Residential aged care occupancy has fallen for the second year in a row to just below 90 per cent on average, the latest report from the Aged Care Financing Authority shows.
ACFA’s Eighth report on the Funding and Financing of the Aged Care Sector found an occupancy rate of 89 per cent across all residential aged care places in 2018-19, down from 90 per cent the year before.
This decline over the last two years follows a period of relative stability with occupancy close to or above 92 per cent between 2011-12 and 2017-18.
Not-for-profit facilities had the highest occupancy rate in 2018-19 (92 per cent) followed by government-run homes (90 per cent) then for-profit facilities (87 per cent), according to the July 2020 report, which was first released in early June.
The occupancy rate is likely to be further impacted by the COVID-19 pandemic, ACFA said in the report.
“A major immediate risk facing residential care providers is the spread of COVID-19 in a facility, which has the potential to cause a sizeable decline in occupancy through both departures and delays in new admissions,” the report said.
Financial performance stabilising
The financial performance of residential care providers broadly stabilised in 2018-19 after a “very significant” decline in 2017-18 compared to 2016-17, ACFA said.
In 2018-19, providers reported an average profit or EBITDA (average earnings before interest, tax and depreciation) of $8,523 per resident, down from $8,746 in 2017-18 and $11,481 the year before.
These two years of poor financial performance are largely due to changes to the funding instrument in 2016. It follows a period of improving financial performance from 2012-13 until 2017-18, the report highlighted.
More than half of residential aged care providers reported a net profit in 2018-19 (58 per cent), slightly up from 56 per cent the previous year, but down from 68 per cent in 2016-17 and 69 per cent in 2015-16.
The overall profit of the sector was $264 million in 2018-19, down from $435 million the previous year.
More to do to understand occupancy, says peak
Sean Rooney, CEO of provider peak body Leading Age Services Australia, said the fall in occupancy has a direct impact on the ongoing viability of residential aged care providers.
“We need to further examine and understand what is really behind occupancy reductions and assess the potential changes in community desire and demand, with respect to the services required and where and how these services are provided,” Mr Rooney told Australian Ageing Agenda.
“It is important that they navigate occupancy changes with mitigation plans and also consideration of alternative models of care and accommodation,” Mr Rooney said.
It may require additional investment, which is difficult given the financial performance of the aged care sector, he said.
“It is distressing that the number of residential care services operating at a loss has doubled in the past four years,” Mr Rooney said.
“While residential care homes continue to do an outstanding job in protecting residents from COVID-19 the financial situation of aged care providers is likely to further deteriorate.”
Snapshot of other findings
- $19.9 billion, up from $18.1 billion in 2017-18
- $13 billion for residential aged care, up from $12.2 billion in 2017-18
- $2.5 billion for home care, up from $2 billion in 2017-18
- $2.5 billion for home support, up from $2.4 billion in 2017-18.
Residential aged care services
- 873 residential aged care providers, down from 886 in 2017-18
- $19 billion in total expenses, up from $17.6 billion in 2017-18
- 242,612 residents received services, up from 241,723 residents in 2017-18.
- total assets of $52.6 billion, up from $48.4 billion in 2017-18
- total liabilities of $39.0 billion, up from $36.6 billion in 2017-18.
Access the report here.