The StewartBrown Senior Partner appeared at LASA’s Ten Days of Congress to speak about the sector’s financial performance over the past 20 years – but what he had to say about the ongoing sustainability of the home care sector was far more compelling.
In a prerecorded presentation, Grant notes that home care operators were only achieving a net profit per client per day of $4.51 in March 2020 – a return he labelled “insufficient” to cover staffing costs and the high cost of access to clients.
More packages not going to provide profitability
While the financial viability of the residential care sector received considerably more attention at the Royal Commission’s recent funding and financing hearings, Grant argued that home care also poses a serious concern – even with the 23,000 new packages released in last week’s Federal Budget.
“Releasing more packages doesn’t mean that operators are going to get profitability out of a package,” he said.
Instead, he pointed to the rising levels of unspent funds – currently in excess of $1.1 billion according to StewartBrown – as a sign that the system needs an overhaul.
In particular, Grant noted of the average $8,250 in unspent funds held by consumers in March 2020, only 8% was used with the majority of funds returning to the Government when the clients passed away or went into residential care.
Unsurprisingly then that StewartBrown is advocating for these funds to be reallocated to provide more packages.
Providers cut back on hours to save on costs
Interestingly too, Grant also notes that the deregulation of the sector and increased competition caused by new financial transparency rules in 2018 led to a serious reduction in revenue – and a corresponding drop in the number of hours worked per client per week as providers looked to save on costs.
Check out the graph above.
As you can see, in June 2015, a Level 4 package would provide an average of almost 12 hours of care per week compared to just under five for a Level 2 care recipient.
Fast forward to March this year and this gap has narrowed to three hours with a Level 4 now only providing 8.36 hours of care per week.
Proof then that when providers do not receive the return they need to make a profit, care is what suffers.
