The conversations of life

Private care retirement villages: the new aged care

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* This article has been updated to correct and clarify the fee structure. 

There is a new form of aged care blossoming, led by Queenslanders. It’s called ‘private aged care’ and it is being offered by retirement village operators.

I believe it’s a great concept for several reasons. Most importantly it gives control and certainty to the person who will be needing care as they enter their later years. Once they have bought into the private care retirement village it is highly unlikely they will have to move again – ever. The dread of being forced to move to an aged care home is taken away.

Likewise, the family’s emotional minefield around ‘when is the right time to move to higher care’ and how to have that conversation, is also no longer required. And couples don’t need to be separated.

By all reports, the bottom line cost of private care is not much different to the traditional entry into an aged care home. Here is how it works.

An innovative fee structure

You ‘buy’ into a private aged care village just like any other village; in most cases you receive a ‘lease for life’. The village will have a DMF structure of around 40 per cent over four years, meaning your estate will get back 60 per cent of what you paid when you leave the village.

“The government subsidy for home care and aged care will be drawn upon and then topped up by the ‘insurance’ that you have been paying in the village”

In this model you will pay the standard mandatory weekly village fees (usually around $200 per week) plus an additional fee for meals if you choose to take that option (around $100 per week).

But here’s the difference: You then pay an additional weekly fee, like an insurance policy, for the expense of your care to be covered for the rest of your life. The amount can be around $200-$250 per week or $13,000 a year. The government subsidy for home care and aged care will be drawn upon and then topped up by the ‘insurance’ that you have been paying in the village.

The average stay is about 4 years, so your care will cost $52,000 over 4 years, less what the government contributes for your home care and aged care.  At first you most probably won’t require much care but as you age, you are likely to need more.

Adding it up

Wrinkles Cafe a feature in Freedom villages.
Wrinkles Cafe a feature in Freedom villages.

Speaking to some of the operators of these villages, the finances work best for part-pensioners and self-funded retirees. They claim that your net payment across your last four years will be about the same as if you had followed the aged care home path.

And customers are saying this all works too. In QLD there are now about 15 of these private care retirement villages and more are being built. The popular brands have been Seasons, Tall Trees and Freedom, plus up-market Henley on Broadwater.

Now the big operators are taking notice. Australia’s second largest village operator, Aveo, last week purchased all the 15 Freedom villages across four states for $215 million; and announced they are going to expand the concept across other Aveo villages.

This is positive news for ageing Australians because it expands the choices that we have and it gives back control… which has to be a good thing.

Christopher Baynes

Chris Baynes is a columnist and publisher of Frank & Earnest. He is also the publisher of Villages.com.au, the leading national directory of retirement villages and aged care services in Australia.


Discussion3 Comments

  1. The affordability for someone to spend their final years in a Freedom Aged Care village does not differentiate between a self-funded retiree, part-pensioner or a full pensioner. If a person is able to afford their unit, then they will be able to afford to enjoy living in a Freedom home.

  2. The aggressive advertising suggests that private retirement villages have the capacity of fully developed nursing homes without some of the defining characteristics and regulatory requirements of residential aged care. This is not the case.

    It is a sound business model for retirement village operators to offer care services (often provided by other operators) but the challenge is for consumers to determine their requirements in advance. For example, a couple entering a retirement village might survive four years for one partner and ten years for the other. Using the above example, the payment of $13,000 for each partner over their occupation equates to $182,000 plus their occupancy and DMF fees. This is a substantial impost on their wealth if they require only minimal care.

    However, if both require substantial care across the last two years or so of their respective lives, there are substantial costs involved. The risk is whether the retirement village provider actually does honor the care obligation in the same way, and to the same quality as residential aged care providers.

  3. Gail Henderson

    I don’t know if this will reach you.

    I live at The Concierge Bayside Melbourne an Aveo retirement village. Just in the last month we have been advised that Freedom Aged Care will take over management of this village although RSA continues to be the OC Manager and Aveo the owner.

    During one of the Freedom presentations we were told that Freedom was an ‘Approved Provider of community aged care however it came under the Retirement Villages Act not the Aged Care Act. Can you explain this please? Who will supervise the standard of care delivered by Freedom? What standards of care does Freedom adhere to?

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