finance, budget, money, profitability

Staffing issues and a complicated regulatory environment have seen the financial performance of home aged care providers stagnate, the latest performance report from industry benchmarking organisation StewartBrown has found.

The situation is worse in the residential aged care sector, where almost two-thirds of homes are now operating at a loss, according to the StewartBrown March 2022 Aged Care Financial Performance Survey of 58,314 home care packages, 1,282 aged care facilities and 285 organisations.

Like its predecessors, this report continues to highlight the declining financial sustainability of the sector and StewartBrown is calling for emergency funding to avoid reduced services, and for structural funding reform.

The survey for the nine-month period ending March 2022 shows the home aged care sector is facing “significant operating issues”. 

“As with residential aged care, staffing remains the most crucial concern, and this coupled with a complicated regulatory environment has seen the financial performance stagnate” with the operating result falling to a surplus of $4.29 per client per day, down from $5.67 a year before, the report’s authors wrote.

Home aged care March 2022 results snapshot. Source: StewartBrown

Meanwhile, revenue utilisation has declined to 85.5 per cent of available package funding while unspent funds have risen to an average $10,690 for every care recipient, the survey found.

Direct service hours per care recipient per week including agency staff has also decreased, to an average of 3.73 hours for the period compared to 4.04 hours a year before. However, these hours do not include sub-contracted or brokered services, the report said.

Providers call for indexation rise

Peak body Aged & Community Care Providers Association said the results confirmed the feedback from providers about increasing financial pressure.

Many providers could be forced to leave aged care unless there is additional funding to allow them to meet the increasing costs of providing quality care and support, said ACCPA interim chief executive officer Paul Sadler.

“It is clear that aged care workers need a significant pay rise but without additional support, aged care providers will be unable to attract more workers and to realise improvements in the quality of care,” Mr Sadler said in a statement.

An indexation adjustment to increase subsidies and legislation to introduce an independent pricing authority as recommended by the aged care royal commission are two solutions to the immediate problem ACCPA has raised with the Albanese Government, he said.

The royal commission found the Australian Government’s approach to indexation inadequate as it failed to keep up with real cost increases over many years. The former government rejected the royal commission recommendation to raise subsidy indexation levels, which has further widened the gap between income and expenses.

“We are expecting an even bigger gap this year between the increase in wage costs and indexation unless the government adopts the royal commission recommendations 110 and 111 to increase indexation,” Mr Sadler said.

Call to tweak funding reforms

Across the whole aged care sector, StewartBrown is calling for the funding reform agenda to clearly articulate each specific area to be addressed. It recommends the strong consideration of the following additional financial reforms:

  • funding to increase staff remuneration and benefits
  • subsidy funding to directly correlate to direct costs of care, particularly staff
  • regulated consumer contribution for home care and CHSP based on ability to pay
  • deregulation of residential Basic Daily Fee
  • structural enhancement of residential accommodation pricing model
  • increased capital grants for rebuilding and refurbishment
  • alternate home care funding model.

Comment on the story below. Follow Community Care Review on Facebook, Twitter and LinkedIn and sign up to our newsletter.

Join the Conversation

1 Comment

  1. SPOT ON – I work in the Finance dept of an aged care provider and couldn’t agree more with the funding reforms suggested – bring it on.

Leave a comment

Your email address will not be published.