First positive result in years, report shows

The profit increase is attributed to additional funding through AN-ACC.

Profits are up for residential aged care providers, according to the latest government report.

Published by the Department of Health and Aged Care, the Quarterly Financial Snapshot for July to September 2023 shows a net profit before tax of $10.36 – up $38.25 compared to the same period a year before.

Almost three quarters of providers (64.4 per cent) made a net profit before tax during the period – an increase of 30.4 percentage points on the first quarter of 2022-23.

Source: Department of Health and Aged Care

As the report’s authors note: “The increase in net profit before tax position in quarter 1 is primarily attributed to an increase in revenue driven by additional funding through the [Australian National Aged Care Classification].”

Providers received increases in AN-ACC funding to cover the 15 per cent workers’ pay rise and the staffing needed to meet the 200 care minute target. Providers received funding for the care minutes before they became mandatory immediately following this snapshot’s reporting period.

Source: Department of Health and Aged Care

Analysing care minute data, the department found the figure had increased by two minutes during July-September 2023 compared to April-June 23, totalling 196 minutes per resident a day – including 38 minutes for registered nurses.

“The department expects care minutes to continue to increase in the lead up to care minute targets becoming mandatory on 1 October 2023,” say the report’s authors. It is also expected that expenses will increase slightly in future quarters as providers progress toward meeting the 200 care minute target.

The report shows expenses for the July-September period rose by $44.12 compared to the year before to reach $389.04 per resident per day.

Source: Department of Health and Aged Care

When assessing staff costs and hours, the report shows agency RN costs rose 13.8 per cent during the period, up 3.6 per cent from Q1 2022-23. However, total agency costs are down 0.6 percentage points from a year before. This appears to have been driven by reduced agency spending on personal care workers.

The proportion of services that deliver allied health care increased from 94.05 per cent in Q1 2022-23 to 98.74 per cent in Q1 2023-24.

Source: Department of Health and Aged Care

The median cost and time for allied health services per resident per day for the period was $5.30 and 4.21 minutes – physiotherapists accounted for the highest allied health cost.

Food and nutrition costs for the period rose by $1.13 on Q1 2022-23 to $13.56 per resident per day. However, when compared to the previous quarter, the report shows a slight decrease in food spend.

Tim Hicks

Responding to the report’s findings on LinkedIn, Tim Hicks – executive general manager, policy and advocacy, at Bolton Clarke – said: “The first positive quarterly result for the sector in some years … Though we are still talking about an overall margin of 2.59 per cent. And some of this will come off over the year as staffing continues to rise to meet care minute targets.”

Noting the continuing rise in RN agency costs, Mr Hicks said: “This supports broader evidence showing that getting access to RNs is the key workforce issue in residential care.”

Home care

Home care net profits before tax rose slightly during the period compared to the year before by $0.71 to $5.68 per recipient per day. However, the percentage of home care providers making a net profit fell by 2.2 per cent to 76.2 per cent of operators.

Providers also saw revenue increase to $73.15 per care recipient per day – up $4.10 on the year before. “Revenue increases are primarily the result of increased Home Care Package claims,” say the report’s authors.

Expenses also increased during the period to $67.47 per care recipient per day – up $3.39 from September 2022.

Source: Department of Health and Aged Care

Of those expenses, the median total staff costs increased to $48 per care recipient per day – up $3.00 from Q1 2022-23. “The increase in staff costs is mainly attributed to the increase in wages for care workers,” say the report’s authors.

The July-September 2023 financial report is the third quarter for which data was available following changes to reduce administration and management charges in the HCP program – from 1 January 2023, care management charges were capped at 20 per cent while package management was capped at 15 per cent of the package level.

Source: Department of Health and Aged Care

During Q1 2023-24, all package levels were under the 20 per cent cap; all package management charges were under the 15 per cent cap.

From 1 July 2025, the new Support at Home program will replace the HCP program and the Short-Term Restorative Care program. Meanwhile, the Commonwealth Home Support Program will join the Support at Home program no earlier than July 2027.

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Tags: Department of Health and Aged Care, Quarterly Financial Snapshot, Tim Hicks,

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