The seventh report from the UTS Ageing Research Collaborative (UARC) has highlighted concerns about profitability in the home care sector just months out from the new Support at Home program.
UARC's 134-page Aged Care Sector Mid-Year Report 2024-25, which has been restructured to prioritise home care given the shift towards care in the home, states 40% of home care operators were operating at a loss in the six months to 31 December 2024.
On average, providers recorded an operating result of $2.05 per client per day (pcpd), up 16% from $1.77 pcpd in the December 2023 half.
Profit margins declined for the third straight December half and have nearly halved from 6.5% in December 2021 to 3.3% in the December 2024 half, based on data from StewartBrown financial surveys of 90 home care providers, or 26% of all Home Care Packages..
"Home care package providers, on average, will not be launching into Support at Home in robust financial health," wrote Professor Mike Woods, UARC Chair, in his foreword.
The results "do not make for a strong foundation given the changes that they are now facing".
The report states the risk of "sustained financial pressure may also prompt providers to either exit the home care sector altogether or to concentrate operations in regions with stronger margins".
Other notable features of the report include:
- With higher prices expected under Support at Home, Mike recommends the Government mounts a "strong education campaign" to inform consumers about the changes.
- Package utilisation rebounded to 88% in the December 2024 half, up from 81.7% at the same time the previous year.
- The report is also cautious on the pricing caps due in mid-2026, recommending they only be implemented if existing pricing arrangements, such as consumer protections, are insufficient.
- The report notes Government projections that 1.7 million Australians will require home care by 2043, an average increase of 32,000 older Australians year-on-year.
