If the federal government continues to delay on funding reform, then up to 75 per cent of aged care homes are predicted to operate at a loss, says a new report.
Released last week by benchmarking firm StewartBrown, the document – Aged Care at the Crossroads – said such an outcome will lead to further home closures and “have a lasting effect for regional, rural and remote areas in particular.”
As the report’s authors note, the Aged Care Taskforce – established in part to nut out a new funding policy for the industry – issued its final report to government in late December 2023.
While the report’s 23 recommendations – which includes the proposal that those with means contribute more for non-direct care services – have undergone considerable scrutiny and received widespread stakeholder support, parliament has failed to act.
“The sector cannot continue to operate in a climate of legislative and funding uncertainty,” say the report’s authors. “It is now time for the government and opposition to provide a clear and unambiguous response.”
Other findings of the report include:
- three in four of the nation’s 2,600 nursing homes face years of sustained financial losses if the government continues to delay on reform
- projections indicate inner regional and outer regional homes will continue to incur operating losses that are not sustainable.
- half the nation’s nursing homes are already losing money, with aggregate losses over the past five years hitting $5 billion
- unless the funding and margin increase substantially, these homes are at risk of closure with the forecast indicating losses each year up to FY29 – and beyond.
“The impact of these aggregate losses has reduced equity (net asset position) in the sector, inhibited investment in new infrastructure and technology and has the potential to directly affect availability of beds and standard of care,” say the report’s authors.
“Of critical importance is that the lack of financial sustainability has significantly restricted new builds and innovation, and the sector is at a crisis juncture where there is a significant risk that sufficient aged care beds will not be available to meet the future demand.”
Before formally responding to the recommendations of the taskforce, the Department of Health and Aged Care has said it will continue to consult across the aged care sector “to ensure there is broad support for reforms to improve the standard of care.”
StewartBrown analysts argue further consultation isn’t required “and will be detrimental to the financial sustainability” of the sector. They add: “Time is of the essence.”
Chris Mamarelis – chief executive officer of regional aged care provider Whiddon – agrees. “We’re calling on the government to be brave and take a step forward. It’s hard for us as providers to understand why there has been such a delay,” he said.
Mr Mamarelis – who has long advocated for the need for sustainable levels of investment in the regions – added, if it’s an issue of gaining bipartisan agreement, there is still opportunity to implement some funding reform without opposition support. “We need a better response,” he said. “In fact, we simply need a response.”
Ahead of the release of the StewartBrown report, peak body the Aged & Community Care Providers Association also criticised the government for stalling.
“We don’t need more consultations. We’ve done that. We need urgent action to land these reforms before the next election,” said ACCPA CEO and taskforce member Tom Symondson. “Aged care will affect every Australian now or in the future. The Australian people need confidence that the system can sustainably deliver quality care for their loved ones whenever and wherever they need it.”
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