A survey by aged care accountants has revealed that more than half of the aged care facilities studied are operating at a loss.

In the three months to September 2019, 51 per cent of aged care facilities recorded an operating loss before tax, according to the latest quarterly survey by accountants StewartBrown.

For the same period in 2018, only 41 per cent of homes were operating at a loss.

The results are even worse for facilities in outer regional and remote areas, where 65 per cent operated at a loss, compared with 47 per cent in cities.

The survey looked at 984 residential aged care facilities, which represents 41 per cent of total facilities in Australia.

Losses arising from provision of care

Aged care operators are experiencing greater losses in the provision of care.

“The single biggest issue in relation to residential care is the unsustainable financial losses attributed to the provision of care,” the StewartBrown report states.

The cost of delivering care (government subsidies + consumer contributions – the cost of providing care) is now accruing an average loss of $13.96 per resident per day. The loss is even greater in rural and remote locations, at an average deficit of $28.31 per resident per day.

(Care costs include care staff costs, medical supplies, catering, cleaning, laundry, routine maintenance, administration, quality, training, compliance, human resources, local administration and corporate administration.)

As a result of the deficit, operators are having to use a surplus from their accommodation operations to “support” the care loss. 

“This will greatly inhibit building upgrades and erode investment into new aged care homes,” the report states.

Urgent fix needed to avoid closures

Aged and Community Services (ACSA) released a statement in response to the StewartBrown report calling for “urgent” support for aged care operators facing a “bleak” financial situation.

ACSA CEO, Pat Sparrow, said, “More than half of aged care homes are struggling to remain viable – that’s something we need to fix urgently if we want to avoid closures and maintain proper aged care services.”

Staff costs lower for in-home care

The financial performance of in-home care improved during the September 2019 quarter, due mainly to lower staff costs. 

“Whether this is sustainable is open to conjecture,” the report states.

Home care ‘unspent funds’ the “biggest issue”

Unspent home care funds continued to rise, reaching $7,295 per client or almost $800 million in total.

“The biggest single issue in relation to home care packages in our opinion remain… unspent funds,” the StewartBrown report states. 

“We view with concern the prospect of continued growth in unspent funds, and many probable instances of their use for capital-related expenditure for care recipients,” the StewartBrown report states.

Government plans to implement a ‘payment in arrears’ model to address the unspent funds problem is “essential”, the StewartBrown report states.

Unspent funds should be used to deliver home care packages

The “worrying” StewartBrown analysis comes on the heels of recent home care data showing that 112,237 people are still on the waiting list for their approved level of home care.

Ms Sparrow said, “The measure currently being considered by government to manage unspent funds could help meet demand and reduce unacceptable waiting times by providing additional high-level packages to older Australians.” 

Occupancy levels down

Occupancy levels dropped significantly for the first time, from 94.9 per cent in the September quarter 2018 to 93.9 per cent for the December quarter 2019.

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