The results for the nine months ending 31 March 2018 indicate the financial performance of residential aged care facilities is continuing to deteriorate, StewartBrown’s new quarterly benchmarking report shows.
Aged care accountancy and benchmarking firm StewartBrown’s survey of more than 911 residential aged care facilities found results are continuing their downward trend due to this financial year’s freeze on indexation for care subsidies, the January 2017 changes to the Aged Care Funding Instrument and escalating direct care costs.
The latest analysis found that 43 per cent of facilities reported a loss on their overall facility earnings before tax (EBT) for the nine-month period, which is up from 41 per cent at the half-year mark and 34 per cent for the previous financial year.
As with the last quarter, 21 per cent of facilities reported a loss on their earnings before interest, taxation, depreciation and amortisation (EBITDA) this quarter, which is up from 16 per cent of facilities for the previous financial year, according to the report, which was released this week.
StewartBrown senior partner Grant Corderoy said the deterioration in performance from June 2017 has continued in the March quarter with more than four in 10 facilities continuing to run at a loss.
“The expectation is that there will be a further deterioration in performance in the June 2018 quarter,” Mr Corderoy told Australian Ageing Agenda.
Mr Corderoy said EBT was considered a more important measure than EBITDA because it showed the “real surplus or loss”.
What happens to financial performance next financial year depends in part on the level of indexation applied to residential care subsidies from 1 July, he said.
The level of indexation will be known in late June, Mr Corderoy said.
In response to these latest results Mr Corderory said providers needed to look at how they could maximise their revenue outside of ACFI.
“The big message for providers is now to look for other revenue lines. Predominantly they can come from two sources; providing optional services and increasing their accommodation pricing.”
He said it was unfortunate that last month’s Federal Budget didn’t allow for the deregulation of the basic daily fee as many had hoped and been recommended by the Tune Review.
“Even without the deregulation [of the basic daily fee], all providers can provide additional or optional services and we think providers need to focus on that. They really need to focus on how they can improve their revenue,” Mr Corderoy said.
For the survey average, at March 2018:
- funding per bed per day was $172, slightly up from $171.85 at June 2017
- direct care costs plus allocation of workers compensation and quality and education costs increased by 3.8 per cent to $139.61 per bed per day, up from $134.46 in June 2017
- occupancy was 94.06 per cent, slightly down from 94.64 per cent at June 2017
- the average refundable accommodation deposit was $348,019, up from $320,254 last financial year
For facilities in the top quartile, at March 2018:
- funding per bed per day was $176.95, up from $173.48 at June 2017
- direct care costs increased by 7.3 per cent to $119.80 per bed per day, up from $111.70 in June 2017.
- occupancy was 96.3 per cent, consistent with 96.4 per cent at June 2017
- the average refundable accommodation deposit was $353,198, up from $352,619 last financial year
Access the report here.
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