The additional funding from the Australian Government and increased occupancy has helped residential aged care providers' bottom line. 

StewartBrown's Aged Care Financial Performance Survey Sector Report for the 2024 financial year shows after losing an average $16.54 per bed per day in FY23, the average is now an average loss of $1.58 per bed per day.

However, the report states nearly two-thirds of aged care homes in regional centres (MMM2, 62%) and small rural towns (MMM5, 61%) made an operating loss, as did just under half in metropolitan areas of Australia (MMM1, 46%).

The operating EBITDA averaged $7,039 per bed per annum (pbpa), up from an EBITDA of $1,489 pbpa in FY23, an improvement, but still significantly lower than the operating EBITDA of $18,000-$20,000 pbpa StewartBrown estimates will allow the additional investment needed to build the new aged care beds needed to meet rising demand. It is forecast that Australia will need an additional 50,000 aged care beds by 2030 and an additional 200,000 within 20 years.

"Despite improvement, the low EBITDA return remains a significant deterrent to future investment in the sector from existing providers and institutional lenders," the report states.

Russell Egan, CEO of Superior Care Group, said the biggest impediment to providers is still the inflexible revenue model and vastly inadequate supported resident accommodation funding.

"I cannot see the 40,000 beds required being built because it is not possible to recoup the cost and make an adequate return for the high risk. I have development approval ready but cannot justify the investment."

The use of agency RNs in aged care remains at around 10% of total RN usage. The average agency RN hourly rate of $128 for the June 2024 quarter is significantly higher than the $85 per hour paid to in-house RNs. 

With increased care minute targets coming in from 1 October 2024, including for RNs, providers will be under pressure to improve on already stretched margins.

You can download the report here.