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Following a period of explosive growth in the home care providers market, the number of new providers commencing operations has dropped substantially. The total number of home care providers in Australia increased from 465 at 30 June 2017 to 863 providers at 30 June 2019. However, only around 50 new providers commenced operations during the last 12 months.

Since 2017, KPMG Australia has conducted annual reviews of 20 distinct geographical locations, focusing on localities with larger proportions of people aged 65 years and over.

For each location we surveyed, we identified providers that were offering Home Care Package services in the suburb for the first time. Analysis was also undertaken of the revenue generated by providers from government funded Home Care Packages over the last five years.

Key findings

  • Growth in new home care providers has dropped substantially when compared to the two prior years. This change occurred prior to the arrival of COVID-19 in Australia.
  • Nationally, around 50 new providers commenced home care operations in 2018-19. This is down from around 170 new providers during 2018-19.
  • In the 20 locations we researched, we identified only 14 new providers. This is down from around 50 new providers during 2018-19.
  • For-profit providers continue to make up the majority of new providers.

Insights and actions for leaders

  • The decreased growth suggests factors such as market saturation, media scrutiny, the Royal Commission into Aged Care Safety and Quality and the introduction of new aged care standards have had an impact.
  • Home care is an increasingly competitive sector. While the largest providers continue to be dominant, recent entrants and others are growing market share. Some of this growth has been gained from established providers.
  • Some providers have disrupted the market with new service packages and pricing models. These are appealing to some consumers.
  • Recent mergers and acquisitions are helping others to grow their market share; it remains to be seen whether this equates to sustainability.
  • As highlighted by recent industry surveys, profit levels for many have deteriorated. There is a risk therefore that as Australia responds and recovers from COVID-19, growth in government revenue may be masking deeper issues about sustainability.

How is the market changing in the locations we researched?

Across the 20 locations researched, there were only 14 new providers of 366 providers in total. Five were focused on New South Wales, three in Victoria, Queensland and Western Australia, and one in South Australia.1 No new providers were identified for the Tasmania, the Australian Capital Territory or the Northern Territory locations. The new entrants were up to 11 percent of all providers within any geographical location.

We also examined existing Home Care Package providers who were offering services in a new geography for the first time. This analysis showed that existing providers were continuing to expand their target markets, equating to around 15 percent to 25 percent of all providers advertising services in the different geographies.

Number and proportion of home care providers new to locations
Number and proportion of home care providers new to locations

Source: KPMG analysis of My Aged Care listings

 

Analysis of government revenue figures

We examined the 25 largest providers by government revenue. Collectively, these providers received 44 percent of Australian Government home care funding (the same proportion as during 2017-18), which totalled almost $2.5 billion in 2018-19. The Home Care Package government revenues for the largest providers ranged from $22.37 million to $103.28 million in 2018-19.

Of the 25 largest providers, 11 providers achieved growth in government revenue of greater than 10 percent of the prior year, while eight providers achieved negative growth when compared to the prior year. Ten moved up the rankings, 10 moved down and five remained at the same ranking. Three providers were ranked in the 25 largest providers for the first time.

We also examined the revenue share of home care providers that commenced operations during the last three years. All providers except one had increased their revenue, with growth rates of between 51 percent and 434 percent on prior year for those expanding their market share. The largest received $22.4 million in government revenue during 2018-19, while all received greater than $3 million. Eight of the 10 were for-profit providers, and two of these were franchise businesses.
 

Download the report for more detailed analysis of Australia’s Home Care Package providers.

Footnote

  1. One of these providers was targeting three states and one was targeting two states.

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