The new Aged Care Act was passed in Parliament yesterday and with it Anika Wells announced 83,000 additional Home Care Packages. These actions will cement care into retirement villages. Independent living will gradually disappear as a value proposition.
Why? There are two significant headwinds that will push older Australians into retirement villages which they will then refuse to leave, creating a quasi aged care community.
The first headwind, as we regularly explain, is the fact that no new aged care beds are being built. Increasingly, you can’t get one when and where you want one. Village residents will hang on to their ‘village bed’ with all their might.
And Home Care Packages alone will not deliver equal care to aged care homes.
Stuart Hutcheon, Managing Partner at StewartBrown, told our Melbourne DCM Institute audience last Thursday their latest home care analysis (to be released on Thursday) identified that a Level 4 Home Care Package now delivers just five hours a week of actual in home support (down from 7.8 hours).
In 2010 this package was delivering 17 hours a week, more like what is needed.
The additional packages in the Act, Levels 5 to 10, are all time and dollars limited, and rationed; they do not fill the expanding gap between what is being funded and what is required.
Village residents will increasingly value the fact they have a village management that keeps an eye on their welfare. They are not facing increasingly high acuity alone.
The Act also opens up co-contribution user pays. Residents in villages will absolutely require additional care and the village operator’s Duty of Care will be pressured to supply it, or have partners who will supply it.
Inevitably the village operator will develop resident contracts that have built in draw downs on the capital in the DMF contract to pay for the additional care. RetireAustralia is now advising clients to put $30,000 aside for future care services.
The net result, we contend, is that older people with greater acuity will seek out village accommodation as a safe harbour and over the next five years become the dominant village resident group.
It is realistic to say half the village beds will be in effect aged care beds, and village operators will be care providers at scale.
The conversation on what a retirement village is will drift in every local community, from being independent living to being care communities.
The business model will change dramatically.
How will villages adapt? Just look at private aged care models as they innovate in this user pays care environment.
You can't do better than attend our LEADERS SUMMIT in March next year where Aaron Lavell, CEO of Odyssey Lifestyle Care Communities, will unpack their business model, which sees them expanding from one retirement village to six in development in around six years.
With around 135 residents in his Robina retirement village, he has around 75 staff. This will become the new village business model over the next five to ten years, we contend.