Number of aged care homes in the red hits 50% for first time: StewartBrown – while home care is on the up

Published on

51% of the 984 aged care homes notched up an operating loss (negative earnings before tax), according to the accounting firm’s latest report for the quarter ending September 2019. The 984 homes are a sample of 40% of all facilities.

Outer regional, remote and very remote areas took the brunt with 65% of homes reporting an operating loss and 47% making a cash loss compared to metropolitan areas with losses of 47% and 22% respectively.

Occupancy also took a hit, down to 93.9%, from 94.9% for the previous year.

In total, the average cash profit per bed per year was $5,820, from $7,737 in 2018, while the average operating profit per bed per day was just $1.69 – down from $4.37 in 2018.

It was a different story for home care however with an improvement in the financial performance of the 34,702 home care packages in the survey for both the average and the First 25%.

The overall survey average NPBT result was a surplus of $6.35 per client day (compared to $3.49 in September 2018) with all revenue bands (based on care recipient acuity mix) showing an improved performance in comparison to the same quarter in 2018.

So, this profit equates to 1.5 coffees a day in value.

The survey’s First 25% also had an increase in surplus to $21.38 pcd (up from $17.53 in September 2018).

The only downside it would seem is the increasing amount of unspent funds in the sector with revenue utilisation falling to 85.9% in September 2019 (Survey First 25% was 85.7%) which StewartBrown warns would affect profitability due to the fixed overhead costs being spread over the improvements revenues and variable costs remaining proportional to revenue levels.

A two-speed sector then.

You can download the report HERE.