The Financial Review last Wednesday published an exclusive article based on Rohan Mead’s assertion that the Australian health system is about to be swamped.
In simple language, currently we average 20,000 ageing Australians turning 80 each year. In 24 months’ time, in 2027, that number jumps to 80,000 – every year for 20 years – but we only have the systems and services in place for 20,000 a year.
“These numbers will overwhelm current systems,” Mead said. “This will present as crises of bed blockers, absence of aged care beds and facilities, too few doctors, ambulance ramping etcetera.”
“The temptation will be just to throw money at this,” he said. “We will just be feeding the old model, which is not fit for purpose.”
“We need to have business models that are supportive of people in locations of care beyond an acute hospital setting,” he said in the article.
We have been writing this playbook for a couple of years now, but with aged care beds and home care waiting lists now full, we are seeing the first signs that people are seeking out retirement villages as their care and accommodation solution.
Rohan Mead says we have to look at business models and that includes the traditional village model based on the DMF, which will not work, looking forward.
Operators can’t provide additional staff in the village while waiting for the DMF revenue years down the track. They will need the cash upfront.
Enter the LDK membership model, which requires a membership payment upfront about the same value as the DMF, and people are paying it because they see the investment that LDK is making in real time from that upfront cash. LDK is investing back to better support residents while they are alive in the village, not when they are dead or in a nursing home.
Does this fly in the face of the traditional model of charging 80% of the value of the family home sold to pay for the village home? No, because the family homes are so much more valuable than the village home, plus people are moving in much later, so they need less cash to live out their days.
LDK has proven their Membership model and co-owner Anglicare is now rolling it out in affluent and less affluent villages, all with established DMF contracts, meaning they are renegotiating the contracts, successfully.
LDK CEO, Byron Cannon, will cover their membership model at the LEADERS SUMMIT next week, and because of its importance, we will publish a video of his presentation so you can understand how you fund quality accommodation and ongoing support in your village homes.
Watch this space.