41% of aged care providers losing money: StewartBrown blames ACFI freeze

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Four out of ten providers reported an Earnings Before Tax (EBT) loss in the six months to December 2017, up from 33.9% in FY17.

Another 21.3% of facilities recorded a negative EBITDA, up from 16.1% last FY – a direct result of this year’s freeze on indexation and cuts to ACFI according to the accounting firm.

Their latest survey of over 915 facilities showed outer regional, rural and remote areas were hit hardest, but inner regional and metropolitan facilities have also had “significant declines”.

Their report also points to increasing staff costs, the low price of accommodation compared to median house prices, the slow uptake of services and lack of dementia care funding as factors.

Interestingly, StewartBrown notes that the average ACFI has remained neutral – at $171.84 –and residents’ acuity levels have stayed the same as more consumers sit on the national home care queue.

This prevents facilities from improving their financial performance by increasing their mix of residents.

The average facility EBITDA for the survey dropped by $1,326 to $7,071 per bed per day.

Meanwhile, direct care costs increased by 2.96% to $134.58 per bed per day.

Check out the cost comparisons for the last 10 years. ACFI and supplements (including the means‐tested care fee) have grown by 77.8% since 2007.

In contrast, direct care costs including staff, allied health services and medical supplies have jumped by 87.9% – a 10.1% difference.

It’s a gap that will only widen unless more funding becomes available.

You can read the full StewartBrown report here.