The law firm partners, Penelope Eden (pictured above) and Louella Stone, have forecast a “flurry of activity and consolidation in 2021” after the uncertainty created by the Royal Commission in 2018 stymied activity.
In a piece for the Australian Financial Review, the pair says that the “revolutionary” changes recommended by the Counsel Assisting including mandated minimum staff time for residential care, a new duty to provide ‘high quality and safe care’ and a new, Australian Prudential Regulation Authority-style regulator with powers to mandate liquidity and prudential standards will tighten regulation and increase the costs of doing business for aged care providers.
“This is not to say these changes are unnecessary: many of them are overdue. But they will be imposed on a sector where many providers are, according to analysis commissioned by the commission, already on a financial knife edge,” they write.
While Government funding for aged care is likely to increase, the lawyers say this is unlikely to make unprofitable providers financially sustainable,
“Divestments in the sector will ensue, with larger providers acquiring portfolios,” they add.
It is not all ‘doom and gloom’. The partners state that the recommendations for allied healthcare offer opportunities for joint ventures and strategic partnerships, while hospital operators could expand into aged care at the acute end of the market.
“The demand for these services will drive deals in the short term and expansion by existing providers,” they conclude.