What needs to change?

By James Price

I read this morning the latest bulletin from 3 million reasons with interest.  The make-up of the Australian population is going to change drastically over the coming years and we need to act now.

Yes, there will be many more people over the age of 65 in 2050, and again more over the age of 85.  But what will this look like in 2015 or 2020?  At the tender age of 39, I find it tough to plan for something that will happen in 37 years’ time.  Who knows what the world will look like in another 4 decades time?

Think back 40 years and the world wouldn’t have imagined much of what we take for granted today.  You wouldn’t be able to read this piece on your smartphone – what’s a smartphone you would have asked? Does it answer itself?

Anyway the point is, we should be thinking about how the Industry will look over the next few years as well as how it will look 37 years into the future.

Let’s consider some numbers:

• In 2006, 330,000 Australians were over 85 years old – this almost doubles to 580,000 by 2021. ‘The Case for Reform’ (Henry Ergas, 2009)

• Today there are around 180,000 beds in nursing homes across the land. The National Health and Hospitals Reform Commission have estimated that 337,500 aged-care places will be needed by 2020.

• So that’s 155,000 additional beds that could be needed in just 7 years.  A Large nursing home can cater for up to 300 residents and there is a trend for building new facilities with 140-150 beds.  We would need over 1,000 facilities to be up and running in 7 years and of course progressively up to that point.

The target is still some way out there, 7 years is still a long time.  How about next year?  Will there be 143 new homes constructed?  By the way, there’s a significant cost incurred in setting up a new facility – something like $250,000 per bed.

Can the government afford to invest in building over 20,000 new beds per annum?  Where is the $5bn a year going to come from? And that’s just to build them; care services are above and beyond this number.

A focus on the long-term future is important, but it is easier to ask the question – where are the plans for the next 12 months? The next 24 months?

What needs to change in the Industry to foster sustainable growth to meet near term and future needs?  Answers on a postcard, please…