70% of aged care facilities have been operating at a loss

Aged care providers are still reporting financial losses, according to new data.

The latest StewartBrown Aged Care Financial Performance Survey Sector Report analysed records from 1,182 of the 2,500 nursing homes in Australia and found that 70% of them ran at a loss over last year’s September quarter, jumping from 67% reported in the June quarter.

The report revealed that during that period, aged care homes lost an average of $21.29 a bed per day compared to $14.67 in the previous quarter – equating to an annual loss of $1.4 billion for the sector.

It also suggested that staffing shortages, increased levels of overtime and agency staff requirements were the main causes behind this financial loss, despite the Federal Government’s progress and funding to reform the sector.

Occupancy rates have also dipped from 95% in 2018 to 91% in September 2022, showing the gradual decline of older people accessing residential aged care. 

Senior Partner at StewartBrown, Grant Corderoy, said the increase in older people accessing Home Care Packages and the negative consumer reaction surrounding the Royal Commission into Aged Care Quality and Safety also contributed to this financial climate for aged care facilities. 

“Whilst older people, quite rightly, are accessing more care at home, so that’s had a major impact on the occupancy of homes,” he explained.

“The results of the Commission also naturally affect consumer sentiment.”

Aged and Community Care Providers Association (ACCPA) Chief Executive Officer (CEO), Tom Symondson, said this loss can be explained by the increased cost of delivering services and the failure of Federal funding to keep pace in real-time.

“It’s not chickenfeed. It’s a very significant number,” he told ABC Radio National.

“We know that aged care has been under huge pressure for years – decades, in fact. COVID has made it worse, but it was already struggling before that.”

Mr Symondson added that the notion of aged care is the “land of milk and honey” for business owners was a myth and that the days of providers collecting huge profits were over.

He explained this is partly because “last year, we received an indexation of 1.7% at a time where CPI is at six or seven (%) and wages are going up”.

Treasurer Jim Chalmers agreed that the sector was a “mess” but that Aged Care Minister Anika Wells and Health Minister Mark Butler were working to improve residential aged care after increasing funding for the 2022/23 financial year.

“Aged care has been a mess for some time and what we’re trying to do in the Albanese Government is to clean it up,” he told ABC Radio National.

October’s Federal Labor Budget saw an extra $2.5 billion allocated to aged care over four years for sector reforms which have propelled the implication of a new Code of Conduct for providers to adhere to and a new star rating system for facilities to be graded against.

In order to address aged care workers being overworked and understaffed, the Federal Government also announced an interim 15% pay rise for staff but it has been met with criticism, as the delivery is intended to be drawn out over a period of time.