Covid costs and increased regulations has taken the profit out of aged care beds in NZ, with the result that operators are moving away from providing nursing home level support. This has dramatic implications between the ‘haves’ and the ‘have nots’.
At the LEADERS SUMMIT last Thursday, Jeremy Nicholl (pictured), CEO of NZ listed operator Arvida, explained that most village operators are moving to only provide ‘care suites’ within the village and DMF system, with care suits providing care up to palliative care.
‘Hospital level’ nursing home beds are being dramatically cut back as a percentage of the accommodation.
He says those that can’t afford to move to a village are going to have great difficulty in the future obtaining an aged care bed, with the result they will end up in the hospital system.
You can watch his 7 minute discussion HERE.
Funding for villages, not for beds
We are tracking in the same direction in Australia. Major aged care operators are swerving to retirement village development over aged care.
Brian Wong, National Director – Strategy and Insights for CommBank Health spoke at the LEADERS SUMMIT. He had told DCM that he had not had a nursing home funding application across his desk in 12 months but overall his lending is up for the sector, thanks to retirement village applications.
Nowhere to go
The implications for village operators are big. If there are few aged care beds available, there is nowhere for village residents to go when dementia or high acuity hits them.
Consider this. For most village units there are potentially two aged care customers. Over 70% of new residents are couples. The male typically needs care within three years and dies within five years, while the wife/partner lives another three years (average occupancy is now eight years).
Currently 75% do go to aged care or a hospital. See below.
At the same time, Tammy Berghofer, retirement living Partner at MinterEllison, confirmed at the LEADERS SUMMIT that it is almost impossible to move a resident out of a village if they or the family do not wish to leave. And most do not want to go to a nursing home.
Based on this scenario, village operators will need to follow the New Zealanders to deliver what is Assisted Living in the American model, or private aged care as now offered by the likes of LDK in Canberra.
Those people who do not have the wealth to afford this model will enter the aged care system, but it may mean they have little choice on location. We see this now in country towns as aged care beds are closed – permanently.
