New survey shows profit drop in nursing homes
A follow-up report on Grant Thornton’s latest annual aged care survey confirms that modern aged care facilities are less profitable than their older counterparts, with some new homes reporting deficits of nearly $2 million.
Further analysis of the 2008 results reveals a huge discrepancy between the results of facilities built before 2000 and those built in the past decade.
Homes built last century had an average, annual pre-tax profit of $1,036 per bed.
In contrast, facilities that were built after 2000 averaged a $584 loss per bed each year – and some of those facilities are making alarming losses. Almost a fifth of loss-making facilities built in the past decade reported deficits of over $1 million.
“This result reflects the significant increase in the costs of building and operating modern facilities to meet consumer demand, and the absence of appropriate funding mechanisms to encourage development,” the report said.
The state with the highest construction costs is Queensland, where providers are paying an average of $185,000 per bed for new facilities.
Tasmanian facilities are the cheapest to build with an average construction cost of $138,000 per bed.
The report also highlighted that the decision to increase bond access by building extra service high care facilities does not necessarily improve overall results. More than half of the 56 extra services facilities participating in the survey reported a net loss in 2008.
