The Australian aged care sector only gained 2,224 residential aged care places in 2023-24, compared with 1,502 in 2022-23.
The number of beds increased 1% over the period, well short of the 4% increase in the number of Australians aged over 80, the proxy for residential aged care demand, according to a new report by aged care management consultants Boxwell & Co written with global real estate specialists Colliers.
The report estimates the shortfall in 2023-24 was 6,600 residential aged care places. As a result of the shortfall, occupancy levels increased to 87.7% in the March quarter 2024, an increase of 1.7 percentage points compared with the same period the previous year, according to the Department of Health and Aged Care.
The bed shortages have "flow on impacts to the hospital system in every State and Territory," the Boxwell & Co report states.
Victoria only added 20 new beds over the year, which Colliers attributed to the state's higher payroll tax rates which weigh on returns. Most aged care beds, at least 60%, are developed by private aged care operators.
Home Care fills gaps
The number of people using Home Care Packages increased by 24,000 in the 12 months to March 2024, which would have helped to "absorb" some of the shortfall in residential aged care places but the report notes with a waiting list of more than 68,000 Australians as of May 2024, the number of people waiting for a Home Care Package has more than doubled in the last last year.
Funding reforms positive
Ian Sanders, Head of Transaction Services, Asia Pacific Healthcare and Retirement Living, Colliers, said the Government's funding reforms aim to "stimulate the development of new aged care places".
"In a positive sign Regis and Opal have committed to additional developments post the reform announcements of three and four homes respectively. These were sites that have been on hold for some time," the report states.
However, costs are rising due to inflation, increased material and labour costs, and stricter building regulations, Ian said.
"The per bed cost to construct a multi-level home with basement parking is now circa $500k plus land costs, a significant increase on costs five years ago. Adequate and sustainable funding is necessary to source capital and financing," the report states.
"Private operators continue to be the main developers that take on the risk and commit capital."
Colliers would like to see the cap on RADs removed altogether, except in thin markets to "encourage further development and supply at no additional taxpayer cost".
