Cost of building nursing home beds on the rise

New research shows the cost of building nursing home beds has blown out by up to 80% in the past three years, forcing many aged care providers to dump plans for much needed new beds.

David Lane, group chairman of Thomson Adsett Architects, has told the Aged Care Association Australia 2006 Congress in Perth that the industry was being squeezed financially on two fronts – compliance with heavy Government regulation and the impact of the national construction boom.

An analysis of his company’s aged facility projects around Australia showed the two factors had driven up the cost of nursing home beds by an average 38% a year for the past three years.

This compared with an average increase of 6.1% a year in the previous decade.

“This raises serious questions about the financial sustainability of the aged care industry,” Mr Lane said.

“Many organisations are having to review their commitment to new building programs because of the significant cost escalation.”
Consumers were adding to the construction bill by demanding more space to reflect modern living standards.

“In terms of square metres, in 1989, nursing home facilities cost an average $850 per square metre to build, now it has climbed to $2200 per square metre,” Mr Lane said.

“People want more area and that has a cumulative effect on the average cost per bed.”