Losses continue and high care results worsen
The December 2008 benchmarking report from Stewart Brown shows net profits are still the exception in residential aged care.
The group’s surveys showed slight increases in returns for high care facilities in June and September but the latest report shows returns have declined again.
The average operating results for high care facilities were down $1.13 per bed day on September figures.
“We were hoping that the high care figures might continue to improve but they have dropped back to a little bit worse than where they were in June [2008],” said SBBS’s survey manager David Sinclair.
“Low care has not really deteriorated any further but it is still averaging a loss.”
Almost two thirds of the 96 participating high care facilities failed to record an overall profit and fewer than half of the 176 low care facilities were in the black.
The poor returns come despite improved average earnings in both high and low care.
Among the high care facilities this was due to a sharp rise in operating costs, particularly in the areas of catering and administration.
The last three SBBS survey reports suggest that the new Aged Care Funding Instrument (ACFI) is partly responsible for the increased administrative burden on residential providers.
“From a clinical point of view the ACFI might be a lot easier, which is what the [Department of Health and Ageing] was hoping for,” said Mr Sinclair.
“But from an administrative point of view it has made things more difficult. Instead of having 8 types of resident, facilities now have 64 pricing points which they have to reconcile.”
Rising care costs have played a greater role in offsetting the income gains in low care.
In a worrying trend, the majority of low and high care facilities involved in the survey were drawing on capital income to cover day-to-day running costs.
“This is going to eat away at those funds that might ordinarily have been put aside for refurbishing current stock and rebuilding,” said Mr Sinclair.
“And the interest earnings on capital money that has been put away into cash reserves are going to be down because of the decrease in interest rates. Providers will feel the pinch from that too.”
