The Department of Health, Disability and Ageing’s March 2024-25 Quarterly Financial Snapshot (QFS) shows between 2020-21 and 2023-24, care management charges made up 16.5%-18% of home care providers’ total revenue, while the cost of delivering these services accounted for just 10.5%-11%.
"These results indicate that providers may be using margins on care management services to cross-subsidise losses in other services," the Department's report states.
"The department will continue to monitor prices set by home aged care providers, including through the transition to the Support at Home Program to ensure they are reasonable and transparent."
According to StewartBrown, home care providers will need to increase their margins through increased pricing and improved revenue utilisation to claw back the cash they will lose thanks to the incoming 10% care management cap and removal of Package management fees under Support at Home.
Fewer profitable home care providers
Elsewhere, the report showed fewer home care providers reported positive earnings before interest, tax, depreciation and amortisation. In Q3 2024-25, 76.1% of providers reported positive EBITDA, down 5.8 percentage points from the year prior – see the graphic on the right.
However, profitability overall for the sector improved. The home care sector's EBITDA for the quarter was $5.5 billion, or $74.69 per care recipient per day (pcrpd), up $8.33 from the previous year.
Revenue grew 14% to $10.15 pcrpd, driven by a 5.3% increase in claim days and increased utilisation of Home Care Packages, which rose from 83.4% in Q3 2023-24 to 85.4% in Q3 2024-25.
Expenses also grew 12.6% to $8.39 pcrpd driven by the increased labour costs associated with the higher claim days and Package utilisation.
The median EBITDA margin was 6.7%, down 2.2%.
Unspent funds rose 23% to $3.7 billion in the year to 31 March 2025.
