Aged care shares take a hit amid Australian government inquiry into industry

Australia’s leading aged-care providers’ shares have plummeted, after Prime Minister Scott Morrison announced a government inquiry investigating the aged-care industry.

Healthcare
Source: Bloomberg

Mr Morrison announced the inquiry on Sunday, upon what he described as ‘’alarming and disturbing’’ spikes in elder abuse.

Leading providers lost as much as $318 million in market value on Monday after the announcement. Japara Healthcare Ltd stocks dropped 21%, Estia Health Ltd fell 17% and Regis Healthcare Ltd tumbled 20% upon the news.

Fisher & Paykel Healthcare Corporation Ltd also fell 1.3% while Ryman Healthcare Ltd dropped 0.4 %. The wider health care index was down 0.9 %.

The inquiry into the aged-care industry will investigate quality of care in residential facilities to elderly Australians and people with disabilities. This comes after Mr Morrison said the government had discovered malpractice in the industry including abuse and poor quality of care.

Annual government spending on aged care is expected to rise to $23 billion by 2023. According to GEN aged care data, government spending on aged care services has progressively increased each year since 2011-12.

In 2016 – 2017, governments spent an estimated $17 billion on aged care, with 69% towards residential aged care.

The call to action comes after authorities say they’ve shut at least one aged care facility a month since the Oakden nursing home scandal in April 2017.

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