MARKET REPORT SUMMARY AUSTRALIA AGED CARE SECTOR REFORMS KPMG has conducted an in-depth analysis of the aged care market, focusing on the financial performance of the top 25 providers by market share across home care and residential aged care over the past five years. The aged care market remains highly fragmented with 735 providers delivering residential aged care and 906 providers delivering home care services (at 30 June 2021), and the top 10 providers maintain almost 25 per cent of market share across both residential and home care. The home care market has experienced significant growth mainly from an increase in government expenditure, with $4.2 billion in FY21, an increase of 25 per cent from the previous year. This growth is aligned to government policy and consumer preference to remain at home for as long as possible. Demand for residential aged care continues to decline which has resulted in a continuing drop in occupancy levels. Further, 58 per cent of providers reported an operating loss in FY21. Despite these challenging conditions, the Australian aged care market has continued to grow which can be attributed to providers seeking to reach the right economies of scale, growing their brand reputation and footprint and seeking greater influence in the sector. The Royal Commission into Aged Care Quality and Safety (Royal Commission) provided a unique opportunity to improve the quality, safety and experience for senior Australians accessing aged care services. The Government committed $18.3 billion in the 2021-22 budget to support a five-year reform of the sector, with an additional $468.3 million committed to continue the implementation in the 2022-23 budget, along with $458.1 million to support the COVID-19 response.2 The reform is likely to result in renewed interest from organisations that don’t currently deliver aged care and also further consolidation from smaller providers who may struggle to keep pace with the level of reform. Following are the five major upcoming reforms to flag now so that the related industry player can prepare early and be ready: DEMAND FOR RESIDENTIAL AGED CARE CONTINUES TO DECLINE; PROVIDERS SEEKING TO REACH THE RIGHT ECONOMIES OF SCALE HOME CARE MARKET HAS EXPERIENCED SIGNIFICANT GROWTH 01 02 From 1 July 2023, providers will have to ensure that “at least one registered nurse is on site, and on duty, at all times at the residential facility.” It is likely that additional reporting will be required by providers on 24/7 RN coverage, for example reporting at the end of each month through a form on the My Aged Care Provider Portal. The reporting for care minutes and 24/7 RN care will be used to inform the new star ratings. The Government has committed to introducing: (i) mandatory 200 minutes of care time per resident per day (including 40 RN minutes) from October 2023 and (ii) mandatory 215 minutes of care time per resident per day (including 44 RN minutes) from October 2024. Mandatory 200 minutes care time expected to commence October 2023, increasing to mandatory 215 minutes from October 2024. 24/7 Registered Nurses Mandatory Care Minutes AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2022 58
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