Analysis of the Australian Government’s aged care reforms has forecast the residential aged care sector can expect at least $2-plus billion a year in additional funding in three years’ time. Will it be enough to incentivise new beds?

As we report in this issue, aged care accountants StewartBrown have delivered their verdict on the Government’s residential aged care reforms, modelling that the sector could see a minimum operating result of $13,932 per bed a year by FY29 (see the image above).

Based on our conservative back-of-envelope calculations of 200,000 aged care residents (based on the assumption that numbers will increase in the next five years, but more people will be staying at home with the shift to Support at Home), that is $2.7 billion in additional funding flowing into the sector.

For the average 100-bed facility, that is an additional $1.39 million a year in funding which means better care and services for residents and their families, and happy days for operators.

StewartBrown has also modelled the numbers if operators increased their RADs by 10% every year on top of that baseline. This step would increase this extra fund to $3.4 billion a year – or $1.7 million annually for a 100-bed facility.

The question is: can all operators increase their accommodation pricing?

Regional providers tell us that raising their RADs is difficult because of their geographical location.  They also often have higher numbers of supported residents so fewer opportunities to improve their accommodation revenue.

Even without these increases, operators should see a significant shift in their financial fortunes. While this funding is still 36 months’ away, the growing demand for aged care beds should also ensure that occupancy stays high and keep losses smaller during this period.

Operators can now strategise with greater certainty about the future direction of their businesses.

But will this increased funding deliver the returns needed to support the sector to build new beds?

StewartBrown says no – but you can read more about what CEOs and experts from across the sector – including Opal HealthCare’s Rachel Argaman and Regis’ Linda Mellors – think in this week’s special Aged Care Reform issue of SATURDAY.

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