Call for reforms in aged care

OUTDATED regulatory and pricing arrangements in Western Australia's aged care industry is threatening the vulnerable sector, with industry groups warning that an ageing population will exacerbate the state's already strained health resources.

Stephen Besci, deputy chief executive of Australia's largest residential aged care provider The Bethanie Group, said government regulation and pricing within the industry had remained unchanged from when the Aged Care Act was introduced in 1997.

Commenting on new research by Grant Thornton, which painted a dire picture of the state of aged care services in Australia, Mr Besci said previous government funding increases were "totally mismatched" considering the significant rises in wages and operating expenses faced by carers.

"The compounded effect of this mismatch is now threatening the viability of the industry. The fact is that aged care providers in WA simply cannot afford to build or operate new places," he told WA Business News.

Australia's peak residential aged care industry association, the Aged Care Association of Australia, said increasing production costs and low returns were impeding future development of aged care services.

The association's WA chief executive, Anne-Marie Archer, said development within the sector was coming to a grinding halt as the availability of services struggled to keep up with growing demand.

She said with the number of Australians over 85 expected to grow over the next five years, the elderly would be forced to turn to an already congested state hospital system if they could not access adequate care.

"Consumer choice has been the catalyst for considerable change in the industry and the baby boomers will demand, and will be able to afford, an even higher standard of aged care accommodation," Ms Archer said.

"However, the findings of the Grant Thornton aged care survey indicate that without some serious reform, providers will not have the financial resources to continue building the much needed new services."

ACAA chief executive Rod Young said the federal government's $10.4 billion economic stimulus package ignored frail elderly, describing the future of aged care services as ''grim''.

"The report found aged care providers are now making 1.1 per cent return on investment, which means no aged care provider can afford to build new facilities in the future," he said.

The survey labelled regulatory and pricing arrangements in the aged care sector as outdated, claiming they suppressed incentives to invest in modern infrastructure and discouraged the construction of new nursing homes.

Grant Thornton found diminishing returns were impeding investment at a time of unprecedented demand and projected growth in the number of elderly Australians needing care.

National head of aged care services at Grant Thornton, Cam Ansell, said although the cost of building and operating modern facilities was much higher than older-styled shared-room accommodation, the current funding model did not provide incentives for aged care operators to meet consumer demands for privacy and dignity.

"Almost half of the facilities in the survey were over 20 years' old and the current system does little to incentivise operators to refurbish or rebuild to meet current consumer preferences," he said.

Belmont-based construction company Pindan has a different perspective on aged care facilities in WA.

It believes the state's booming economy has boosted construction for luxury retirement villages and five-star accommodation for WA's elderly.

Pindan's director of construction Andy Peppercorn said, in line with rapid growth in the sector as a whole, the number of high-end aged care dwellings being built was surging.

"The luxury of the aged care facilities we are being brought in to construct are pretty amazing. The demand of the ageing population for quality is fuelling a very competitive market where each new facility is out-doing the last," he said.

"It's no secret WA's taste for luxury is growing and the aged care sector is no exception."

Pindan has a number of high-end commercial projects in the pipeline, including more than 500 residential and aged-care independent living units, with a combined construction value of more than $400 million.

In July, the company won an award for its Woodlake Aged Care facility in Kingsley, a project Mr Peppercorn likened to a "mini hospital with state-of-the-art lifestyle facilities".

Pindan also has under contract the Lawley Park expansion, a 36-unit premium residential complex, the $33 million Howard Solomon Care Facility, and the Donovan Village in Forrestfield, which will include 15 hostel beds and 11 independent units, plus the construction of a respite for Southern Cross Health Care.