"Many big vendors don’t want to be interoperable, so you can either legislate or encourage that move. In the US in the end they legislated. Given the US experience, in Australia I anticipate negotiated interoperability. But it will happen – one way or another – and that will be a massive opportunity for aged care players, completely altering the landscape."
Will Australian aged care providers invest, acquire or consolidate for growth?
At a recent round table attended by leaders from across the aged care sector, attendees discussed the potential for industry disruption and the resulting likely shape of industry investment, acquisition and consolidation. This paper discusses some of the issues covered.
Digital disruption coming soon
According to Jim Birch, Chair of the Australian Digital Health Agency (ADHA), healthcare hasn’t been very disrupted by digital – and aged care barely at all.
"Digital health isn’t going to work until you achieve national coherency
– when you can drive the healthcare and aged care systems with digital."
Birch hopes to facilitate that coherency by building the underpinning infrastructure required to make digital health work.
"Our role is not to make apps, it’s about creating an ecosystem infrastructure
that will allow private and public players to flourish in digital health."
A banker’s perspective
The scene is set for strong levels of M&A given the growth and consolidation opportunities available in the fragmented sector. But Richard Gates, the former Head of Health Care Banking at ANZ, says that bank appetite to fund transactions in the sector will depend on a number of factors.
Limited Asia-Pacific inbound investment, but massive outbound opportunities
EY’s China Business Partner, John Li, observes minimal success for Asia-Pacific inbound investment in aged care for several reasons:
Li believes there are huge and immediate opportunities in outbound investment in aged care, particularly in China where 240 million people will be aged 60+ in 2020. However, aged care in China will have its challenges.
What will this mean for aged care operators?
- eHealth will alter the aged care landscape, creating opportunities for digitally advanced operators to leverage the broader health and wellness ecosystem.
- OpCo PropCo deals will become more prevalent as investors seek to dissect portfolios and leverage revenue streams from beds.
- Digital home care models are likely to be developed in Asia, but Australian aged care operators will have opportunities to leverage their experience and IP to move into niche areas in the Asian market.
- China will yield massive opportunities for outbound aged care investment.