Researchers from the UTS Ageing Research Collaborative (UARC) are warning that aged care losses are “unsustainable”, with more than 60% of approved providers operating in the red.
In the second edition of UARC’s Australia’s Aged Care Sector Report, StewartBrown data showed that 67% of residential care homes made a loss in 2021-22, with an estimated $2.75 billion lost over the past three financial years despite plenty of taxpayer funding.
The average home lost $16.13 per resident per day, with most of these losses arising from accommodation; smaller losses came from services such as food and cleaning.
Home care was not spared, either, with the sector’s financial performance plummeting 39% compared to 2020-21.
“These persistently low returns are unsustainable,” said Professor Mike Woods (pictured), Chair of the report’s Editorial Board.
“They pose a real threat that older Australians won’t be able to receive the quality and quantity of subsidised care they need.”
According to the report’s lead author, Dr Nicole Sutton (pictured), the new independent pricing authority will need to ensure AN-ACC funding can cover costs of wages, inflation, and large direct care staffing increases.
“As direct care funding is likely to be set much closer to cost recovery levels, home operators will no longer be able to use surpluses from this care to cross-subsidise losses in the other areas of their business.
“While providers need to adjust their accommodation pricing to align with increasing costs, some of the answers also lie with the Government, which needs to reform policies for how people pay for basic daily services and accommodation,” she said.
Previous UARC reports have also warned of sustainability issues in the aged care system; the DCM Group has suggested Plan B – user contributions from those with the means to pay – as a model for aged care funding moving forward.
