Home care finances in doldrums, says new report
The financial performance of the home care sector has idled over the past four financial years, says StewartBrown.
Staffing remains a key concern in the home care sector and this, coupled with an overly complex regulatory environment, has seen financial performance declining, according to the latest industry report.
Analysing data from 66,703 home care packages, the StewartBrown Aged Care Financial Performance Survey Report for the second half of 2022 finds the current operating result has decreased to a surplus of $2.54 per client per day, compared to $4.51 the previous year.
Revenue for the period amounted to $69.13 per client per day, a slight decrease from the previous year – $69.72.
Direct service costs increased by $0.67 per client per day to be 59.4 per cent of total revenue.
The period showed a reduction in staff hours – 5.41 per care recipient, down from 5.46 hours the previous year.
Overall, the financial performance of the home care sector has idled over the past four financial years, note the authors of the 28-page report, who say, “such a financial return is not adequate based on the investment required and business risk to provide these essential services to the elderly in a domestic home setting.”
Workforce shortages remain one of the biggest challenges facing the sector. “The ability to attract and retain staff has reached a critical stage,” say the report’s authors.
And while the 15 per cent wage increase from 30 June is a positive step, the report’s authors question “whether this increase is sufficient on its own to attract additional staff.” Other incentives and benefits may be required, they say.
Under utilisation of services remains an ongoing issue for the sector with unspent funds for the period reaching $11,241 for every home care client. In aggregate across the sector, this represents in excess of $2.5 billion of funds that have not been utilised.
As the authors highlight, home care providers are entitled to receive a consumer
contribution of up to 17.5 per cent of the single aged pension amount. However, due to the under utilisation of services there has been little incentive for providers to seek a consumer contribution as it adds to the unspent funds and a portion is ultimately returned to the care recipient when they leave the home care program.
“This,” say the authors, “has distorted the overall funding, and, importantly, has created a climate whereby consumers do not regard co-contribution as being a necessary
component of aged care.”
A major reason for the under utilisation of services is flaws in the current funding model, say the authors. “Increased utilisation is required to fully cover the fixed costs, encourage investment in technology and innovation and therefore improve financial performance.”
Meanwhile, the home care sector continues to operate in a “policy void” of uncertainty, say the report’s authors. This is due to a lack of clarity over the new home care model – which is due to kick-in from 1 July 2024 – and its potential implications for providers and clients alike.
As a result, say the authors, many providers are experiencing “a stagnation of innovation”.
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