Home care providers face dangerous headwinds

Profits have increased for home care providers, but economists say this is based on a false economy and warn of an expected decline in coming months.

Grant Corderoy

Profits increased for home care providers in the nine months to March, but economists warn this is based on a false economy and say the financial situation is expected to decline over the next three months.

Unspent funds have also hit $850 million across the country, the latest StewartBrown economic survey found.

The March 2020 Survey Sector Report takes in data from 47,000 home care packages around the country.

The headwinds are becoming a major concern in relation to in-home care where the profit levels have deteriorated …. and revenue has decreased.


It found average operating profit for home care operators increased by $1.03 to $4.51 per client in the third quarter, but average revenue has dropped by almost six per cent.

The report says lower staff costs resulting from lost client revenue, an increase in unspent funds and lower utilisation of revenue have contributed to the profit.

The reports predicts the uptick will be short lived.

“The headwinds are becoming a major concern in relation to in-home care where the profit levels have deteriorated …. and revenue has decreased, with the offset being a further reduction in direct care staff hours, which may be unsustainable going forward,” it says.

 “Our expectation is for profit to decline over the next three months due to continuing lower revenue per client per day,” the report says.

Grant Corderoy, a senior partner at StewartBrown, says the latest results came off the back of a strong September quarter.

“We had actually seen that they had an operating loss for the last six months, so home care , even though it’s profitable, is moving to a more dangerous area where its profitability is really not at a level to be sustainable.

“So I guess we could say in conclusion, the sector is at an important juncture of its financial sustainability,” he told Community Care Review.

Unspent funds continue their climb

Unspent funds per client continue to grow year on year, the survey found with average unspent funds rising by $1,463 to average $8,250 per client.

The report notes proposed funding and payment reforms are planned to reduce the impact of unspent funds, however these currently on hold because of COVID.

Staff hours per client reduced by almost one hour a week to an average of less than six hours per week, with a drop in both direct service provision and case management coordination both down.

The cost of case management and coordination has also increased.

StewartBrown said the COVID-19 has had an impact on results, particularly for March, and is likely to heavily influence the results for June and subsequent quarters until the virus stabilises and the economy begins to recover.

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