Rising losses in providing quality aged care

Two well-known commercial benchmarking services on the financial health of the aged care industry have produced reports showing rising losses in aged care.

The most recent report by Stewart Brown and Company, for the nine months ended 31 March 2006, shows that 53% of the services measured in not for profit aged care facilities were losing money on a daily basis for all care services provided, especially for residents receiving high care. Financial performances were trending down.

While the picture was better for the facilities benchmarked in the Bentley Underwood National Residential Aged Care Survey, it was conducted nine months earlier (up to 30 June 2005) after the Government had lifted subsidies.

Aged and Community Services Australia chief executive officer, Greg Mundy, said the trend shown in the two surveys was of great concern to the industry, and to the long term future of aged care in Australia.

“The aged care industry is totally regulated and controlled by the Government in what it can charge for services and care – not just overall but for each resident. The system can only work if the fee rates and subsidies move in line with – and not below- actual costs of care,” he said.

“Government funding has not met the rapidly increasing costs of care, especially in the wages area which makes up over 70% of costs. The benchmarking reports show that aged care is responding by gradually reducing the level of care provided because they cannot afford to meet the increasing costs of this care.”

He urged the Government to index the prices it pays to reflect the actual costs of providing quality aged care; remove some of the restrictions on user-pays by those consumers who could afford to pay more, especially for their accommodation; and for both federal and state governments to lighten regulations to reduce some of the costs of operating an aged care service.