Decline in financial performance impacting aged care

Leading Age Services Australia (LASA) says figures released last Friday by the Aged Care Financing Authority (ACFA) show that expenses of residential care providers have increased faster than income.

 

Residential care expenses increased by 5.3 per cent while income increased by only 1.7 per cent. For home care, expenses per consumer increased by 7 per cent while income decreased by around 1 per cent.

 

In its latest official report on funding and financing for 2017-18, the Authority describes the sizeable decline in the financial performance of both home care and residential care providers as a ‘significant development’.

 

The latest indicator of financial performance comes in the wake of the Government’s recent funding increase of just 1.4 per cent and a National Minimum Wage increase of 3 per cent, further compounding the financial pressures on a sector struggling to meet the needs of older Australians and the cost of their care.

 

The ACFA report says average earnings before interest, tax, depreciation and amortisation (EBITDA) per resident fell by 24 per cent, and 44 per cent of residential care providers reported a loss. Similarly earnings per home care consumer fell 60 per cent.

 

LASA’s General Manager – Policy & Advocacy, Tim Hicks, said feedback from consultations suggests that there appears to be a growing number of smaller providers, particularly in regional and remote areas, facing significant financial stress and seeking to leave the industry.

 

“A notable development in 2017-18 is the ongoing decline in the number of residential care providers reporting that they planned to rebuild or upgrade their facilities,” he said.

 

“Feedback from consultations indicated that many providers have curtailed or delayed investment plans because of policy and regulatory uncertainty.

 

“This impacts on the ability of providers to deliver the care and support older Australians need and deserve.

 

“Despite the pressure they are under, residential care providers continue to increase the number of hours of care per resident, but this cannot continue, and some providers have already been forced to cut back on staffing.

 

“While the Aged Care Royal Commission continues its important work, this Government must commit to urgent action before Christmas to address this funding emergency if the sector is to effectively meet the needs of the growing numbers of older Australians.

 

“The Government must also be ready to respond quickly to the recommendations of the Royal Commission, which will release its interim report by 31 October and its final report by 30 April next year.”

 

The Aged Care Funding Authority’s Seventh Report on the Funding and Financing of the Aged Care Industry is available at https://agedcare.health.gov.au/sites/default/files/documents/07_2019/2019_acfa_annual_report_on_funding_and_financing_of_the_aged_care_sector.pdf.

 

9 July 2019.