Positive results, but sector still struggling

An improved operating result for residential aged care and a marginal uptick for the home care sector, says the latest industry financial data.

Analysing statistics from 1,203 facilities, StewartBrown’s Aged Care Financial Performance Survey Report for six months ended 31 December 2023 records an average operating loss during the period of $2.25 per bed per day – compared to a $15.98 deficit the previous year.

In all, during the period, just over half of aged care homes in Australia – 51.6 per cent – continued to operate at a loss.

Summarising the latest financial results, the report’s authors say: “The impact of additional funding through the [Australian National Aged Care Classification] direct care subsidy is continuing to have a positive impact on the results of residential aged care providers. However, as providers continue to work towards meeting their mandated care minutes, the direct care margin will continue to deteriorate to a level that will not be able to be sustained without increases to other revenue streams.”

Since 1 July 2023, aged care homes have been required to provide a registered nurse onsite 24/7. And since 1 October 2023, facilities must also provide residents with an average of 200 minutes of direct care a day – including 40 minutes from an RN.

According to StewartBrown’s latest report – for the standalone December ’23 quarter – survey participants recorded an average of 37.23 RN minutes per resident per day and a total of 202.74 minutes of direct care per resident per day. This is an increase from the September ’23 quarter average of 36.12 RN minutes and a direct care total of 196.36.

The report’s authors note, hiring RNs to hit the mandatory requirement “remains a significant challenge” for providers. “Despite a decrease in agency usage of enrolled nurses and personal care workers in the Dec-23 quarter, the usage of RNs continued to increase,” they say.

Residential aged care occupancy rates during the six months to December ’23 improved compared to the previous year, the report shows – an average of 92.8 per cent, up from 90.8 per cent. The highest result since December 2020.

But the good news is fleeting. As the authors acknowledge: “The sector continues to make significant losses through the delivery of everyday living and accommodation services.” They add: “As the AN-ACC margins continue to decrease, providers will have to find additional funding to supplement the losses in these services.”

Analysing everyday living costs, the report’s authors find they are greater than the revenue earned. The sector average result is currently a $5.40 per bed per day loss.

Accommodation is “the biggest loss-making area for an aged care home,” say the authors. The sector averaged a loss for the Dec-23 survey of $10.11 per bed per day.

On a positive note, the authors say that, if implemented, recommendations of the Aged Care Taskforce – which were released in a final report on 12 March – will bring additional income to everyday living and accommodation services, “and significantly improve the financial sustainability of residential aged care facility operations.”

The latest StewartBrown financial performance report is the first to be released since the Fair Work Commission announced its stage-three finding of the work value case on 15 March. In the stage three decision, the FWC awarded personal care workers an increase of 13 to 28.5 per cent inclusive of the 15 per cent interim increase they received last July, and non-direct care workers a pay rise of between 3 and 7 per cent.

What will no doubt be sobering news for providers, the report’s authors estimate the stage-three ruling will lead to a $13 per bed per day increase in staffing costs.

Home care

Crunching data from 73,829 home care packages, the report’s authors find that the home care sector’s operating results increased slightly for the reporting period to a surplus of $2.69 per client per day, compared to $2.54 the previous year.

Staffing remains the most crucial concern for home care

Tracking staff hours, the report’s authors find they decreased to an average of 5.37 per client per week, compared to 5.41 for Dec-22. “Consistent with residential aged care, staffing remains the most crucial concern for home care,” say the authors.

Revenue utilisation for the period decreased to 82.7 per cent of available package funding and unspent funds increased to an average of $13,963 for every home care recipient.

The report finds that consumer contributions to home care remains low, representing less than 2.6 per cent of the funding envelope.

Overall, say the authors, “home care continues to operate with uncertainty” as the sector waits for the reform of the Support at Home program, scheduled for implementation from 1 July 2025.

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