Published on 08/01/2016 by Punchmedia

Ageing Population Generates Aged Care Growth

It appears Australia's ageing population is giving those businesses offering support to people in their home a huge lift. According to a recent Productivity Commission report, the number of Australians expected to require aged care services each year will hit 3.5 million by 2050, with around 80 per cent of these services likely to be delivered in the community. Estimates believe the workforce to deliver those services must grow from 300,000 to around 800,000, meaning the Aged Care industry is one that requires huge growth over the next few decades. It seems it’s not just Australia’s ageing population that will affect the industry’s growth over the next few years with the number of people suffering from some form of dementia also tipped to increase. Demand for qualified carers in the space is growing so quickly, businesses are beginning to put further services and plans in place in order to the expected demand. Ongoing government assistance has been another growth driver with the government committed to spending around $9.6 billion on residential care subsidies in 2015-16.

Supply Constraints

Over the past decade, there has been a significant increase in operational residential aged care places, with numbers at 189,293 for 2014-15. However, place numbers remain tightly controlled. In the 2014 Aged Care Approvals Round, there were over 19,000 applications for the 9,330 residential places advertised. In the same round, there were also 6,653 home care places available.

Profitability

Industry profitability is affected by government funding, the ability to gain revenue from residents, regulatory accreditation and documentation costs arising from government requirements. For example, in 2012-13, the move to freeze Aged Care Funding Instrument subsidy rates at 2012 levels affected profit margins. To mitigate a decline in profit margins, the average number of places offered in residential aged-care facilities has increased.

Structural Changes

Consolidation has occurred in the residential aged-care segment as some operators have sought growth through acquisition and have aimed to benefit from scale. Another interesting development has been the growth of private for-profit enterprises and charities as several religious, community-based and government operators have cut back services. Private equity investors are taking a growing interest in the industry.

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Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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