OPINION
BUILDING A SUSTAINABLE AGE SERVICES INDUSTRY ADDRESSING VIABILITY PROBLEM IS KEY TO HIGH PERFORMANCE AND QUALITY CARE
T
his May, our team at the UTS Ageing Research Collaborative released the first edition of Australia’s Aged Care Sector, a biannual report examining the viability of aged care providers, the availability of skilled workers and the sustainability of subsidised aged care services. Our analysis shows that the financial performance of aged care service providers has worsened across the sector compared to last year. This raises serious concerns about the financial viability of services on which senior Australians depend.
Dr Nicole Sutton Senior Lecturer UTS Ageing Research Collaborative
These types of expenditure on workers, compliance and safety are not ‘bad’ as they often translate into better quality and safety of aged care services. However, these increases are unlikely to be temporary and will potentially grow as the sector’s reform agenda rolls out. This prompts critical questions about whether providers’ revenue streams are sufficient to meet these costs and whether their business models will be viable in the future. The answers to these questions are not straightforward.
In residential care, over 60 per cent of surveyed homes are operating at a loss, reporting an average deficit of $11.34 per resident per day (more than double the average deficit of $5.33 reported the year before). Concerningly, this poor financial performance has occurred despite the injection of funds through the Basic Daily Fee supplement since July 2021.
Clearly, providers must continue to ensure that resources are used efficiently and effectively to deliver quality care services. Poor financial performance is not ubiquitous across the sector. Our analysis shows that, for example, the top 25 per cent of residential homes have achieved sustained, positive returns of more than $30 per resident per day over the last five years.
In home care, the average operating result declined by 25.5 per cent year on year, to $3.82 per client per day. Although the Government has released more packages, operating margins have shrunk as revenue growth has plateaued and providers’ cost base has increased.
Further work is required to understand what distinguishes these homes, especially those characteristics that can be replicated elsewhere, such as more efficient built environments, effective use of technology, better workforce design or adept management strategies.
These results reflect the substantial financial hit that COVID-19 had across the sector late last year. Occupancy dropped nationwide to an average rate of 91.6 per cent, and providers experienced significant service delivery and staffing disruptions. With most COVID-related financial support ceasing in July 2021, their bottom line was also adversely affected.
Our results also point to areas that warrant the attention of policy makers as they adjust aged care funding models. For example, the acute decline in the financial performance of home care providers with lower-level package mixes should factor into the costing and pricing redesign of the new Support at Home program. Likewise, the comparatively worse results of residential homes that are either smaller in size, located outside major cities or servicing residents with less complex care are relevant to the ongoing refinement of the new AN-ACC funding model.
Our team also sees evidence of structural changes in the fundamental cost of providing quality care. For example, we can see that providers are facing increased wage pressures as staff salary costs grow faster than the number of employees. Administration costs have increased across both residential and home care. Providers face ongoing outlays to provide safe care in a ‘COVID-normal’ world, including proactive infection control measures—such as PPE, testing and vaccinations— and surge agency workers.
As a guiding principle, changes to policy settings should not be designed to prop up poor performers. Instead, they should be oriented towards ensuring the viability of all subsidised aged care services that deliver high quality outcomes to senior Australians, regardless of the complexity or context of that care. ■
11
