Feb 28, 2023

Financial snapshot reveals two-thirds of aged care providers are still losing money

Financial snapshot reveals two-thirds of aged care providers are still losing money

The Government’s inaugural aged care quarterly snapshot has further highlighted the sector’s precarious position as only 33% of residential aged care providers recorded a profit last year.

And with many providers struggling to meet the incoming mandatory 200 care minutes quota, financial struggles are set to continue throughout 2023.

The Department of Health and Aged Care’s Quarterly Financial Snapshot of the Aged Care Sector (July-September 2022) is the first of its kind, drafted in response to the Royal Commission into Aged Care Quality and Safety’s call for greater transparency in aged care. 

It provides a clear snapshot of residential aged care and home care, outlining performance in key areas such as care cost and time, average care minutes, food and nutrition and labour cost.

But just as the report provides timely information for aged care service providers, it shows the sector faces ongoing financial challenges despite increased Government funding. 

66% of aged care providers operated at a loss between July and September 2022, with just 25.9% of not-for-profit aged care operators recording a net profit. 

For-profit aged care operators fared better as 47.5% recorded profits, while a whopping 78.4% of home care service providers had net profits.

Aged & Community Care Providers Association (ACCPA) Chief Executive Officer (CEO), Tom Symondson, said this shows that the COVID-19 pandemic, workforce shortages and inadequate Government funding have taken their toll.

The report reflects what the sector have been saying for some time – providers are struggling,” said Mr Symondson.

“However, it is even worse than we thought with only 34% of residential aged care providers reported as making a profit, losing on average nearly $28 per resident per day. 

“For the sector, that represents a loss of $465.3 million over the quarter or a potential full-year loss of $1.86 billion.”

Mr Symondson said that positive financial performances by home care providers are pleasing but ACCPA remains concerned about the longevity of the sector without Government funding intervention.

Meanwhile, the Government does expect to see some changes in the next quarterly report, as Minister for Aged Care, Anika Wells, acknowledged that the data was collected before the Australian National Aged Care Classification (AN-ACC) funding model was introduced last October.

“The new AN-ACC model has been implemented, funding for 24/7 registered nurses is rolling out and we have committed to funding the aged care workforce value case,” said Minister Wells.

“These changes will support the future of Australia’s aged care service providers’ finances and operations for the long term. 

“We will continue to work closely with aged care providers to deliver these reform measures—for older Australians today, and for many years to come.”

Care minute struggles

From October, providers will have to deliver an average of 200 care minutes per resident each day, including 40 minutes by Registered Nurses (RNs), and 215 minutes per resident from October 2024

Although many providers are already going above those requirements, the sector is sitting at an average of 187 care minutes per resident per day, with 34 care minutes coming from RNs.

Local, State or Territory Government (LST) aged care services are exceeding requirements with a total of 229 care minutes per resident every day and are far less reliant on personal care workers than other providers.

Personal care workers provide an average of 138 care minutes per day across the sector, but just 85 minutes in LST Government homes. Enrolled Nurses (ENs) pick up the slack with 83 minutes of care for residents in LST Government homes compared to the lowly average of 15 minutes across the sector.

Currently, the median average hourly rate is $45 for RNs, $33 for ENs and $27 for personal care workers, hence why some providers have opted to utilise personal care workers over ENs.

Allied health professionals are providing just 5.6 minutes of care per day, although the report stated that many providers have contracts in place that haven’t previously required detailed reporting for allied health.

Mr Symondson said providers are now faced with the additional burden of being able to afford wages for staff to meet the higher minutes of care and the need to have a 24/7 RN on site. 

That’s why ACCPA has continued to push for full Government funding when the 15% aged care pay rise is passed on in July.

“ACCPA’s Pre-Budget Submission, released last week, calls on the Government to ensure it funds the Fair Work Commission work value case pay increase in full and at the time the increase is granted,” explained Mr Symondson.

“We are also seeking an indexation increase for subsidies paid to providers that matches the CPI and more immediate action relating to workforce shortages.”

Mr Symdson said it’s essential that different funding models are explored for the future, including the possibility of wealthier older people paying more for aged care services.

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