According to The Australian Financial Review today, the supply of residential aged care places is unlikely to keep up with the demand generated by Australia's ageing population, an industry report has found.
Demand for aged care beds hit a shortfall of 28,000 places in the 2015 round of federal government allocations for aged care places, according to a report by accountancy firm RSM.
By 2025, demand for places could reach as much 392,000, on a forecast of high population growth.
However the forecast for available places is just 262,000 places in 2025.
"The available statistics suggest that even if supply could be created to meet demand that there is insufficient appetite for this within the sector."
It notes that if the market for aged care places were to be deregulated supply would find a level to match to demand.
But the supply of places is in fact tightly regulated through government control of bed licences, Another major constraint is the lag before an allocated aged care place can become operational.
The median time for an allocated place to become active is at least four years.
Another factor weighing on availability is an emerging trend towards shorter stays of between one and three months. This may contribute to higher vacancy rates.
As well, the proportion of allocated places that are not being made operational is increasing, with industry players more focused on investment returns than creating additional capacity.
"Many of the overarching industry trends we're seeing in the residential aged care industry suggest that the profitability of the sector is actually declining, despite increasing demand," said RSM director Bruce Bailey said.
"Although there was improvement in operating performance in 2014, the industry is no more profitable than it was in 2012."
Return on assets and equity in the sector are also declining, the report found.
As a result, the industry will become increasing reliant on short term finance in the form of resident loans, increasing the sector's risk profile.
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