A sign that the care business is proving less attractive to new operators?
The newly released 2019-20 Report on the Operation of the Aged Care Act 1997 shows that 40% fewer new approved providers applied to join the system.
Between the Department of Health and the Aged Care Quality and Safety Commission (ACQSC) (which took over the role on 1 January 2020), 206 applications were processed for new residential care, home care and flexible providers, 79 of which had been carried over from 2018-19.
Compare this to 2018-19 when there was a total of 350 applications – 244 new applications plus 106 applications carried over from 2017-18.
In 2017-18, there were 347 applications, of which 167 were approved.
Levels of approvals have also dropped considerably in the last two years.
Just over 40 new providers were approved in 2018-19.
This dropped to less than 20 in 2019-20.
Royal Commission creating uncertainty for operators
Are the numbers a surprise however?
The uncertainty created by the Royal Commission over the past two years is likely to have played a part in the drop.
New operators may have found it challenging to get the funding together to gain approvals. Dr Rodney Jilek – who is leading the establishment of Canberra’s’ first independent dementia home – told us that he would not pursue approved provider status because of the funds that operators are required to have in the bank.
New systems and processes have also come in to provide real accountability.
In addition, there is an increasing drive to increase wages and the prospect of tighter regulation.
The Counsel Assisting have recommended to the Royal Commissioners that the requirements for becoming an approved provider be tightened to prevent ‘rogue’ operators entering the market.
But as we have seen in recent weeks, aged care is still proving attractive to operators and investors with large portfolios.
Is this an indication that future applicants will need to have size on their side – and not just be starting out?