AN-ACC benefits begin to show, says report

New funding model is having a temporary impact on the operating performance for residential aged care.

The implementation of the new funding model is having a temporary impact on the operating performance for residential aged care, according to the latest industry report.

The Australian National Aged Care Classification – which replaced the Aged Care Funding Instrument in October last year – resulted in a transition benefit of $13.72 per bed per day for the December 2022 quarter and $8.65 per bed per day for the March 2023 quarter.

This compares to the September 2022 quarter – the final period of ACFI – of just 11 cents.

This short-term benefit – say the authors of StewartBrown’s Aged Care Financial Performance Survey Report for the nine months ending 31 March 2023 – is “due to the taxpayer subsidy including full funding for the legislated mandated care minutes per resident per day, though the requirement to meet these minutes is not obligatory until 1 October.”

Source: StewartBrown Aged Care Financial Performance Survey Report – March 2023

However – in line with the government’s most recent Quarterly Financial Snapshot – overall, the residential aged care sector continues to perform in the doldrums.

Analysing data from 1,143 aged homes, the StewartBrown report shows an average operating loss of $15.74 per bed per day – up from $12.85 the previous year.

This represents a loss of $5,221 per bed per annum, and a continuation of losses over five successive years.

Stuart Hutcheon

“The residential aged care sector has continued to have significant financial sustainability issues with deficits still being at an unsustainable level,” StewartBrown managing partner Stuart Hutcheon told Australian Ageing Agenda.

“The government has recognised the need to consider future funding requirements to improve the viability, ensure quality-of-care improvements are achieved and provide a range of consumer choice. This cannot be achieved with the current funding model.”

StewartBrown has been advocating for a series of financial reforms to be considered for a number of years. “Increased consumer contribution for those who have the financial means requires strong consideration,” , said Mr Hutcheon.

As the report shows, the ongoing workforce crisis is still burdening the sector, with many providers remaining reliant on agency workers at a cost of $17.04 per bed per day compared to $7.18 March 2022 – a $9.86 increase.

Source: StewartBrown Aged Care Financial Performance Survey Report – March 2023

Occupancy levels are much the same as the previous year: 90.9 per cent compared to 91.4 per cent.

In all, during the period, 64 per cent of all aged care homes operated at a loss – which mirrors the previous year. The authors are keen to note the above figure relates to aged care homes – not providers as reported in the government snapshot.

“A provider may be reporting an overall surplus,” say the authors, “however, a number of homes run by that provider may be operating at a loss and these homes may be at financial risk of closure.”

Home care: ‘a climate of operating issues’

Home care providers, meanwhile, are also “performing in a climate of operating issues.” Most notably, having to still deliver services within a convoluted regulatory environment.

The second postponement of the Support at Home program – pushed back until 1 July 2025 – “creates a policy void which has led to a stagnation of innovation for many providers,” say the authors.

Another crucial concern: the workforce shortfall. “Staffing remans a critical issue for aged care,” said Mr Hutcheon.

As for the financials, data from 69,753 home care packages shows the current operating result decreasing to a surplus of $3.39 per client per day, compared to $4.29 the previous year.

Source: StewartBrown Aged Care Financial Performance Survey Report – March 2023

Revenue utilisation has decreased to 84.9 per cent of available package funding and unspent funds have increased to an average of $11,778 for every care recipient – unspent funds are now in excess of an aggregate $2.6 billion.

“Home care financial performance and related issues should not be ignored,” Mr Hutcheon told AAA. “The utilisation of funding remains less than 85 per cent with the unspent funds per consumer increasing accordingly. This has led to reduced profitability and pressure on providing the range of care services required.”

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Tags: Aged Care Financial Performance Survey, AN_ACC, featured, nine months ending 31 March 2023, stewartbrown,

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