Resident lifestyle: the ‘next battlefield’ in aged care

Resident lifestyle will be the single biggest determinant of the viability and success of residential aged care operators of the future, writes Ross McDonald.

Resident lifestyle will be the single biggest determinant of the viability and success of residential aged care operators of the future, writes Ross McDonald.

Did you know that the loss of just one occupied bed in a residential aged care facility can lead to profitability falling by over 15 per cent?

Given that residential aged care standards mean that care is ‘a given’, and that location and amenity is largely fixed for an operator, resident lifestyle will be the single biggest determinate of the viability and success of residential aged care operators of the future.

If occupancy drops by just one bed in an average Australian facility, with an average mix of residents, EBITDA (or profit) will plummet, over 15 per cent. Operators lose all the income, yet, cannot adjust their costs.

Capital Guardians

Residential aged care facilities that do not have strong occupancy will not be sustainable. Aged care facility occupancy will experience further downward pressure in the future due to several factors including:

  • bipartisan political support for older Australians choosing their own care services through market-based mechanisms;
  • the ever-present prospect of bed licence deregulation and money following consumers, not operators with home care taking the lead in February 2017;
  • the growth in available packages and cost effectiveness of home care, coupled with CDC and technological innovation, is helping keeping people out of residential care
  • the influence of emerging “star rating” style websites for aged care; and
  • the move towards user pay and the appeal of additional ad-hoc purchases by innovative CDC residential operators with resort-like offerings.

With the consumer wielding the power of choice, operators will find consumer appeal, or lifestyle, essential for occupancy.

In terms of funding and focus, resident lifestyle will move to top of mind, ahead of care and accommodation, which are generally meeting community standards.

Lifestyle will drive the welfare of residents and consequently support the reputation and brand of providers, both of which are essential for high occupancy.

Lifestyle also has a natural funding source – that is, user-pays and/or the opportunity cost of lost income arising from empty beds.

There will be no room for penny pinching when it comes to resident wellbeing and lifestyle – as demonstrated above, the resulting profitability of the initiatives far outweigh any cost.

Ross McDonald is the founder and CEO of Capital Guardians, having previously been CFO at MYOB, Benetas and strategy executive for Sensis.

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Tags: cdc, finance, occupancy, resident lifestyle, ross-mcdonald,

7 thoughts on “Resident lifestyle: the ‘next battlefield’ in aged care

  1. Residential aged care providers have already started to look beyond occupancy towards establishing community health hubs, providing community health services and a continuum of care model. The large capital investment in the facility can be better leveraged into higher margin “in-home” services.

    Lifestyle will still be the single biggest determinate of the viability and success of aged care operators of the future, but residency will only be a smart (and less profitable) part. Diversification into home care will be the ‘next battlefield’ in aged care.

  2. Anyone, however expert, who glibly uses the word “battleground” has no business within a mile of any caring” profession or business……

  3. Personally I agree with this thought as a Diversional Therapist in aged care for 16 years I find it frustrating to think that many Diversional Therapists and Recrecreational Activities Officers still do not have the support of their aged care organisations.
    From having to fundraise for entertainers and resources, to not having opportunities to being financially supported for time away from the floor to attend appropriate education sessions, conferences, or local network meetings. Also quite often not having enough staff to assess, implement, program , plan and evaluate individualised leisure and recreation programs. In some cases having one or two full time staff in a aged care facility of 40/50 up to 80 people.
    I would like all aged care providers to think how much support do we give the Diversional Therapy Department… Do the cooks have to raise funds for catering equipment do the office staff have to raise funds for printing, stationery and computers and do the care staff have to raise funds for shower chairs, gloves and the like?
    does any other field have staff to residents ratio numbers of 1-30 or more and is that staff untrained for a specialised area of practise.
    This article highlights how important leisure and recreation will be in the future well I hope organisations will recognise this and start looking at ensuring quality of care by implementing a appropriate ongoing budget, supply of resources, supply of trained staff ie Cert4 in Leisure and Health (RAO) and a degree qualified Diversional Therapist as well as appropriate ongoing education and encouraging staff to become members of their professional body DTA. only then I believe you will have a leisure and recreation team well equipped to provide the best individualised leisure and recreation lifestyle care to residents/ consumers to keep those beds filled.

  4. I couldn’t agree more Kim. As a former DT reading your comment I can see that nothing has much has changed since I moved out of this profession over 12 years ago. I still work within the aged care sector as a placement consultant and get to observe what’s happening in many organisations operating in and around Melbourne. Lifestyle is still pushed on to prospective residents as one of the main focuses of operators and it’s sad for me to hear from you that the Diversional Theraphy and Lifestyle profession is still so under valued and under resourced.

  5. Kim I agree with you too.
    There never seems to be enough time in the day to carry our tasks that is expected on lifestyle staff.
    My question is what is the Lifestyle staff ratio to resident?
    The government needs to inject more funds in making the ratios fair across all Aged Care Facilities.

  6. Good morning, I agree with some comments. However, I don’t believe the article is about ‘lifestyle activities’ that are provided in aged care services by ‘lifestyle’ staff. It’s about how a resident lives in the home and their well being. For example, are they supported to continue to live in the same way they previously did at home, or supported to maintain friendships and provided with dignity and care that enhances their daily well being. Standard 1 of the new standards are clear about what changes should occur.

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