Regulatory changes and funding pressures have led to the “disturbing statistic” that more than 42 per cent of residential facilities are operating at loss, StewartBrown says in its half-yearly report on the financial performance of the aged care sector.
Services in outer regional, rural and remote locations have the most significant financial concerns, but all geographic locations reported a decline, the report found.
The StewartBrown December 2018 Aged Care Financial Performance Survey includes financial and supporting data from 175 approved provider organisations, 965 residential care facilities and 27,164 home care packages across Australia.
StewartBrown said the results highlighted that the financial performance of both the residential and home aged care sectors were experiencing ongoing and significant challenges because of a continued decline in profit.
“This creates challenges for the long-term financial sustainability of the sector,” StewartBrown said. said.
While the Government’s recent $320 million one-off funding boost to residential care providers acknowledges the problem to some degree, “it will not repair the underlying issues relating to the viability of residential care facilities in the future periods unless the funding model – government and consumer – is enhanced,” it said.
Residential survey findings
The survey found that 42.3 per cent of residential facilities made an operating loss (negative EBT) for the six months to December 2018.
It’s an improvement on the 45.1 per cent reported for the year ending June 2018, but worse than the December 17 finding of 41.3 per cent.
The latest survey also found that 19.5 per cent of residential facilities made a cash loss (negative EBITDA), which is slightly better than the same time last year (19.8 per cent) and an improvement on the previous financial year (21.2 per cent)
Once again facilities in outer regional, rural and remote facilities fared worse with 61 per cent operating at loss (negative EBT) and 37 making a cash loss (negative EBITDA).
“The financial viability of outer regional, rural and remote aged care providers is reaching a pivotal point,” StewartBrown said in the report.
“There are few opportunities for existing providers to merge or sell their facilities to larger providers, meaning that remedial funding would be essential in our opinion. This need has been recognised with a substantial increase of 30 per cent to the viability supplement for qualifying facilities.”
Other findings include:
- an operating profit (EBT) of $3.20 bed per day for the survey average, down from $4.70 the year before
- an operating profit (EBT) of $32.40 per bed per day for the first 25 per cent, down from $34.73 the year before
- a cash profit (EBITDAR) of $7,391 per bed per annum for the survey average, down from $7,466 the year before
- a cash profit (EBITDAR) of $17,279 per bed per annum for the first 25 per cent, down from $17,860 the year before
- average ACFI increased by 3.1 per cent to $177.68 per bed per day (pbd), up from $172.36 pbd at December 17
- average occupancy levels remained neutral at 94.9 per cent, on % average occupancy)
- total care hours per resident per day were 3.16 hours, up from 3.06 hours at December 17
- direct care costs increased by 4.5 per cent to $144.69 pbd from December 17 to December 18
- costs for providing everyday living services exceeded contribution revenue by $7.38 pbd
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