Beginning of a consumer-driven decade: Aged care predictions from industry experts – Part 1

| 16 Dec 2013
Aged care predictions for 2014

This year is quickly drawing to a close and as we look back, 2013 has seen the aged care sector continue to shift dynamically, with new technology offering much potential to revive Australia’s aged care sector. However, the perennial challenges – funding constraints, compliance requirements, operating costs, workforce pressures and hefty demographic changes – remain in the spotlight, without any obvious sign of subsiding.

And so, with 2014 just days away, it’s time to set our sights firmly on the year ahead to see what is on the horizon for the sector. In order to find out what we can expect from 2014, we invited several aged care industry experts to share their views.

What trends, changes or developments do you see continuing to shape the Australian aged care sector in 2014 and beyond?

Tapan Parekh, Partner, Deloitte Touche Tohmatsu

In 10 years’ time, I think we will look back on 2014 as being the year that the deregulation of the residential aged care sector really started. Whilst the formal deregulation of residential aged care is some time away, we will see a move to consumer empowerment and consumer choice, both of which will result in informal deregulation. In 2014, this will begin with accommodation; residents and their families will be provided with more information on their choices with respect to accommodation and the way in which they choose to pay for the accommodation.

Graeme Wickenden, Chief Financial Officer, Villa Maria

Looking forward, July 1, 2014 stands out as a key date for aged care providers, with the Living Longer Living Better reforms taking effect. While residents will have increased choice in the way they fund their care, providers are faced with the prospect of having to refund a bond with no certainty of receiving a new Refundable Accommodation Deposit (RAD). Those residential care providers holding significant accommodation bonds will need to carefully monitor their cash flow and consider the scenario of reduced liquidity if bonds convert to Daily Accommodation Payments (DAP), given the decision making between a RAD and DAP transfers to the resident. The potential need to establish banking facilities to cover this has obvious cost implications.

For home care providers, the introduction of Consumer Directed Care (CDC) brings new challenges. Ensuring systems and supporting processes are established will be a critical consideration for providers whose existing business models will be challenged in the CDC world. Importantly, in an environment where home care recipients choose who they will engage with, an aged care provider’s brand and reputation will be paramount.

Michele Lewis, CEO, mecwacare

We expect to see more registered nurses move away from providing direct care and into advisory roles such as clinical consultants that oversee the direct care provided by care staff. As this trend becomes a reality, improving the skills of our workers – both registered nurses and care staff – through ongoing workforce development will be a priority. Providing ongoing staff training and development for staff will be a key enabler in improving staff retention, and in increasing the quality of care outcomes for residents and clients who will have higher acuity when they move into the aged care sector.

Rob Hutchison, CEO, McKenzie Aged Care Group

The key issue that will define aged care in 2014 and further is sustainability. The proposed framework surrounding discretionary accommodation payments or contributions will have a significant impact on cash flow management and capital adequacy for some providers, particularly those who did the heavy lifting by developing modern, quality asset portfolios utilising the bond system in response to the Government’s desired wishes. For those providers who are well geared with bonds, how does a significant net reduction in debt capacity for some – or insolvency issues – stimulate $30 billion worth of investment ( 75,000 beds), over the next 15 years?

Luke Greive, Chief Operating Officer, RSL Care – Support Centre

There is a clear shift towards customer-centric organisations, which is a growing trend in health care and aged care, worldwide. With the introduction of CDC in Australia, the majority of aged care providers are more aware of the need to place the customer at the centre of everything that is designed and delivered.

I believe, the true defining moment for aged care as a genuinely customer-centric service will be when accommodation types are sought out by our customers as a desirable places to call home. I don’t think the Australian market is there yet – further creative and innovative thinking needs to happen to design aged care which has evolved beyond traditional aged care. This will be the culminating effort of designing and developing aged care with the customer (customer co-creation) and I feel the icing on the cake will be the delivery of a service which exceeds customers’ expectation.

Additionally, the next phase of Living Longer Living Better reforms will continue to drive major productivity requirements through deregulation and as per the last Stewart Brown results, some providers will just not be able to meet the ongoing requirements in running sustainable entities. If we follow what has happened in other countries, our not- for-profit and for-profit balance will swing more assertively to those entities that can meet sustainability requirements. This coupled with major investors eyeing the market will make for an interesting year ahead.

For more predictions from our industry experts, read the second part of the post here.

(Image credit: Danilo Rizzuti)

Tags: aged care, CDC, residential aged care, technology

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The iCareHealth Team


  1. Pat Sparrow

    This is a good discussion to have. But while we are talking about a consumer driven decade there are no comments from the industry leaders who represent consumers. It underlines the challenges the sector faces in becoming truly consumer directed & working with consumers.

  2. Corina Reid

    I believe we will see changes in the Aged Care Sector; Because our vulnerable elderly will not know how to access services or who to ask ,if they can’t access the internet with care link offices closing ,We all need to think clearer on better communication for the generation we are caring for know and in the next 10 years. As a consultant my vision is to make a difference and give families and our elderly all the information required to make their own choices and not be dictated too.

    We will see a difference to the quality of care provided!

  3. Alice Khon

    I want to know anyones suggestions, do you think aged care is a customer service industry?

    • John Coxon

      Hi Alice, not sure about customer service. I believe customer service is different to being consumer focused, while at the same time they are linked. When someone believes they have recieved excellent customer service it is because their expectations were met or exceeded. Consumer focus on the other hand is about understanding the consumers needs before they need to make a purchase. In theory if we get the consumer focus right then we will exceed the consumers expectations and they will have recieved excellent customer service. Another way of looking at it might be that consumer focus attracts the consumer to a facility whereas excellent customer service results in a recommendation by a resident to another potential resident. Again, interchangable, interconnected and interdependent. Maybe they are the one and same thing.


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