A new review by Leading Age Services Australia (LASA), the voice of aged care, shows almost 200 residential aged care services providing care for up to 50,000 people at sites across Australia are at unacceptably high levels of financial distress.
Desktop balance sheet analysis – undertaken by accounting professionals using the latest de-identified data from the Government’s 2017-2018 Aged Care Financial Reports from residential aged care providers – reveals a concerning liquidity ratio result for 197 providers. That is, for these providers, current liabilities (excluding Refundable Accommodation Deposits) were greater than their current assets.
“The scale of this risk is alarming for residents and their families, as well as stressed staff, financially stretched providers and the Government,” said LASA CEO Sean Rooney.
“These new figures reveal the dire situation facing many services and LASA is calling for $1.3 billion in additional operational funding before Christmas. We are also calling for a structural adjustment program to avoid the risk of unplanned closures of distressed services, while maintaining continuity of care for residents.
“We believe this is particularly critical for regional and remote providers, with the latest evidence given to the Aged Care Royal Commission highlighting concerns for country services.
“This additional funding should be on top of the Government’s welcome commitment to a quick response to the three immediate priorities highlighted in the Royal Commission’s Interim Report, which includes a major home care boost.”
The new warning comes on top of LASA’s recent aged care financial risk survey which found 80 per cent of surveyed providers are facing challenges and if conditions do not improve:
- 15 per cent may have to withdraw services
- 41 per cent may have to reduce direct care staff
- 62 per cent may have to reduce investment
Excluding a one-off 2019 Government grant, the latest Aged Care Financial Performance Survey by chartered accountants StewartBrown for the financial year ended 30 June 2019, showed over half of residential care providers are operating in the red, climbing to over two-thirds in regional areas.
“Financial pressures are no doubt a significant factor in the looming closure of three regional aged care facilities in New South Wales and Victoria,” Mr Rooney said.
“Our appeal for funding assistance has nothing to do with maximising profits, it is solely focussed on maintaining and improving care, while avoiding more service closures.”
LASA’s push for additional funding and immediate structural reform is part of the organisation’s Working While We Wait campaign for action to make the aged care system better right now, while the Royal Commission continues its critical work.
The campaign includes implementation of the Aged Care Workforce Strategy, ageing well reforms and improving the interface between the aged care and health sectors.
About Leading Age Services Australia (LASA)
LASA is the national association for all providers of age services across residential care, home care and retirement living/seniors housing. Our purpose is to enable high performing, respected, and sustainable age services that support older Australians to age well by providing care, support and accommodation with quality, safety and compassion – always.
We represent providers of age services of all types and sizes located across Australia’s metropolitan, regional and rural areas. Consistent with the overall industry profile, 56% of our Members are not-for-profit providers, 36% are for-profit providers and 8% are government providers.
Our diverse and representative membership gives LASA the ability to speak with credibility and authority on issues of importance to older Australians and the age services industry.
Contact: David O’Sullivan 0427 138 024 firstname.lastname@example.org