Jun 30, 2022

Aged care providers losing $12.85 per bed every day

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The Aged Care Financial Performance Survey Report for the March 2022 quarter, by aged care accountancy specialists StewartBrown, collated data from 1,282 aged care facilities and more than 58,000 home care packages.

The survey for the nine months ending March 2022 “continues to highlight the declining financial sustainability of the sector”, the report’s authors note. 

“To avoid closure of homes and reduced service delivery, especially in regional locations, an emergency funding package needs to be delivered in the short term to ensure current viability,” the report states.

Funding reform must include staff remuneration, deregulation of the basic daily fee, and increased capital grants for rebuilding and refurbishment, according to StewartBrown.

Residential aged care is at a “critical financial sustainability position”. Structural funding reforms are “essential” at this point, it states.

Nearly two-thirds (64%) of aged care homes recorded an operating loss for the nine months to March 2022.

The report notes that the funding index – the COPE – for aged care, where 75% of costs are for wages, has risen 53% since 1998, compared with 83% for inflation and 111% for the wage price index. 

The most recent COPE increase of 1.1% was offset against the Superannuation Guarantee Scheme increase of 0.5%, workforce award increases ranging between 1.75% to 3.5%, and higher inflation (5.1% for the March quarter). 

The funding constraints have had a deleterious effect on aged care wages – contributing to the devastating staff shortages being experienced across the sector.

Occupancy rates for mature aged care homes are also a “major concern” in residential aged care, falling to a historic low of 91.4%, in large part due to COVID but also due to the increase in home care packages.

The return on refundable accommodation deposits is “not sustainable” in relation to the cost of delivering the accommodation, the report states.

Focus on food

Food was a focus of the report, following on from the government’s $10 basic daily fee supplement, which was intended to improve nutrition in aged care. From 1 October 2022, the supplement will be rolled into baseline AN-ACC funding for residential aged care homes. Food and nutrition reporting will be folded into quarterly financial reporting from 1 July 2022.

The average spending per resident per day on food, supplements and meal ingredients for the six months to December 2021 was $12.63 per bed per day.

When it comes to the size of aged care homes, the sweet spot seems to be in homes with between 80 and 100 beds. These mid-sized homes reported an average loss of $10.30 per bed per day (pbpd), compared with the worst performing size – homes with fewer than 4- beds (a loss of $15.84 pbpd) and homes with 100 to 120 beds (a loss of $15.71 pbpd).

In a rare snippet of good news for the sector, RNs, ENs and PCAs delivered an average of 179 direct care minutes per resident per day in the March quarter, a 6.1% increase from the March 2018 quarter and a 1.5% increase from the March 2021 quarter.

In the home care sector, the average unspent funds per clients increase to an average of $10,690 per clients. Total unspent funds is now in excess of $1.9 billion.

Staff hours per client for direct care declined to 3.62 hours per client per week.

“There has been a consistent decline in the number of direct service staff hours,” the report notes. Home care staff hours per week have declined 32% from 5.33 hours per client per week in the March 2017 quarter.

The largest decline in care hours has occurred in level 4 packages, the highest level of care.

Aged & Community Care Providers Association (ACCPA) Interim CEO Paul Sadler says the StewartBrown data confirms feedback from its members of increasing financial pressure.

The report indicates “many providers could be forced to leave aged care unless there is additional funding to allow providers to meet the increasing costs of providing quality care and support,” Mr Sadler said.

“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 ACCPA had been in touch with the Albanese Government and proposed an adjustment in the COPE to increase subsidies to providers, and legislation to introduce an independent pricing authority as recommended by the Aged Care Royal Commission.

“We look forward to working with Ministers Butler and Wells on practical solutions which maintain important aged care and support services for older people,” Mr Sadler said.

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  1. Operating loss? Or very good accountants. There is a great deal of public money not accounted for. Time for greedy operators to move out of this sector which is about vulnerable people with high needs not wealthy people funding extravagant lifestyles. Do not believe for a minute that they are operating at a loss in reality!

    1. So everyone else is wrong? It’s just you that knows the facts?
      How many reports or royal commissions would it take for you to get it through your head! Every cent is accounted for through independently audited accounts and deliver to the government each October.
      Read the last ACFA report (no 8) Aged Care Funding Authority, the governments own body that clearly defines the sector as unsustainable!
      But you won’t!

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