Retirement village operators, we have a problem
Those village operators, feeling comfortable that home care providers will look after their village residents when there are no aged care beds, are in for a shock.
There are seismic changes taking place in the home care sector (now known as Support at Home).
In simple terms, the profitability of the home care business plummeted 64% in the three months from September through to December. Now the average profit per day per customer is $1.44.
If a retirement village has 50 clients who are receiving home care, the daily value to the home care provider is $72 per day or $360 for a five-day week.
Village operators have always argued that they present an attractive business proposition, being the efficiency of serving 50 clients in one location. The reality today is that the economics of running a home care business are becoming extremely marginal.
Expect a lot of the smaller operators to leave the sector.
Why the profit collapse for providers? The Government changed the funding. It will pay for clinical care but for all other services, the customer has to contribute to the cost, even pensioners. Before November, the Government paid for a cleaner even though the home care provider was costing that at $100 an hour.
With new compliance costs, the provider is charging around $120 an hour and asking the customer to contribute up to 80% of that or over $80. But the customer knows they can buy a local cleaner for $50. On top of this, the customer says they want to preserve their Government funding for real care support when it’s required, so they are holding back on using the home care services.
Meanwhile, the home care operator’s overheads remain the same.
Is becoming a Support at Home operator the answer?
The Retirement Living Council/PwC village survey reports 59% of villages provide regulated home care directly, while 23% use a partner or nominated provider.
They all face the same profitability challenge.
The possible future is that village operators will be organising local cleaners and other domestic support to have direct relations with village residents, who will be paying cash in my hand.
We see to get real care support for the residents, operators need to be establishing partnerships with the national home health operators like Silverchain, Amplar Health, Vitalis Health and St Vincent’s. Check them out.
Care will be largely delivered virtually. This means operators will have to invest in in-home tech to connect with these providers.
You might want to watch this discussion with Chris Blake, the CEO of St Vincent’s Health Australia, at the 2026 LEADERS SUMMIT, where he explains why this new world will be upon us within the next two to three years.
Village operators already have the problem that there are no aged care beds for frail residents to move into. The next problem is where to find care for your residents. It would be wise to start investigating now.
