Financial woes continue for aged care providers

The financial performance of aged care providers remained in the doldrums last year with more than 60 per cent operating at a loss.

The financial performance of aged care providers remained in the doldrums last year with more than 60 per cent operating at a loss.

That’s according to the second edition of Australia’s Aged Care Sector Report, released last week. The report – compiled by researchers from the UTS Ageing Research Collaborative and based on data collected by chartered accountancy firm StewartBrown – covers the full-year results for 2021-22.

“These persistently low returns are unsustainable,” said Professor Mike Woods, chair of the report’s editorial board. “They pose a real threat that older Australians won’t be able to receive the quality and quantity of subsidised care they need.”

Source: UARC Australia’s Aged Care Sector Report

As the 136-page report makes clear, the situation in the residential sector is particularly challenging, with 67 per cent of aged care homes making a loss. On average, each home lost $16.13 per day for each resident under their care.

UARC Australia’s Aged Care Sector Report

Meanwhile, nationwide occupancy declined to 91.1 per cent, contributing to poor financial returns. The worst financial performance continues to be reported by smaller-sized homes and those located outside metropolitan areas.

Provision of accommodation is responsible for the largest losses, say the researchers. Lesser losses occur through basic daily services such as food and cleaning.

“More detailed analysis of residential care reveals that successive years of accumulated operating losses have intensified viability concerns,” say the report’s authors.

Indeed, over the last three financial years, homes have lost an estimated $2.75 billion, “despite substantial inflows of additional taxpayer funding.”

The report cites varied reasons for the bleak outcomes, including declining occupancy, financial impacts of Covid-19 and the fact that the low indexation of subsidies have failed to keep pace with the rising costs of care.

Studying the newly commenced AN-ACC funding model, the UARC researchers have doubts that the initial price settings will be sufficient to meet inflation and cover an increase in wage costs, both of which have accelerated during the year.

Source: UARC Australia’s Aged Care Sector Report

In home care, the operating result declined to an average of $3.42 per client per day, representing an average margin of just 4.1 per cent.

In the report, the UARC researchers point to the major redesign of the Support at Home Program as an “important opportunity” to improve the home care sector.

“Looking forward,” say the report’s authors, “unification of four major in-home care programs provides an important opportunity to redesign services to meet older Australians’ needs while also reflecting the interests of providers and Australian taxpayers.”

As the authors note, aged care providers must also come to grips with a vast array of other reform initiatives, such as home care fee caps, more stringent reporting requirements, the star ratings system, and the Fair Work Commission wage case outcome. “All of these matters will have both short-term and long-ranging impacts across the sector.”

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Tags: aged care sector report, featured, Professor Mike Woods, UTS Ageing research collaborative,

1 thought on “Financial woes continue for aged care providers

  1. Apparently not for one provider who is building a multimillion dollar residential complex at Noosa

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