Feb 17, 2020

Rural aged care at risk as two-thirds report losses


Nearly two in three aged care providers in rural and remote areas – 65 per cent – are losing money, according to a new report by independent aged care accountants StewartBrown.

The report also noted that rural and remote aged care facilities have fewer residents than their city counterparts, but their residents have higher care needs. Rural and remote facilities also have difficulty attracting staff, have lower accommodation prices and higher costs, such as for food and maintenance.

Despite the challenges in rural and remote homes, the StewartBrown report notes residents in these facilities receive the highest number of direct care hours per day, compared with city residents.

Increase in losses “alarming”

Leading Age Services Australia has issued a statement saying it is “alarmed” by the findings, and have labelled it a “viability warning” for the industry.

The report shows the average net loss for rural and remote aged care homes between September 2018 and September 2019 jumped by $1,391 per bed per annum, to a loss of $3,963.

Losses increased for rural and remote aged care operators in every mainland state over the past year.

Rural facilities enable older Australians to age in place

LASA CEO, Sean Rooney, said “Maintaining rural and remote aged care services is critical to enabling older Australians to age in place, as well as sustaining local communities. 

“This is increasingly at serious risk,” he said. 

“We have already seen the closure of regional aged care homes in recent months and the risk of missed care and more service closures is looming large in 2020,” Mr Rooney said.

Regional care is in danger 

Mr Rooney said, “The passion and dedication of staff and management of these facilities is without question.

“But the financial distress, the rising costs compared with lower facility incomes, and the challenges of attracting and retaining care professionals is putting regional care in danger.”

“Not sustainable”

Age and Community Services Australia CEO, Patricia Sparrow, said the report paints a “bleak” picture of the aged care sector, particularly for regional areas.

“The report showed that provider costs are rising much faster than revenue.

“More than half of all aged care homes reported an operating deficit for the period in question,” she said.

“This gets even worse in regional and rural areas with a staggering 65 per cent recording an operating loss – a number that is simply not sustainable,” she said.

ACSA is calling on the Government to increase the rural and remote supplement by $10 per day, although Ms Sparrow acknowledged that some consolidation in the sector is inevitable.

“We must ensure that services are available as locally as possible, acknowledging that some consolidation may occur and be necessary,” she said.

“Funding resi care in RRR on the number of beds, rather than occupancy, or as suggested by the RUCS study that a fixed proportion of costs are provided and adjusted based on location, to keep the doors open is also an adjustment needed to the funding model,” Ms Sparrow suggested.

“The Morrison Government… shouldn’t be waiting until the Royal Commission is finished; there are things that funding can fix now,” she said. 

Australia’s aged care funding below OECD average

Mr Rooney acknowledged the government’s $50 million investment in a Business Improvement Fund for aged care, but he reiterated LASA’s call for an extra $1.3 billion in funding over the next 18 months.

“There is something fundamentally wrong with Australia’s aged care funding levels, which are well below the OECD average,” he said.

“Unless we begin distributing more operational funding ahead of the Royal Commission report in November, the welfare of thousands of older people relying on aged care services in regional Australia is at risk,” Mr Rooney said.

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