Home care sees revenue rise on the back of reduced costs and staffing hours: StewartBrown analysis – unspent funds reach $1.5 billion

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Home care operators have fared better than residential care providers in StewartBrown’s March 2021 financial performance survey – but not because of increased revenue.

Home Care Packages have seen an increase in operating performance for the year to March 2021, with an overall increase of $1.16 per client per day in comparison to March 2020.

However, these improved results are largely due to reduced costs rather than increased revenue –and particularly staff costs and the resulting staffing hours again reducing.

For the nine months ended March 2021, home care operators had an average operating result of $5.67 per client per day ($2,070 per client per annum).

Direct care hours down again

However, total staff hours reduced to an average of 5.51 hours per client per week from 5.67 hours in March 2020.

Direct service hours per care recipient per week (including agency staff) fell to 4.04 hours (on average) for the March 2021 period compared to 4.36 hours for March 2020.

StewartBrown has previously noted that there has been a 50% decline in home care hours over the past decade which was attributed in part to people’s care needs not being commensurate with funding levels – so clients being over-assessed – as well as operators reducing their costs to drive profitability.

Home care administration and support costs – currently being targeted by the Government – also fell slightly to 22.2% of revenue, down from 23% of revenue in March 2020.

Intriguingly, the figures show the number of home care recipients entering residential care has gone up – from 42% in June 2020 to 48% in March 2021 – despite the decline in residential care occupancy outlined in the above story.

This raises the question: does this represent a ‘rush’ from older Australians whose families kept them at home during the COVID-19 pandemic – and did these home care clients actually decline faster at home than they would have in residential care?

$1.5 billion in unspent funds

The level of unspent funds in home care also remains an issue, increasing by $1,621 per client to an average of $9,871 per client – a total in excess of $1.5 billion of funding.

Revenue utilization did increased by 2.8% to an average of 87.9% of funding received compared to 85.1% at March 2020 – leaving 12.1% in unspent funds.

94% of these unspent funds is never utilised and returned to the Government once the consumer leaves the home care program.

The Government is taking action to redistribute these funds, with Phase 2 of its Improved Payment Arrangements reform due to start in September 2021 – just under two months’ away.

“The result in terms of cash flow implications for providers will require monitoring,” the analysis concludes.

Watch this space then.