The government’s COVID-19 subsidy has been a “financial saviour” for many aged care providers but four in 10 homes are still operating at a loss, says an industry expert.
For the three months ending September 2020, 44 per cent of homes recorded an operating loss, down from 52 per cent in the same quarter in 2019 and 58 per cent for the 2019-20 financial year, according to StewartBrown’s September 2020 Aged Care Financial Performance Survey of 1,140 aged care homes.
The survey released last week shows aged care homes on average made a profit of $2.60 per bed per day before tax in the September quarter, up from a $1.69 loss 12 months earlier.
Without the COVID-19 subsidy, 52 per cent of homes would have recorded a loss and an average loss of $5.06 per bed per day compared to 51 per cent and a $1.69 loss respectively for the same period in 2019.
The report shows 23 per cent of aged care homes recorded a cash loss for the quarter, down from 27 per cent in September 2019. Without the COVID-19 subsidy, 28 per cent of homes would have recorded a cash loss.
StewartBrown senior partner Grant Corderoy said the COVID-19 subsidy has helped many aged care homes.
“The COVID funding has been a financial saviour for many homes, unless the home has actually had an outbreak of COVID,” Mr Corderoy told Australian Ageing Agenda.
“Many homes had a surplus from the COVID funding they received and their expenses for COVID dramatically reduced in this quarter. If it weren’t for the COVID funding, the sector would be, again, operating at a reasonably substantial loss,” Mr Corderoy said.
However, mature aged care homes in outer regional, rural and remote locations are “still struggling,” he said.
Mature aged care homes are fully operational in their current state and not undergoing refurbishments and not a new build.
Without the COVID-19 subsidies including the higher viability supplement, 55 per cent of outer regional, remote and very remote homes are operating at a loss, down from 65 per cent 12 months earlier.
Likewise, more than half of aged care homes in inner regional locations are operating at a loss excluding the COVID subsidy (54 per cent) compared to 50 per cent of homes in major cities.
Mr Corderoy said outer regional, rural and remote homes have different characteristics to their counterparts in major cities.
“My mantra has been residential aged care is not one size fits all,” he said.
“[Outer regional, rural and remote homes] really need to have additional funding above what the funding is for major cities on top of the viability allowance. They’re still struggling,” Mr Corderoy said.
South Australia reported the highest average occupancy nationally (96.2 per cent) followed by Western Australia (95.2 per cent), the ACT (94.5 per cent), Tasmania (94.1 per cent) and Queensland (92.2 per cent).
Victoria and New South Wales recorded the lowest occupancy for the quarter (91.8 per cent and 91.7 per cent respectively) due to the ongoing impacts of COVID-19 there, Mr Corderoy said.
“What we are seeing though is that except for New South Wales and Victoria, occupancy levels have kept coming back to pre-COVID levels . We would expect the same thing to happen in Victoria and New South Wales but it just takes longer because they’ve still got lockdowns,” he said.
Mr Corderoy said the aged care sector still urgently needed additional funding.
“If we don’t have any additional funding, then we’re going to have probably in excess of three quarters of homes in the sector running at an operating loss and therefore, the viability is dependent on that increased funding,” he said.
Other residential results
- $31.07 – average per bed per day profit for homes in the top quartile, down from $33.41 in September 2019
- $7,620 – average per bed per year cash profit for survey average, up from $5,829 in 2019
- $17,618 – per bed per year cash profit for homes in the top quartile, down from $17,816 in 2019.
Access the report here.