Leading Age Services Australia (LASA) says the latest report on the financial performance of the aged care sector highlights the need for urgent government action on improving funding to the industry as a matter of priority.

The Aged Care Financial Performance Survey, by industry analyst Stewart Brown, shows the sector is experiencing significant challenges due to a continuing decline in profitability in both the residential care and home care areas, creating challenges for the longer term financial sustainability of the sector.

The report says the results for the financial year 2018 clearly show that the current funding model is under strain, and that the industry requires significant investment and a need for all stakeholders to explore sustainable and robust solutions to the funding and operational business models.

Of particular concern is the report’s observation that the financial viability of outer regional, rural and remote aged care providers is reaching a pivotal point, with more than 63 per cent of facilities in these locations operating at a loss.

The report also said that regulatory changes and funding pressures had led to a disturbing statistic of more than 45 per cent of residential facilities reporting a before tax operating deficit for the year, and more than 21 per cent reporting a cash loss from operations.

LASA Chief Executive Officer Sean Rooney said the report is further evidence of the need for urgent short-term action on funding by the Government, despite the upcoming Royal Commission into Aged Care Quality and Safety, and plans for longer term funding models.

“LASA has been advocating strongly that the industry needs urgent funding relief to address the increasing demand for services and acuity of residents, while the work on longer term sustainable funding arrangements is being undertaken,” he said.

“We have been advising the Federal Government for the past year of the impact on residential care providers of the combination of rising operating costs and stagnant revenues from government.

“It is not unreasonable to expect that Australia’s aged care system is adequately funded to be sustainable and to meet the needs of older Australians.”

Mr Rooney called on the Government to immediately provide:

  • $675 million this financial year to respond to the gap between rising costs and stagnating subsidies in residential care, including additional targeted support for those residential aged care providers that are struggling in regional and remote Australia.
  • At least $60 million per annum more for home care subsidies to respond to rising costs, as well as review of the overall level of investment to ensure that the roll-out of additional home care packages keeps up with the actual numbers of people in the national queue (currently well over 10,000 people).

Mr Rooney said while Minister for Health Greg Hunt has previously acknowledged the seriousness of this issue, this report is now a clear reminder of the urgent need for action.

“It is vital that while the Royal Commission is underway the Government and industry press on with addressing key funding and workforce issues in particular, and not lose sight of making the system better right now.

”Ultimately the development and implementation of a sustainable funding strategy must ensure care and services are available for older Australians as their needs arise, while also providing certainty, stability and viability for our aged care system for the next decade, and not just the next year.”


Read the Age Care Financial Performance Survey.


Contact: David O’Sullivan Ph 0427 138 024  E davido@lasa.asn.au

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