"With so much change, mostly because of the [Aged Care] Royal Commission, it is critical we ensure each change improves the care older Australians receive," says Tim Humphries, CEO of private aged care operator Homestyle Aged Care, which has 10 aged care homes across Melbourne and Geelong.
"It’s imperative Government, the Department [of Health and Aged Care], the ACQSC (Aged Care Quality and Safety Commission) and all providers ask how does that [change] improve the lives of those we care for?
"If we can’t answer it definitively in the positive, we should scrap the change," Tim told The SOURCE for our weekly 'political wishlist' series in which we ask providers what they would like to see prioritised by the next elected Government.
Tim would like to see the Government "removing red tape and easing the reporting burden" on aged care staff, particularly registered nurses, allowing them to spend more time on care rather than on administrative and compliance work where recent reforms have created an increased workload.
Bring back Payroll Tax Supplement
Tim said the "biggest issue" his organisation is dealing with at present is the combination of complying with their mandated care minute targets and meeting the cost of state-based payroll taxes.
"It seems illogical to mandate care minutes on all providers equally when around 30% of providers are incurring significantly higher costs to meet the same requirements," he said.
He would like to see the Government level the playing field between For Profit and Not For Profit providers, which are exempt from paying payroll taxes, by reintroducing the Payroll Tax Supplement, which was removed in January 2015.
"Simply put, our labour cost base due to payroll tax is over $5M higher than an identical Not For Profit or Government provider," he said.
The aged care peak body Ageing Australia also recommended this week that the Government allocate $391.5 million to reintroduce the Aged Care Payroll Tax Supplement for private aged care providers as part of its nine recommendations to Government ahead of the Federal Budget.
Patrick Reid, the CEO of Illawarra-based aged care provider IRT, also had removing payroll tax for private aged care operators on his 'political wishlist'.
In addition, while Tim supports higher wages for aged care workers, he says the Government cannot say it is fully funding the increases.
"Payroll tax is not funded, and increases in leave entitlements are funded to the tune of 50% or 25%," he said.
Care minutes reduce innovation
Mandatory care minute targets are also reducing the "levers" providers have at their disposal to create efficiencies, Tim said. Combined with independently assessed AN-ACC, costs are fixed and rising, he said.
Innovations that might have improved care but under the current regime don't create labour efficiencies will be "shelved" until efficiencies are available, he said.
Ageing population presents reputational risk to the sector
Despite funding reforms being implemented under the new Aged Care Act from 1 July 2025, Tim said more needs to be done to attract investment to the sector to meet the incoming surge in demand.
"When 2032 arrives and the largest increase in Australians turning over 85 occurs, increasing the supply of all forms of aged care will be needed," he said.
"There is a need now to set the aged care system on a more sustainable financial footing, to improve the sector's financial viability and attract more private investment to create the needed increase in supply."
StewartBrown's report on the September 2024 quarter (Q1 FY25) states the average operating EBITDA of $4,734 per bed per annum (pbpa) achieved for the quarter is "significantly lower" than the operating EBITDA of $20,000 pbpa needed to encourage ongoing investment in the sector.
Tim said, "My fear is that without change, when we start to see more service providers reach capacity, and older Australians increasingly not able to find anyone to provide the care they need, our industry will be seen as the cause of the problem we have known was coming for over 80 years."
Homestyle Aged Care has been in operation for more than 30 years and operates more than 1,000 aged care beds. For the year to 30 June 2024, the provider reported an operating loss of $1.6 million, an improvement on the $12.2 million operating loss recorded the previous year. The operator said it expects to report a profit in the year to 30 June 2025.
Tim appeared at last week's LEADERS SUMMIT on a panel that discussed the challenges and opportunities for mid-sized aged care providers.
Read our previous articles in this series:
Seven years since a workforce strategy: Juniper CEO Russell Bricknell’s ‘political wishlist’
“Whining for more money won’t cut it”: IRT CEO Patrick Reid’s political wishlist
Anne McCormack CEO of mecwacare wants to see greater recognition of palliative care in aged care
