Health & Ageing

Evolving health, aged care & disability service sectors

The health, aged care, and disability services sectors are undergoing significant transformation, driven by regulatory changes, an aging population and patient expectations for hyper-personalised care. We anticipate that the heightened deal activity observed last year will continue. As organisations seek scale to balance increased back office and compliance costs, further market consolidation is expected.

Over the next 40 years, Australians aged 65 and over will make up 23.4% of the population, according to the 2023 Intergenerational Report. Significant funding will be needed to house these individuals and convert existing facilities to better suit an aging demographic. Innovative aged care providers will gain from this influx of new capital. This year, the Federal Government is also expected to introduce a new co-funding model and many investors are already assessing the sector’s potential for growth.

Unlike the aged care sector, the disability services sector is at the start of its regulatory reform journey. The disability services sector is highly fragmented with no single peak body or entity responsible for ensuring quality, safety and oversight.

In late March, the Federal Government will announce its response to the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability and the NDIS Review. Without a single authority responsible for the sector, the reform journey will make slow progress. While uncertainty around government reform remains and many operators rely on their balance sheets to continue operating through challenging financial conditions, some smaller operators may fail in 2024.

Professional investors, including superannuation funds and private equity companies, are showing keen interest in the health care sector, recognising the current demographic shifts and increased demand for healthcare services. This financial injection will support infrastructure development, and underscores the sector’s attractiveness as a maturing investment.

More from the author, Partner Selina Gerner

The health, aged care, and disability services sectors are undergoing significant transformation, driven by regulatory changes, an aging population and patient expectations for hyper-personalised care.

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