Profit or service: why it matters to older people

As we move into an era of greater choice, the competition among service providers is hotting up, and investment is on the rise.

This is a good thing for consumers – which includes all of us. A customer led environment means products and services become more varied and accessible. More and better facilities and housing can only be beneficial. The risk is that players will move onto the field whose primary motivation is profit.

There are those who predict the demise of not for profit (NFP) aged care organisations because the 'for profits' have easier access to capital and greater ability to compete on price. There’s no denying that the industry has great potential for savvy investors and businesses. But, is this what we want?

Should consumers of retirement housing, aged care and associated services not care terribly much about who is providing the service if the product itself seems good and well priced? I contend that consumers of aged care ignore such things at their peril and may find their retirement village or care facility being bought and sold from under them as a commodity.

There is debate within the industry about the benefits of NFP versus 'for profit' aged residential care providers, in light of evidence from overseas that NFPs deliver better outcomes for residents overall. We don’t yet have data to support this in Australia, but we do know that our NFPs have a lower rate of regulatory failure. Intuitively, these pieces of evidence would suggest that NFPs are likely to be delivering better outcomes.

I suggest that the community benefit sector will therefore become more important, not less important, in this increasingly competitive environment. These organisations will offer an essential point of difference – a commitment to people and values rather than investment and profit.

We must also consider regional, rural and remote areas of Australia, and the full range of socio-economic demographics. These are the customers who bring the lowest financial return, but have the same needs. Historically, the 'for profit' providers have not bothered with these segments of the community.

Do we really want a sector that is profit driven, where prices are pushed down as providers eye one another across the uneven playing field? While competition can mean more choice and lower prices, it often leads ultimately to a streamlining of products and services into those that prove to be the most profitable, with the rest becoming categorised as ‘niche’ and therefore costly. The danger looms of a two tier aged care system.

There will always be a need for community benefit organisations, whose mission is to serve. This is the only way to ensure the wellbeing of all older people, whatever their situation.

This blog post was originally published in Amana Life. Read more of Ray Glickman's blog Ageing from Left Field.