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The dilemma of an aging population

Jul 31, 2012

Nursing homes could become one of the hottest property investments over the next few years as the industry gears up for a shortage of beds.

Andy Reid, a Cranleigh director, says the ageing population means approximately 800 to 1000 new beds a year will be needed for elderly patients from 2014. However, the increase in demand is unlikely to be met from existing rest home operators, because the money they receive from the government barely covers their operating costs and is not enough to justify spending on new facilities.

The huge increase in demand for elderly care facilities is coming at a time when district health boards (DHBs) are restricted in the amount of capital they have to build new facilities, because of the general state of the economy, Andy says. "There's a steamroller coming, driven by the baby boomers and ageing population.

Cranleigh is working with several DHBs to find ways to overcome the problem. One solution is to build what Andy calls intermediate facilities larger nursing homes with facilities to hospital standards, where patients can be sent to recuperate after receiving medical care for illness or injury in one of the major public hospitals.

This will reduce the length of time a patient has to stay in the main hospital and help free up its beds, Andy says. He has also been in discussions with private investors who can develop such facilities and banks have indicated they will be willing to get involved, on certain conditions. DHBs will have to be prepared to provide long-term contracts for the facilities. "The private sector is happy to invest in these assets but they need long-term contracts rather than just being on a panel [of providers] with no guarantee of supply of patients," Andy says.

These new intermediate facilities will probably also provide long- term accommodation for people who can not live on their own because they are frail, but who did not necessarily need hospital care - the traditional rest home residents.

However, the expected huge increase in the number of people who would traditionally have gone into a rest home means a two-pronged approach will probably be necessary to cope with their numbers, because it is unlikely that all of them can be housed in the intermediate nursing facilities.

Recent advances in technology means it is possible to monitor people in their homes to see if they are mobile, are taking their medications correctly and even how long they are spending in bed, Andy says. Combining that technology with traditional home-based care services and outpatient facilities will enable many people who need some level of assistance to stay in their own homes. It is likely DHBs will increasingly use the private sector to provide such services.

With the provision of more in-home care and new larger intermediate care facilities the traditional rest home operations most people are familiar with will be a thing of the past.


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