Leading Age Services Australia (LASA), the voice of aged care, says a new and independent study reveals record aged care financial risk that is impacting on the care of thousands of older Australians, in addition to the additional pressures of COVID-19.

The StewartBrown report shows 64 per cent of surveyed residential care homes recorded an operating loss in 2019-20, an eight per cent rise over the previous financial year. This figure is much worse in regional and remote areas, rising to almost 80 per cent of homes.

“These figures do not include the additional COVID-19 costs, exposing the duress aged care homes are enduring to deliver the best care for thousands of older Australians,” said LASA CEO Sean Rooney.

“This highlights that, regardless of the Government’s funding to help combat the pandemic, there still remains a gaping hole between the rising costs of delivering care and funds provided to cover these costs.

“The report reflects what was raised at the Aged Care Royal Commission hearings last month – with records showing increasing pressure on aged care homes since 2016, when funding cuts were enacted in the Federal Budget.

“The Royal Commission heard that funding cuts put aged care homes in an ‘impossible position’, having to balance financial viability alongside with delivering the care that is needed. Costs have risen 21 per cent since 2016 but ACFI rates have only gone up 11 per cent.

“Despite the dire financial situation for many providers, the StewartBrown report shows an increase each year in the direct care hours given to individual residents, with a nine per cent rise since 2017, to deliver quality services.”

There have also been reductions in residential home occupancy, from 92.3 per cent in 2019 to 91.4 per cent in 2020.

The percentage of homes who made a cash loss last financial year rose from 28 per cent to 36 per cent over the past year. The operating earnings before interest, taxes, depreciation and amortisation (the cash result) declined to an average of $110,000 per provider.

“This shows the average operator is now fighting to keep their head above water from a cash perspective, while still working tirelessly to deliver quality care,” Mr Rooney said.

The report recommends a more than $1.7 billion injection to pay residential care wages, increase staff training and lift daily living funding, plus a large injection into “very vulnerable” regional and remote aged care homes.

This includes an addition to the Refundable Accommodation Deposit (RAD) because the report finds the net return on RADs is not sustainable in relation to the cost of providing aged care accommodation.

On the home and community care front, the StewartBrown report shows a slight decrease in average operating margins for home care providers, dropping to $3.59 per client per day.

It is expected that home care results will decline in 2020-21 due to the continuing lower revenue per client per day and the requirement for higher staff hours.

“Our communities demand an adequately funded aged care system, to care for the needs of our valued older Australians,” Mr Rooney said.

“LASA and the nation wants this addressed as soon as possible and we strongly note the commitments made by the Treasurer and the Aged Care Minister to act on the Royal Commission’s recommendations, once the final report is handed down in February.”

The report is available on the StewartBrown website

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