200+ RACs ready to go suggests the problem isn’t pipeline, its confidence

Right now, there is a significant aged care pipeline sitting idle.

Our desktop research suggests there could easily be 200+ residential aged care homes up for being built now.

These are not new proposals sparked by last week’s Federal Budget. A large number have been sitting in strategic limbo for years.

Australia has close to 600 Not For Profit residential aged care operators. Many are community-based and faith-based organisations with a mission to deliver care locally. In many cases, they already own the land earmarked for future developments, some held for decades.

These projects are being discussed in Board rooms and executive meetings, wanting to deliver on their missions.

The sites are there. The demand is there. The intent is there.

What is missing is confidence.

Confidence in workforce availability. Confidence in future funding settings. Confidence that a project started today will still be commercially viable when it opens in three to five years.

It is easy to assume the next generation of aged care homes will be delivered by large private operators such as Opal HealthCare, Regis Aged Care, Estia Health and Arcare. But the 200 we estimate are mainly the Not For Profits that can do the local heavy lifting.

Cam Ansell, Managing Director of Ansell Strategic, says his firm is currently working on around 20 aged care projects across Australia and New Zealand.

Darrell Price, Principal and National Head of Health and Aged Care at Grant Thornton, says clients have approximately 30 projects under consideration that are not progressing.

This is the tip of the iceberg.

“Investable” has become one of the defining words in residential aged care. For many operators, the sector still is not.

But the levers required to change this are reasonably easy to implement and we believe they will come into effect in as little as the next 36 months, because of demand and common sense.

Think about these easy wins:

• Accept that virtual nursing at clinical grade care can supplement the 215 minutes. Amplar Health, St Vincents Health Australia, Vitalis, Australian Unity and Silverchain are already doing it at scale. Little regional operator McLean Care has been doing it for a few years now.
• Move the RAD retention from 2% to 4%
• Move the MPIR from 7.65% to 10%

For a nation that is looking at no aged care beds, these small changes will soon feel worth it to open up supply.

200+ homes within five years. It is possible.