Unspent funds set to hit $600M

The average amount of unspent funds per home care package client has hit almost $7,000 and total unspent funds are likely to reach $600 million by the end of the financial year, a key financial analysis shows.

The average amount of unspent funds per home care package client has hit almost $7,000 and total unspent funds are likely to reach $600 million by the end of the financial year, a key financial analysis says.

The situation is undermining sustainability and discouraging co-contribution models, the StewartBrown December Aged Care Financial Performance Survey says.

The survey, containing information from more than 27,000 home care packages across the nation, shows the amount of unspent funds held by providers increased by more than $1,400 to average $6,827 per client in the last six months.

“From a provider perspective, unspent fund affects profitability (and sustainability),” the report says.

“Due to the high level of unspent funds per client, there is a reluctance by providers to charge (and consumers to be charged) a client contribution (basic daily care fee) as it would effectively only add to the quantum of unspent funds.

“This distorts the overall funding model and discourages the notion of consumers “co-contributing” to their care needs,” it says.

“Unspent funds liability at the end of the financial year is likely to be over $600 million,” the report notes citing ACFA estimates.

Financial performance may be stabilising

The report says while the home care sector experienced a decline in financial performance in 2018 with a 30 per cent overall reduction in profitability, the decline seems to have stabilised with the latest figures showing a marginal increase of $0.09 per client per day.

Revenue per client per day increased almost ten per cent to $6.70 and earnings before tax also increased but only slightly, up from $3.24 a day to $3.33.

Direct service costs increased by $2.78 per client per day while staff hours dropped to less than seven hours a week per client – partly due to lower available package revenue as a direct result of unspent funds, the report says.

The analysis also showed an increase in the average age of level one home care clients from 73-years in 2017 to 81 in 2018.

The number of home care providers is continuing to grow, the report shows, with 400 more entering the market since June 2016. However while providers grew by 80 per cent the number of home care packages is failing to keep pace, with only a 43 per cent increase over the same period.

It says the sector requires significant investment with the national prioritisation queue continuing to grow.

“What the Survey highlights is that the financial performance of the aged care sector continues to experience significant challenges due to a continued decline in profitability in both the residential care and home care segments and this creates challenges for the long-term financial sustainability.

Home Care Packages Program (HCP) and Commonwealth Home Support Program (CHSP)  must be considered in relation to the future aged care funding models, the report sayws.

New laws for home care providers

The figures come as the federal government announced that new laws requiring home care providers to publish pricing information in a new standardised schedule by July 1 had been finalised.

The schedule will make it possible for consumers to compare prices across providers.

Home care providers can publish their pricing information within the schedule from April, with compliance required by 1 July 2019.

Provides who failed to comply with law requiring them to enter the information would face sanctions, Minster for Senior Australians and Aged Care Ken Wyatt said.

Read more

Unspent funds creating a ‘perverse incentive’

Consumers sitting on $329 million in unspent funds

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2 thoughts on “Unspent funds set to hit $600M

  1. Home care is unsustainable, always was and proving that the liberal government has lost the plot… and the money.
    Home care doesn’t offer security or service in any reliable firm and where you were told differently the evidence is correct.
    Unsafe and unsustainable idealogical nonsense that is tearing families apart and tearing the budget a new one!
    Well done Scott Morrison!

  2. Clearly this system is not working. Think on the number of people who could be receiving support/services with the unspent funds just sitting with all the providers. It is a disgrace when so many people need help to stay at home.

    I suggest that the government sets cap limits and if customers are not using their funds payments stop for that person until they have used their allocation of money.

    Something needs to change and the sooner the government takes action then more people can get the help they need.

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