industry & reform
Interestingly, the total allocated places
ratio (total places allocated per 1000
people over the age of 70) is significantly
higher at 93.8 per 1000 people.
The gap reflects unoccupied beds and
non‑operational places.
PROJECTED STATISTICAL DEMAND
The older-old population will more
than double
The 70-plus population is projected to
increase significantly from the year 2019 to
the year 2066 by around 140 per cent.*
More relevant for residential aged care,
the projected population of those aged
85‑plus is expected to more than double.
More of us will be old
Get a head start on ACAR
Analysis of the aged care
industry ahead of the next
round of approvals.
By Safdar Ali and Peter Hoare
Over the period to 2066, the proportion
of Australians aged 70-plus and 85‑plus
is projected to grow from 11 per cent to
16 per cent, and from 2 per cent to over
3.5 per cent respectively.
Other factors aside, the projected
ageing of Australia’s population over the
next 4–5 decades suggests demand will
grow significantly for intensive residential
aged care.
Projected statistical demand based on
the current utilisation rate
T
he federal health department
announced the 2020 Aged Care
Approvals Round (ACAR) late last
year. The next ACAR is expected to open in
March 2020, and this time the department
has given some notice to providers to
get a head start on preparing their ACAR
applications.
ACAR is a process through which the
health department allocates residential
aged care bed places and capital grants for
providers so they can offer new services
that respond to the need of their local
communities. The majority of residential aged care
facilities are now making a net loss
(StewartBrown, September quarter, 2019
survey). StewartBrown commented that it
is becoming increasingly difficult to remain
sustainable at facility level with average
earnings before interest, depreciation and
tax reducing to $5829 per bed per annum.
Given financial and other challenges,
some providers will be less motivated
to expand. For providers intent on
expanding their residential aged care
offering, it is imperative to view the big
picture and consider longer-term factors.
CHALLENGES CURRENT QUANTITATIVE SUPPLY
The announcement came at a time when
the aged care industry was facing arduous
challenges. One of these is financial
pressure which constrains providers’
capacity to deliver services without
compromising on quality.
According to the Aged Care Financing
Authority (ACFA) 2019 report, occupancy
has dropped to around 90 per cent in
2017–18, down from around 92 per cent
in 2016–17. For residential aged care, the government
provision target ratio is 7.8 per cent for
people over the age of 70 (78 residential
places per 1000 people over the age of 70)
to be achieved by 2021–22 nationally.
According to the Australian Institute
of Health and Welfare, as at June 2019,
the operational ratio (operational places
per 1000 people over the age of 70) is
77.5, which almost aligns with the target
provision ratio.
16 agedcareinsite.com.au
There is a projected statistical demand
for 523,151 beds by the year 2066. As at
30 June 2019, there were a total 262,680
beds allocated, including provisionally
allocated (36,958 beds) and unused/offline
places (8655).
Based on statistical demand analysis,
there will be a requirement for 260,471
additional beds to meet the projected
statistical demand indicating a requirement
for over 5500 beds to be added on average
each year to 2066.
It is noted that this is a statistical
projection based on the current utilisation
rate of residential aged care facilities.
One thing is certain – other demand
drivers will materially impact the
eventual demand
Other demand drivers may be expected
to have a positive or negative effect on
statistical demand for residential aged
care services and will impact the future
utilisation rate (presently around 78 beds
per 1000 people over 70). These include:
POSITIVE
• S
ocietal changes:
• A
CFA notes that informal care provided
by family members delays entry into