Expenses also rising more than revenue for listed providers

The operating expenses of the three-listed aged care providers are increasing at a faster rate than revenue, new analysis shows.

The revenue of the three-listed aged care providers has increased but less than the rise in operating expenses, StewartBrown’s latest report shows.

StewartBrown’s Listed Aged Care Providers Financial Performance Analysis released this week analyses the financial results of the aged care providers listed on the Australian Securities Exchange, Regis Healthcare, Estia Health and Japara Healthcare, for the six months ending 31 December 2020.

Japara had the highest expenses as a percentage of revenue (96 per cent) followed by Estia Health (94 per cent) than Regis (85 per cent), according to the report.

In the reporting period, Regis recorded an operating revenue of $353.1 million, up from $332.2 million for same period in 2019, and total operating expenses of $312.3 million, up from $288.5 million the previous year.

For the same period, Estia’s revenue increased to $300.9 million from $294.1 million and total expenses rose to $281.7 million from $251 million and Japara’s revenue went up to $215.8 million from $207 million and expenses to $207.8 million from $188.2 million, the report shows.

Staffing accounted for the lion’s share of providers’ expenses with Japara recording the highest proportion compared to revenue (77 per cent) followed by Estia (75 per cent) and Regis (72 per cent).

Estia reported the highest COVID expenses among the three providers ($20.1 million) followed by Japara ($13.7 million) and Regis ($9.7 million), according to the report.

During the Victoria’s second wave of COVID-19, four of Estia’s homes had outbreaks and 311 positive cases of COVID-19 among staff and residents.

Japara had outbreaks at five homes and 285 positive cases while four of Regis’ homes had 78 cases, but only one home had a “significant” outbreak with 67 cases, the report shows

Darren Lynch

Consultant Darren Lynch, who assisted in the preparation of the report, said funding increases do not match rising expenses.

“In terms of the last period, we’re still seeing a negative impact where without the COVID funding, the increase of funding hasn’t been at the same rate as expenses,” Mr Lynch told Australian Ageing Agenda.

The increase in operating revenue was mainly driven by indexation, and Regis had an increase in operating bed days as it had acquired the Queensland aged care home the Lower Burdekin Home for the Aged in March 2020, the report said.

All three providers recorded declines in occupancy from June 2020 to October 2020 and while occupancy has partially recovered towards the pre-COVID levels, Victorian occupancy continues to suffer.

For the first six months of 2020-21, Regis recorded the lowest occupancy (88.3 per cent and down from 90.4 per cent in the same period 12 months before) followed by Japara (89.2 per cent compared to 92.6 per cent) than Estia (90.6 per cent compared to 93.7 per cent).

Mr Lynch, principal consultant at Boxwell and Co, said COVID-19 and the Royal Commission into Aged Care Quality and Safety had an impact on occupancy levels and staffing.

“It’s difficult for anyone let alone the three listed operators to make any adjustments to staffing levels to reflect the occupancy that they currently have,” he said.

Mr Lynch said the findings of the report were expected, however the real “test” will be over the next six months.

“The current six month results will be impacted by small lockdowns in some of the states and these things have an impact on occupancy. It will be a better indicator of where the occupancy sits,” Mr Lynch said.

The results highlight the sector’s need for urgent funding, he said.

“Clearly there needs to be some stability in funding and there needs to be an increase in funding. And any increase in funding has to be more than what the additional costs will be of any recommendations in the royal commission,” he said.

Comment on the story below. Follow Australian Ageing Agenda on FacebookTwitter and LinkedIn, sign up to our twice-weekly newsletter and subscribe to AAA magazine for the complete aged care picture.  

Tags: COVID19, darren lynch, estia health, financial performance, Japara Healthcare, Listed Aged Care Providers Financial Performance Analysis, occupancy, outbreak, regis healthcare, stewartbrown,

Leave a Reply

Your email address will not be published. Required fields are marked *