Aged care profits drop

Improvements in the net operating results for high care facilities dropped off towards the end of last year according to the Stewart Brown Business Solutions (SBBS) benchmarking report for the period ending December 2008.

The group’s surveys showed slight increases in returns for high care facilities in June and September but the latest report shows returns have declined again.

The average operating results for high care facilities were down $1.13 per bed day on September figures.

“We were hoping that the high care figures might continue to improve but they have dropped back to a little bit worse than where they were in June 2008,” said SBBS’s survey manager David Sinclair.

“Low care has not really deteriorated any further but it is still averaging a loss.”

Almost two thirds of the 96 participating high care facilities failed to record an overall profit and fewer than half of the 176 low care facilities were in the black.

The poor returns come despite improved average earnings in both high and low care.

Among the high care facilities this was due to a sharp rise in operating costs, particularly in the areas of catering and administration.

The last three SBBS survey reports suggest that the new Aged Care Funding Instrument (ACFI) is partly responsible for the increased administrative burden on residential providers.

Instead of having eight types of residents, facilities now have 64 pricing points which they have to reconcile.

Rising care costs have played a greater role in offsetting the income gains in low care.