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Charitable versus For-Profit Residential Aged Care Providers: Does It Make a Difference?

If you are considering residential aged care for yourself or for a loved one you know there are a slew of options available. This makes your decision-making process more complicated. One such decision point is choosing between charitable, not-for-profit facility operators and for-profit operators.

In this article, we examine not-for-profit and for-profit residential aged care facility operators, their similarities and their differences.

In Australia, the majority of aged care facilities are run by not-for-profit organisations:

•    59% of facilities are run by not-for-profit provider,

•    35% by a for-profit provider, and,

•    6% by government.

However, it should be noted that the number of for-profit operators is increasing. Since 2009, they have gained 4% of market share. At the same time, the number of government-owned facilities is decreasing, and we are seeing more attempts by local and state governments to sell their interests in aged care.

No matter the structure of the aged care provider, accreditation and certification, sources of funding and licensing are the same for all.

Traditionally, not-for-profit facilities focused on providing care to the more vulnerable and less well off in society. At the same time, the traditional view that for-profit providers were better at maximising income and managing expenses isn’t necessarily true today. Four of the ten largest operators in Australia are not-for-profit.

So, if those long-held beliefs don’t hold up, where do the differences exist?

Staffing

•    Not-for-profit and government providers are able to offer tax advantages to employees. This increases the ‘after tax’ salary of their employees, relative to for-profit providers. This may help them to attract and retain better staff.

•    Not-for-profit providers, particularly those with a charitable or religious affiliation, have volunteers who play an important role in resident welfare and activities.

Facilities

•    Not-for-profit providers have more difficulty accessing capital to upgrade facilities, or build new facilities. This may be important to you if are leaning towards choosing a well-staffed, well-run, but run down facility that needs a renovation. This may not occur in the short term.

Management

•    In general, the larger the operator, the more distant you are from the decision makers.

•    Larger operators have well-developed staff and systems to ensure quality processes and systems.

When considering residential aged care facilities and providers, do not rely on traditional preconceptions. Instead, consider the provider structure’s impact on staffing, facilities and management, to more accurately assess the aged care facilities you are considering for yourself or your loved one.

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