Home care providers are sitting on more than $1.2 billion in unspent funds, a key aged care report says.
The latest StewartBrown financial performance report says the level of unspent funds has been rising with each quarter and now averages more than $9,000 per client.
“In aggregate, this represents in excess of $1.25 billion of funding that is not being utilised,” the report says.
It says unspent funds remain the biggest single issue for home care providers from both a service delivery and financial performance perspective.
Senior partner Grant Corderoy has welcomed changes to home care funding set to come into effect from next month, which he says are expected to ease the burden of unspent funds held by providers.
The changes will be phased in from February 1, with subsidies to be paid in arrears rather than in advance.
From September 1, payment will only be for actual services, with the government holding onto all unspent funds until they are needed by the recipient.
However Mr Corderoy says while the changes will keep a lid on accrual by providers, they won’t alleviate the overall level of unspent funds in the system.
“We’ll just be transferring the unspent funds liability from the provider to the government,” he told Community Care Review.
“One of the big issues in home care is that providers are overfunded … the current care recipients aren’t using all their funding and until that’s addressed we’re still going to have issues.”
Decline in financial performance
Stewart Brown’s survey found a decline in the financial performance of HCP providers for the three months to September 2020 compared to a year ago, with a slide in both revenue per client per day and average operating profit per client per day.
It also found a continued decline in revenue utilisation and a continued reduction in staff hours per client.
The report says home care providers have experienced an overall decrease of $2.67 per client per day in comparison to the September 19 three month period.
It says this is a slight improvement on the 2019 results but because the September quarter is usually the most profitable, “the results are less than what might be expected”.
Growth in unspent funds ‘unsustainable’
Average unspent funds per client increased to an average of $9,151, and this is having a direct effect on both the profitability and sustainability of providers, the report says.
“This continued growth in unspent funds, and many probable instances of their use for capital-related expenditure for care recipients (probably for a short-term benefit in many instances) is not sustainable,” the report says.
StewartBrown says the impact of the funding changes will have to be closely monitored, though it says indications that unspent funds can be returned to the government over a reasonable period, and the possibility of a limited grants scheme for vulnerable providers should help interim cash flow problems.
The StewartBrown September 2020 Aged Care Financial Performance Survey incorporated data from 52,534 home car packages for the three months to September.
Stewart brown notes that COVID-19 and bushfires have stretched the capacity of aged care providers to an unprecedented extent, however analysis for the current report discounts the effects of government support programs as well as any additional costs relating to the pandemic for more accurate benchmarking.