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Report reveals the sustainability of the aged care sector is at ‘serious risk’

Funding cuts to aged care services, combined with rising operating costs and growing acuity and complexity of resident needs are being attributed to new and shocking statistics which show the deteriorating financial situation for a growing number of aged care providers, prompting concerns that the sustainability of the sector is at risk.

A StewartBrown report revealed that 43 percent of residential aged care facilities experienced financial loss in the last nine months (Source: Shutterstock)
A StewartBrown report revealed that 43 percent of residential aged care facilities experienced financial loss in the last nine months (Source: Shutterstock)

The latest data, released by StewartBrown this week, shows that 43 percent of residential aged care facilities experienced financial loss in the last nine months (to 31 March 2018), an increase from 41 percent in the December quarter, and an increase from 31 percent in 2015-16.

Aged care peak body Aged and Community Services Australia (ACSA) has come forward to support the growing sector with Chief Executive Officer (CEO) Pat Sparrow calling the rise a “serious and disturbing trend”.

She adds that financial conditions are also deteriorating for home care providers as well, according to the data.

“In light of these troubling trend lines, we urge politicians to back up their aspirations with some basic funding commitments that recognise the importance of caring for the ageing population into the future, and providing some certainty to the care required to tackle that challenge effectively,” Ms Sparrow explains.

“Staff costs and resident acuity is increasing - including those operating in rural and remote communities and those caring for homeless and other disadvantaged groups - while funding is standing still.

“The vast majority of services in these areas are delivered by the church and charitable sector on a not-for-profit basis and many of them are increasingly financially vulnerable.

“We need a serious overhaul of the financial approach to aged care so that the costs can be met.

“This can only be achieved through a combination of taxpayer funding and individual contributions from those who can afford it.”

Fellow peak body, Leading Age Services Australia (LASA) has also made comment on the new data, with CEO Sean Rooney increasing his calls for a funding indexation increase from 3 to now 4 percent.

“We believe it is now vital that the Government inject 4 percent indexation estimated at around $470 million per annum,” Mr Rooney says.

“This modest amount of funding would go some way towards short term sector stabilisation, pending a comprehensive game plan for ongoing aged care funding sustainability.”

Mr Rooney adds that the funding squeeze not only puts at risk the viability of age services, but also reduces the capacity of many to refurbish and rebuild facilities.

“As a result of funding stress, investment in building new, and refurbishing existing facilities, is slowing at a time when estimates highlight that we will need another 83,500 beds over the next ten years to meet rising demand,” he says.

“If we are to meet the needs of the growing numbers of older Australians we need to have adequate and stable funding.”

Holding the same concerns, Ms Sparrow put forward the urgent need for a funding model based on real delivery costs to be developed.

“This would result in additional funding which could then be indexed approximately to keep pace with inevitable cost increases,” she says.

Federal Minister for Aged Care Ken Wyatt responded to the survey and concerns voiced by the peak bodies, saying that the Government works closely with the aged care sector and understands that, while some providers are producing strong results, others are reporting losses.

“The recent $5 billion Federal Budget boost for aged care includes a number of measures to support the residential care sector,” he says.

“These include more than 14,000 residential and restorative care places for allocation this year, with almost 30,000 to be allocated over the next four years. There will also be $60 million in new capital grants available and a further $145.7 million in infrastructure support for regional, rural and remote services.

“There will be $50 million to support providers as the sector transitions to the new single quality framework. The Government is also contributing more than $53 million a year to the viability supplement, supporting providers in rural and remote Australia.”

Minister Wyatt says the majority of the Aged Care Funding Instrument subsidies will also return to indexation from 1 July 2018 which will further increase funding for the aged care industry.

He adds that the Turnbull Government continues to review the residential care funding system, with a landmark study examining cost drivers in the industry currently underway which will be completed later this year and provide an evidence base on which to consider funding reform.

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