Australia’s aged care sector is facing unprecedented ‘disruption’ – but not from new internet-based technologies which have unleashed market forces fundamentally changing other industries.
“Huge forecast social changes partially magnified by government reform and being driven by empowered consumers are disrupting the established business models in aged care, presenting huge challenges and opportunities for providers,” Jennifer Lawrence, Chief Executive of Brightwater Care Group, said.
“The demographic tsunami of Australia’s ageing population is leading to unprecedented growth in demand for services. In an age of disruption, we are facing a very different scenario to the wrecking and recasting of established industries caused by new technologies such as Uber and Airbnb which have fragmented other markets.”
Addressing industry and business leaders at “The Business of Age” conference staged by CEDA in Perth in Perth today, Ms Lawrence said “anything was possible” in a radically changed landscape for the aged care sector which over the next 40 years would see:
- Number of Australians aged over 65 double;
- Number of Australians aged over 85 grow four-fold; and
- Government spending in aged care double as a share of the economy, while the number of working taxpayers to each older person would plummet 60 per cent.
Before being appointed CEO in 2016, Ms Lawrence had founded Brightwater’s research and development program aimed at building an evidence base to make decisions on care. This has led to among other things the use of socialisation robots as part of therapy for people with dementia.
“We will see new technologies in aged care, like robots. But they will be tools to support our staff in some parts of the business to provide better care, not to replace them,” Ms Lawrence said.
She also highlighted increased application of technology to support mobile care givers to deliver more services to the growing proportion of Australians who will be taking up incentives from government for them to age in the home.
The challenge for organisations like Brightwater in dealing with disruption, Ms Lawrence said, would be finding ways “to stay relevant” in an environment where funding constraints are tighter than ever before.
“We will have to act more commercially to transform our core businesses by implementing more efficient and effective service models, if we are to seize the market opportunities which will open up in this long-wave phase of dynamic industry growth.”
She told the conference, 76,000 new aged care places would need to be delivered by the industry in the next ten years (2016-26) – more than double the rate of the previous decade (2006-16).
This would present the need for aged providers to source significant amounts of capital funding to develop new facilities, and to refurbish existing residential aged care and disability services infrastructure.
The market challenges from new sector participants
The Brightwater CEO also told the conference that aged care is now a $17.6 billion a year industry in Australia – bigger than either the residential building or beef and dairy cattle industries.
“There are some 2,000 aged care providers currently operating in Australia,” she said.
“Until now, the sector has been largely led by ‘not-for-profit’ groups like Brightwater. But we are now seeing large, well resourced ‘for-profit’ operators entering the sector.
“They are being attracted by the projections of unprecedented growth in demand for aged care services in the coming years, and the potential to participate in the industry’s evolution and unlock significant new revenue streams.
“The entry of more for-profit groups into the sector will be likely lead to restructuring, mergers and acquisitions, and market consolidation as providers look for a competitive edge and to more aggressively promote their brands.”