In Africa we met up again with Katie Smith Sloan, COO of Leading Age (the US equivalent of ACSA) plus the Executive Director of the International Association of Homes and Services for the Ageing (IAHSA).
Discussing trends in aged care, Katie pointed out that most US operators are closing beds rapidly in response to the equally rapid growth in Home Care services.
She says this is driven by consumer demand to stay in the family home backed by increased home care resources and changes in Medicaid. Their form of consumer directed care.
Katie pointed out that the average residency in an aged care facility is now down to 13 months, as people stay in the family home longer, receiving services.
Katie guided me to Kindred Health, who have annual revenues of $5 billion and approximately 63,000 employees in 47 states. They have 98 nursing centres (aged care) and 153 Kindred at Home hospice, home health and non-medical home care locations along with their other health businesses.
Kindred has been shedding aged care facilities; this financial year they have ‘divested’ 122 nursing homes alone (mainly by not renewing leases on buildings an infrastructure).
At the same time Kindred has built their home care service from $0 and 2009 to $352 million in sales with a 11% margin. It has overtaken long term acute care - down to $250 million (with a 21% margin). While home care margins are lower (reflecting increasing competition), it requires significantly less capital.
Katie tells us that Not For Profit operators traditionally dominated home care but they are being overtaken by the private sector. NFPs don’t have access to affordable capital and have risk averse boards compared to faster, more nimble private operators. Their missions to service the less profitable, lower end markets is another limiting factor.
This all means the US and the UK markets are both telling us in Australia that home care will be an aggressive market challenger, not only for aged care operators but retirement villages as well.
Prospective village residents will be promised they can stay in the family home when they have a health issue, rather than relocating to a retirement village for support.
A major challenge for the sector.
