Australian Unity announces review of its residential aged care operations

The mutual fund has announced it will review its residential aged care arrangements in light of the sector’s financial and regulatory challenges.

Australian Unity currently operates 10 integrated residential care and retirement village precincts and 13 stand-alone retirement villages across NSW, Victoria and Queensland.

The significance of the need to review relates to the fact that Australian Unity has long been held up as an operator of excellence. It’s aged care homes have been designed for optimum efficiency and client appeal, AU was delivering 200 minutes of care pre the Royal Commission, they have led the modern vertical aged care home with adjacent vertical retirement villages and they are a leader in home care, which is a feeder into its aged care homes.

AU is also a mutual, whose role is to be for purpose.

In a statement, Australian Unity acknowledged that exiting the delivery of residential aged care was one of the options being considered.

“Australia’s aged care sector is facing a number of challenges, including those that stem from rising demand, pressure on financial sustainability and ongoing (and uncertain) regulatory and funding changes following the Aged Care Royal Commission. Australian Unity’s review is being undertaken in this context and will consider options that could include exiting residential aged care.”

However, the organisation stressed that no decision had yet been made about leaving the sector.

“Today we have announced a review which will inform decisions about our residential aged care operations,” it stated.

“The review will seek to safeguard quality of care and sustainability and should be concluded by mid-2023.”

1,500 aged care beds required for sustainable service

The news follows Australian Unity’s decision last June to split its Independent & Assisted Living division into two: Home Health (which takes in home care and its healthcare businesses) led by Prue Bowden and Specialist Care (which takes in its residential communities as well as dental and disability services) led by David Lumb as it looked to better cater to the social and health challenges of its members and the community.

The move coincided with the departure of then-head of the division Kevin McCoy, who has now stepped into the interim CEO role at Levande, the new retirement village operator created by private equity firm EQT out of the former Stockland village portfolio.

Under Kevin’s leadership, Australian Unity had purchased the Greengate portfolio of vertical integrated residential care facilities and retirement villages in May 2021 for $65 million, bringing their number of aged care beds to around 1,000.

At the time, Kevin told SATURDAY that the board agreed that further scale was required and a target of 1,500 beds was required to be able to sustainably provide a quality service to residents.

The fact that Australian Unity, one of the sector’s success stories, is reviewing its residential care underlines the challenges facing operators today.

We will keep you updated on this developing story.

Bev Smith, a leader for the sector, departs

Beverly Smith, Australian Unity’s Executive General Manager for Residential Communities, will also be leaving the organisation on 24 February.

A positive leader in the sector, Bev first joined the mutual fund in 2018 and played a significant role in leading the performance and growth of its Residential Communities portfolio including the transformation of its former South Melbourne headquarters into a vertical co-located retirement village, assisted living and residential care development.

Speaking about her departure, David Lumb, Group Executive for Specialist Care, acknowledged Bev’s contributions to both Australian Unity and the broader retirement and aged care sector.

“Bev has been instrumental in her efforts and commitment to our Residential Communities—particularly during the COVID-19 pandemic where she tirelessly led critical efforts and initiatives to ensure the safety and wellbeing of our residents, their families and our employees. At the same time, integrating the Greengate Group portfolio in Australian Unity, and developing and commissioning four new aged care homes and a vertical retirement village.”

“Her passion and dedication for not only advocating for the best in healthy ageing outcomes for older Australians but celebrating the contributions of older Australians is well recognised both in Australian Unity and more broadly. I wish her the very best for the future.”

Australian Unity has confirmed that a new Executive General Manager for Residential Communities will not be appointed.

Instead, Brett Lafranchi, Australian Unity’s National General Manager Operations, will manage its retirement communities and residential aged care.

Mr Lafranchi has been with Australian Unity for over 10 years, with the last seven in key leadership positions in the Residential Communities business.

Read more in this week’s issue of SATURDAY, out Saturday 18 February – subscribe here.