Occupancy in residential care is expected to plunge below its 2019 record low of 89.4% in the June quarter – driving more operators into the red, according to StewartBrown’s soon-to-be released financial performance survey.
A number of people from across the sector have warned us that occupancy – critical to profit – has hit the skids during the pandemic.
StewartBrown Senior Partner Grant Corderoy adds that for this latest March quarter survey – which covered 55% of all beds in Australia – they expanded the list of respondents to include the larger listed entities and larger For Profits who are generally not included in their results.
Health Metrics CEO and founder, Steven Strange, tells us they are seeing an “alarming deterioration in occupancy rates” across their 55,000 Australian beds with levels now sitting around 89% – which he calls the break-even mark.
This is a fall of 2% from nine months ago, which he attributed to the pandemic stymieing new admissions and the longer-term fallout from COVID-19 as families choose not to place loved ones into residential care.
“This is on the back of waning occupancy pre-COVID due to the impact of home care and other things,” he said.
This analysis is expected to be backed by StewartBrown’s latest aged care financial performance survey which is due out next week – we spoke to Grant ahead of its release about occupancy levels in Australia.
Grant conceded “anything under 90% is not good” for operators.
The Department of Health has forecast what it calls a “modest reduction” in residential occupancy of 88.6% for this year, but Grant says their figures are based on the number of approved places, minus any known refurbishments whereas StewartBrown’s figures are based on the total number of available beds – and are therefore higher
He says while the occupancy results in the January to March report will show a drop in occupancy, because the pandemic was only declared in March, the findings show the real hit will come in the June quarter where a further drop of 1% is expected.
Respondents forecast another 1% decline in the September quarter.
Grant now predicts that the number of operators running at a loss – at 56% in the December quarter survey – will also jump to 60% on the back of the occupancy slump.
As we have reported, the Government is delivering around $850 million in stimulus funding to the sector during the pandemic, but Grant says the only solution is to develop a more sustainable funding model for the sector.
“Funding for aged care was insufficient pre-COVID and will be post-COVID,” he said. “There has to be a change in the funding model.”