LASA analysed de-identified data from the Government’s 2017-18 Aged Care Financial Reports from residential aged care providers who revealed a liquidity ratio result for 197 providers.
This liquidity ratio result means that those 197 providers highlighted current liabilities, excluding Refundable Accommodation Deposits, were greater than their current assets.
This review follows viability concerns from LASA in their recent aged care financial risk survey.
Chief Executive Officer of LASA, Sean Rooney, says, “The scale of this risk is alarming for residents and their families, as well as stressed staff, financially stretched providers and the Government.
“These new figures reveal the dire situation facing many services and LASA is calling for $1.3 billion in additional operational funding before Christmas. We are also calling for a structural adjustment program to avoid the risk of unplanned closures of distressed services, while maintaining continuity of care for residents.
“We believe this is particularly critical for regional and remote providers, with the latest evidence given to the Aged Care Royal Commission highlighting concerns for country services.
“This additional funding should be on top of the Government’s welcome commitment to a quick response to the three immediate priorities highlighted in the Royal Commission’s Interim Report, which includes a major home care boost.”
The aged care financial risk survey found 80 percent of providers who participated in the survey are facing challenges.
In the report, it says if conditions continue, 15 percent may have to withdraw services, 41 percent may have to reduce direct care staff, and 62 percent may have to reduce investment.
The Aged Care Financial Performance Survey released by chartered accountants, StewartBrown, earlier this year, stated that over half of residential care providers were “operating in the red” and was climbing to over two-thirds in regional areas.
Besides a one-off Government grant in 2019 to help, LASA believes the financial problems in the sector are getting worse.
“Financial pressures are no doubt a significant factor in the looming closure of three regional aged care facilities in New South Wales and Victoria,” says Mr Rooney.
“Our appeal for funding assistance has nothing to do with maximising profits, it is solely focussed on maintaining and improving care, while avoiding more service closures.”
The push for more funding and structural reform is born from LASA’s Working While We Wait campaign, which is pushing for more action in the aged care system while the Royal Commission continues its investigations.