, and fully understanding the ramifications of the new Act and Quality Standards," he said.
