A new report highlights the increasing pressures on delivering quality residential aged care, with funding woes worsening well before the full financial impact of the COVID-19 pandemic.

The independent StewartBrown study shows 60 per cent of surveyed residential facilities recorded an operating loss during the first nine months of this financial year. This rate has risen by one-quarter over the past 12 months. The report further reveals that up to 74 per cent of services in regional and remote areas are operating at a loss.

“These alarming figures reveal the pressure on delivering quality care to thousands of older Australians, even before the full impact of the pandemic hit,” said Leading Age Services Australia (LASA) CEO Sean Rooney.

“It is unacceptable that the number of services operating in the red has doubled in the past four years.

“The community expects an aged care system that is appropriately funded to meet the needs of older Australians receiving care. This is clearly not the case and must be urgently addressed.

“Despite the continuing downturn in financial performance for record numbers of residential care homes, the report shows an increase in direct care hours delivered during the past year demonstrating a commitment to quality care in response to the needs of residents.”

The report notes that the care subsidy paid by Government (also known as the Aged Care Finance Instrument) has risen by 12 per cent since 2016, while direct care costs have gone up by 21 per cent.

The report states that the average operating result for aged care homes is a loss of $2,835 per bed per annum. The sector has long advocated to Government that this situation is unsustainable and affects the ability of aged care providers to meet the needs of the older Australians in care.

“Residential care homes continue to do an outstanding job in protecting residents from COVID-19 but the financial situation of aged care providers is likely to further deteriorate,” Mr Rooney said.

“This reflects the care and commitment delivered by providers and their dedicated staff as they continue to invest millions of dollars in infection control, additional workforce and communications to keep residents connected with their loved ones.”

The report found that average home care revenue per client per day for survey participants decreased by just over 6 per cent, while the average operating profit increased by $1.03 to $4.51 per client per day. The average unspent funds per home care client rose by $1,463 to an average of $8,250 per client.

The report recommends $1.7 billion in residential funding reform to maintain care and improve training:

  • $700 million to lift basic daily resident fee
  • $350 million accommodation supplement
  • $315 million training subsidy
  • $240 million inflation adjustment
  • $140 million regional provider funding

“We have welcomed the Government’s aged care COVID-19 funding but this latest report shows the dire state of residential finances to provide care for our valued elders, ahead of the extensive coronavirus costs,” said Mr Rooney.

“We look forward to working with the Government to resolve the risks and ensure sustainable care for older Australians in the near term, while we continue to contribute to the Royal Commission into Aged Care Quality and Safety as this is the once-in-a-generation opportunity to realise a better aged care system that is high-performing and sustainable.”

Contact: Nick Way 0419 835 449 nickw@lasa.asn.au