Aged Care operators are pursuing new business models, out of necessity. This is in response to changes to the financial position and social expectations of the Baby Boomers generation.
A brief look into the new business models in Aged Care reveals the following trends:
- The move to ageing in place / multigenerational living, where two or more generations co-habit: a 2013 report cited by Choice stated that 27% of residents living together do so for “care arrangement and support”
- Designing for disability, including dementia, and their carers
- Vertical villages and the support of couples for whom age-related disease is occurring at different rates
Why is this happening?
- These changes are in response to changing demographics of the population.
- Fundamental economics show that Baby Boomers are asset-rich, but cash-poor
- The shift in business model reflects the consumer-style expectations of people as they age and the availability of cash (or work) to fund their retirement
People born between 1946 and 1964, the Baby Boomers, are heading into retirement at a rate of about 10,000 a day.
“The Baby Boomers currently comprise 25% of the population yet they own 55% of the nation’s private wealth,” reports Mark McCrindle, a social researcher. “And in 2020, when the oldest Boomers hit their mid 70’s, we will witness the biggest intergenerational wealth transfer in history.”
This generation is one of the richest ever, estimated to peak at about $54 trillion in assets by 2030. Yet, in 2016 GoBankingRates published research conducted with 1,504 adults in the US over the age of 55 (4.3% margin of error): approximately 30% of the respondents age 55 and over claimed to have no retirement savings and less than half (46%) of the respondents had sufficient retirement funds.
The Center for Aging & Work at Boston College found a mismatch in the retirement expectations of older workers and their employers: their research suggested 64 percent of workers would like some kind of “phased retirement.” When Center researchers asked employers whether they accommodated such “phased retirement,” about half said they did for top workers, but only 10 to 20 percent offered it to all workers.
New Business Models
As such, operators are seeking alternate revenue sources through the provision of:
- Access to onsite and offsite medical and health-related services
- Offsite lifestyle retreats
- Additional advancement services, such as onsite education, employment and volunteer advisory centres
- Repurposing retail / mixed building developments, with some levels within the building now dedicated to aged care
Periop Partners offers a state-of-the-art platform and service design for medical and lifestyle care. We uniquely enable care coordination across multiple locations, mobile teams and virtual consultations. To see how we can assist your aged-care development, call 1300 799 438 to talk to our consultants.