The StewartBrown Aged Care Financial Performance Survey Sector Report for the 2024 financial year shows the continued decline in home care profitability, a sector which has already seen further consolidation this year.
In February, mutual fund Australian Unity paid $285 million for Australia’s largest private home care business myHomecare Group, which has about 20,000 home care and CHSP customers. In May, Healthcare Australia, which is owned by Sydney-based venture capital firm Crescent Capital Partners, acquired South Australian family-owned home care provider My Care Solution. In June, BaptistCare purchased Presbyterian Aged Care’s home care business. In July, Silverchain Group bought the private-equity owned home care provider KinCare with its 1,300 employees providing care and services to more than 11,500 home care and CHSP clients.
In FY24, the StewartBrown Aged Care Financial Performance Survey Sector Report found home care providers' operating result decreased by 38 cents per client per day to $2.76 pcpd in FY24, down from an operating result of $3.14 pcpd in FY23, according to the survey of more than 71,000 Home Care Packages. Profits margins declined from 4.5% in FY23 to 3.5% for FY24, due to increased labour costs.
With a 10% cap on care management fees included in the proposed Support at Home reforms, care management fell to 10.1% of revenue in FY24, down from 10.5% of revenue in FY23. Administration and support costs were 25.1% of revenue, up from 24.2% in FY23.
Unspent funds per care recipient continued to climb, now averaging $14,517 per client, up from $12,604 per client in FY23, despite an increase in revenue utilisation rate to 86.3%. Total unspent funds now sits at nearly $4.1 billion.
Average hours of direct services to clients fell to 3.27 hours per care recipient per week in FY24, compared with 3.47 hours in FY23 and 3.63 in FY22, according to the report.
Even adding in care management, administration and agency hours, the result was "significantly below" the average nine hours per client per week provided before the implementation of the Consumer Directed Care model in February 2017, which was intended to put control of care into the hands of care recipients.
Also notable in the report was that consumer contributions to Home Care Packages are "low" at less than 2.6% of overall home care funding.
