Expenses grew more quickly than revenue last financial year at Australia’s three publicly listed aged care providers, meaning profitability was lower.
Revenue was boosted by a one-off government subsidy, which won’t be available next year, and the costs of direct care, compliance, and the royal commission added to expenses.
Revenues at Regis, Japara and Estia, which together account for more than 15,000 aged care beds in Australia, rose 8.3 per cent, driven largely by the opening of new facilities. However, if you remove the government’s one-off subsidy, revenue was up only 6.4 per cent, according to aged care accountants and consultants, StewartBrown
The one-off subsidy from the government amounted to $10.3 million for Estia, $7.9 million for Japara, and $10.8 million for Regis.
The cost of staff is the most significant expense for all three providers, and all three saw the expense rise over the year, according to the StewartBrown report.
At Estia, staff costs as a percentage of operating revenue increased 1.3 percentage points to 67.2 per cent.
At Regis, the figure was up 0.5 percentage points to 70.4 per cent.
And staff costs as a percentage of operating revenue were steady at Japara at around 71.5 per cent.
When the government’s additional funding is removed from the results, earnings before tax per bed per annum (EBT pbpa) have “fallen significantly for all three listed providers”, according to StewartBrown.
The results indicate that “the growth in revenue cannot keep up with the growth in costs”.
At Estia’s, EBT pbpa decreased by $1,316 to $9.375 pbpa.
At Japara, EBT pbpa fell $1,427 to $4,429 pbpa.
And at Regis, EBT pbpa dropped $3,915 to $11,209 pbpa.
The costs of complying with the royal commission also impacted the bottom line.
At Estia, the cost of preparing for the royal commission amounted to $1.7 million, at Japara the cost was $1.8 million, and Regis spent $2.0 million.
As is being seen across the industry, occupancy rates were down.
Estia’s occupancy rate fell from 94.2 per cent to 93.6 per cent. Japara’s occupancy dropped from 93.2 per cent to 92.9 per cent. And Regis saw its occupancy rate decline from 93.4 per cent to 92.7 per cent.
During the year, Estia opened one new home, and its number of ‘operational places’ increased by 56 to 6,102.
Japara’s operational places increased by 166 to 4,235, and Regis’s number of operational places jumped 325 to 7,078. Regis has approximately 600 new places in the pipeline.
Government subsidies account for between 70 and 75 per cent of revenues at the three providers.
The results reflect the trends occurring across the industry, lower occupancy rates, higher costs, and the compounding pressures of the royal commission.
StewartBrown’s ‘Aged Care Financial Performance Survey’ will be released in October.
