Australia’s aged care sector should turn a profit by 2026

Key points:

• The StewartBrown Financial Year 2023 Aged Care Financial Performance Survey included fiscal and supporting data from 1,237 aged care homes and 71,269 Home Care Packages across Australia

• The 12-month Survey, ending June of 2023, found that 66 percent of aged care homes operated at a loss

• Grant Corderoy from StewartBrown addressed critical areas of performance and provided examples of financial sustainability for providers at the Aged & Community Care Providers Association National Conference 2023

Grant Corderoy, a senior partner at StewartBrown and member of the Aged Care Taskforce, told Talking Aged Care journalist David McManus that the aged care industry may ‘break even’ in two to three years following the final report.

The Aged Care Taskforce is set to deliver its final report in December of 2023, with an interim report due this month.

“There’ll be a lag, even if we introduce [the recommendations of the final report] on the first [of December],” Mr Corderoy said.

“I think it’s going to be a lag period of two to three years, even if we pulled them in on that date, to get the full benefit.

“So, that’d make sense. In that two to three years, we can keep [the sector] viable. That’s the challenge.”

The financial viability and sustainability update was based on the 2023 financial year results for both residential aged care homes and Home Care Packages, as per the StewartBrown Aged Care Financial Performance Survey.

The Financial Year 2023 Aged Care Financial Performance Survey noted that structural funding reforms, including increased and appropriate care recipient co-contribution, were required after more than six years of aggregate operating losses in the aged care sector.

Mr Corderoy explained that taxpayers accounted for over 96 percent of the total funding on aged care from Commonwealth and State Governments.

“Look at that result,” Mr Corderoy said, presenting a cost analysis slideshow that covered the aged care sector in Australia, “$13 dollars per bed per day loss.”

“We’re saying ‘you should be paying a proper price for your everyday living and your accommodation services, which is [sic] services that you paid for all your life’ and so that’s going to be really important when we’re looking at where we’re going in the future.

“So, when you look at the [Aged Care] Taskforce — the Taskforce, I think, is saying, ‘[Independent Health and Aged Care Pricing Authority], we want you to properly calculate what the care component should be;’ building a margin, building an administration cost and make certain that we’re getting a subsidy for our direct care.”

Grant said that the Taskforce has focused on who should foot the bill for funding direct care, which had to be accounted for and determined by IHACPA. Mr Corderoy said that the aim of IHACPA is to set dedicated funding commitments for home care and residential care, respectively.

In a panel discussion at the ACCPA National Conference, Mr Corderoy said that regional and remote aged care providers, who were hit hardest by the ‘thin market’ conditions leading to disproportionate operating losses, were a priority for the Taskforce and that consumer contributions were considered during Taskforce meetings.

“I think that aged care in Australia has, of course, a very metro focus. Well, I think the Taskforce, I can say, hasn’t got a metro focus and I think that’s been very important,” Mr Corderoy concluded.

Do you think that the Taskforce will flip the current state of aged care on its head in Australia or is the July 2024 Aged Care Act will fail to deliver? Let the team from Talking Aged Care know and subscribe to the newsletter for more informative content!