New aged care benchmarking survey

The profitability of high care facilities improved in the 2008 financial year, according to the June 2008 benchmarking survey from Stewart Brown Business Solutions.

But the analysis of over 280 facilities in every state and territory revealed that less than a third of participating high care facilities achieved a net operating profit.

The average result for high care facilities was a deficit of $7.08 per bed day.

“There are still only 30% of high care facilities achieving a net operating profit,” said David Sinclair, the manager of Stewart Brown’s aged care benchmarking service.

Mr Sinclair said the slight improvement among high care facilities could be attributed to more efficient rostering and the introduction of the Aged Care Funding Instrument (ACFI); although he added that it is still too soon to fully assess the ACFI impact.

The trends in low care are less positive as declining returns continue to cause problems.

Less than half (48.4%) of the participating low care facilities managed to obtain a net operating profit.

The survey average for low care participants was a net operating loss of $2.02 per bed day.

The results reflect the fact that the average wages to income ratio for low care homes has risen 3.48%, while among high care facilities, it has fallen 0.72%.

“What is happening in low care now is what happened in high care some time ago,” said Mr Sinclair.

“The losses are getting bigger and bigger each year.”

Another worrying finding is that the majority of facilities in the survey are using capital income to cover day-to-day expenses, adding to existing concerns about future building projects.

A major factor behind the existing difficulties for residential providers is administration costs, which continue to rise at a significant rate.

In the past year, spending in this area rose by an average of 6.8% in high care facilities and 21% in low care facilities.

According to Mr Sinclair, the transition from the Resident Classification Scale (RCS) to the ACFI is probably contributing to this trend.

“[The new instrument] was supposed to decrease the administration burden,” he said.

“And it might be decreasing that burden on the floor, but when it comes to administering the subsidies, it can be a lot more difficult.”

As in previous years, the top 25% of participating facilities had fewer staff hours per bed day, compared to the survey average.

High care providers in the top quartile allocated 0.06 fewer staff hours per bed day than the survey average, while in low care, the difference between the top facilities and the overall average was 0.2 hours per bed day.

“The differences look to be fairly marginal, but when you think that we are talking about the hours per person per day, that soon starts to add up,” Mr Sinclair.

On a more positive note, the survey revealed that community care results remained steady in the 2008 financial year.

Average daily returns for Community Aged Care Packages rose to $4.23 and although the returns for Extended Aged Care at Home packages fell slightly, they remained above $15.

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