Further evidence of inadequate aged care funding has emerged with the release of key findings from a national industry survey.
Accounting group Bentleys says the initial findings from its 2009 National Aged Care Financial Survey show that average profits have dropped below five per cent and the return on assets has fallen below two per cent.
The annual survey was based on the financial performance of over 340 facilities throughout 2008/2009.
The net profit margin for participating facilities was just 4.46 per cent and Mr Shonhan said this is a “key concern”.
“In reality this means those organisations that look after our seniors are now far less viable than others within health-related industries,” he said.
“For example, vets achieve much better margins, so those who look after our pets are more financially viable than those who care for our elderly.”
He added that the poor return on assets in aged care would stymie investment, making it difficult for providers to meet future demand.
On a positive note, liquidity in the sector is improving with 27.5 per cent of assets now held as current, up from 20.5 per cent in 2006.
“This means that providers are in a better position to pay debts as and when they fall due compared to three years ago,” Mr Shonhan said.
“This could reflect the impact of initiatives developed over the past couple of years to improve efficiencies in the sector, such as the Australian Government’s introduction of Liquidity Management Strategy regulations in 2006.”
The Bentleys survey also reveals a marked increase in providers’ reliance on accommodation bonds, which now account for 27.12 per cent of the sector’s total financing.
It is expected that the full results from the 2009 Bentleys survey, including balance sheet healthchecks, will be available next month.