Oct 19, 2015

Competitive Aged Care Market Calls for Greater Innovation and Design

“How do providers continue to be competitive in this market whilst not losing sight of their basic service and purpose of supporting seniors living in their facilities?”

The aged care industry is set to boom over the next decade with the ‘shockwave’ of baby boomers moving past age 65 years. The ABS projections are anticipating those over the aged of 65 to increase by 84.5 percent from 3.1 million to 5.7 million between 2011 and 2031 (ABS, 2013), placing massive demand on existing aged care services to support this significant increase. Furthermore, the population over 85 years is expected to double by 2032 and double again by 2046 (ABS, 2014)

The Aged Care Financing Authority has forecast an extra 69,000 aged care beds will be required by 2022, making aged care and retirement living a key investment priority for many listed property funds as well as bringing new private operators and owner entrants to the market seeking to capitalize on this macro trend. This year alone three of the existing major operators have listed on the Australian Stock Exchange (ASX)

  1. Stockland [ASX:SGP], Australia’s largest diversified property group has had a productive few weeks. Having recently closed a $75.8million deal to purchase eight retirement villages from Masonic Homes. Stockland have also signed a deal with Opal, Aged Care Provider in the bid to diversify their services through strategic partnerships, which will allow retirees to move seamlessly from independent living to higher levels of care.
  2. Estia [ASX:EHE] a fast growing aged care provider acquired four new nursing homes across two states.
  3. Eureka Group Holdings [ASX:EGH] also recently acquired its 11th retirement village

The landscape is changing through privatization making it more difficult for the smaller operators to be financially sustainable with increasing regulatory costs to run single facilities compared to multiple large facilities. Increasing competition means more marketing spending from the large private operators as well.

As the industry becomes more crowded, operators will need to diversify to stay competitive not only to attract investor funds but also to deliver care and services that customers expect to see.  It is no longer enough to provide four walls, a bedroom, a bathroom and a kitchen. Seniors want to be living life to its fullest and the communities created must enable this desire and work harder and smarter to keep their residents connected into the community to ensure quality of life throughout their time in care. Providers will need to start planning now, if not already for the baby boomers entering aged care as they differ in a myriad of ways from the previous generation of seniors. Having a major impact on the nature of the care and residential arrangements which they need, seek, prefer and can pay for (Hugo, G 2014) Design innovation and generally ‘smart care’ incorporating new technologies will be expected.

How do providers continue to be competitive in this market whilst not losing sight of their basic service and purpose of supporting seniors living in their facilities?

A cutting-edge aged care facility and model of care that Australian providers can draw inspiration from is the famous De Hogeweyk or “Dementia Village” as it has come to be known. De Hogeweyk has pioneered dementia care (20 years ago) with a clear vision that put ‘care’ at the focus of what they wanted to achieve, which was to provide Dementia residents’ with more than an institutional white-walled environment filled with medication.

Aware of the fact that people with dementia are often challenged by large unstructured spaces, the founders of the Dementia Village had a clear direction, wanting to enable their residents to remain autonomous as much as possible and therefore established small scale living environments that housed only 6-7 residents in each home. Wanting the village to feel homelike and not restrictive, the developers also included a grocery store, hair salon, restaurant and theatre in the village boundaries populated with trained dementia care professionals.

Whilst some providers in Australia are opting for larger aged care facilities with more beds for improved scalability other factors need to be considered. The design element for one is critical to ensure that it not only meets the expectations of the baby boomers but also includes design principles to support the rise in dementia and create spaces appropriate for their needs. Not to mention cared for by experienced and trained people.

The Dementia Village is not just a curious and forward thinking model but it is an excellent example of successfully growing a sustainable dementia community and has gained significant attention around the world. With many industry professionals and consumers asking the question – how and when could this model be replicated in other countries? Most obviously in Australia where an ageing population, established industry and massive government subsidies create a ripe environment for innovation and change as the consumer begins to have more influence on the outcome of their care.

Yvonne van Amerongen Co-Founder of the Dementia Village has been reported saying that whilst village design is very ‘Dutch’ and incorporates ‘Dutch culture and their lifestyle’, if adapted for the relevant country and the basic concept is applied – ‘to value the person, the individual, to support them to live their life as usual then absolutely this can be done anywhere!’.

There are one or two Australian providers in the process of exploring planning and developing concepts for a similar model of care here. We look forward to more taking up the initiative and sharing observations of innovation in the way care is delivered in the months ahead.

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