Australia’s home care providers are holding close to $7,000 in unspent funds for each client, a key aged care financial report reveals.
The latest StewartBrown Aged Care Financial Performance Survey, analysing data from 26,386 home care packages for the nine months ending in March, shows the amount of unspent funds is continuing to balloon over each quarter with almost $600 million now sitting in providers’ bank accounts around the country.
According to an ACFA report released a year ago, providers were holding just over half that amount, or $329 million in unspent funds and $4,600 per client, at July 2018.
Biggest issue for home care
StewartBrown identifies unspent funds as “the single biggest issue in relation to Home Care Packages” and says it “views with concern” the prospect of the pile of unspent cash continuing to accumulate.
Unspent funds affect both the profitability and sustainability of providers and also discourage consumer co-contribution, the report says.
“Due to the high level of unspent funds per client, there is a reluctance by some providers to levy (and consumers to be charged) a client contribution (basic daily care fee), as it would effectively only add to the quantum of unspent funds,” it says.
“In some cases there have been instances where the means-tested fee also has not been levied for the same reason.”
The report says it is also concerning that unspent funds may be being used for the short-term benefit of capital-related expenditure by care recipients, when the money would be better used to fund more packages and cut national waiting lists.
The report says results show the existing funding models for aged care are in need of “considerable adjustment”.
It says given that overall home care funding is not being fully utilised, it would be preferable to broaden funding and make it available to more people rather than increasing aggregate subsidies.
Deteriorating financial performance
The report also finds an ongoing deterioration in the financial performance of home care providers, with the nine months to March 2019 showing a $0.91 decrease in the result from March 2018 to $3.48 per client per day.
“The financial performance of the aged care sector continues to experience significant challenges due to the systemic decline in profitability in both the residential care and home care segments,” the report says.
“The underlying year-on-year results for both residential care and home care indicate a declining financial performance, as does the comparison with the FY18 annual results.”
The analysis also finds a decline in the average direct hours of home care per client per week, partly due to lower available package revenue resulting from increasing unspent funds, as well a fall in admin and support staff hours.
However the report adds “we are not aware of any provider that has irresponsibly placed profit before residential/client care”.
Call for action from federal government
LASA Chief Executive Officer Sean Rooney said with the financial viability of so many providers at risk it was time for Prime Minister Scott Morrison to put his money where his mouth was.
“This report highlights the need for urgent funding relief to address the increasing demand for services and acuity of residents, while the work on longer term sustainable funding arrangements is being undertaken,” Mr Rooney said.
“The Prime Minister said just the other day that aged care would be one of his government’s priority areas of focus – now he needs to demonstrate that by taking urgent and meaningful action to ensure providers of aged care adequately funded to meet the needs of frail and vulnerable older Australians.
“Aged care is an issue of national importance and older Australians deserve a sustainable and world class aged care system, and that means world class funding.”
Financial performance of the home care sector at a glance:
- Revenue per client per day rose by $3.5 per cent, or $2.54 a day
- The surplus per client per day fell by 90 cents a day to $3.48
- Direct service costs rose by $3.20 per day
- Unspent funds improved marginally to 88.52 per cent
- Staff hours per client per week fell by almost half an hour to 6.6 hours a week
- 47 per cent of home care clients moved to residential care
- Average amount of unspent funds per client: $6,788