Residential aged care occupancy falls below 90% for first time ever – is the Royal Commission to blame for vacant beds?

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The national occupancy rate for aged care beds has dipped to 89.4% – leaving a massive 22,260 beds empty as of 30 June 2019, according to the 2018-19 Report on the Operation of the Aged Care Act 1997.

You can download the report HERE.

In a sign of the times, James Underwood also reports aged care providers are resorting to recruiting sales managers to address declining occupancy and profitability.

Making his point, his newsletter includes ads for both a General Manager and a Sales Manager for a new facility opening in Brisbane.

James notes the additional 10,000 Home Care Packages announced by the Government last Monday in response to the Royal Commission into Aged Care’s Interim Report are unlikely to help operators facing declining occupancy levels.

Check out the graph from James Underwood above.

As you can see, occupancy slid gradually from 96% in 2003 to 92.4% in 2010 before hovering around the 92% mark until 2016 (when the Government changed the ACFI funding).

The rate then began to trend downwards again, dropping over 2% over 2017 (Oakden), 2018 (the ABC’s ‘Who Cares?’ investigation) and 2019 (the Royal Commission).

So, what would it take to bring occupancy back to 95%?

We did some quick back-of-envelope calculations. Let’s say the average income per resident is $265 (based on the average ACFI and care fees quoted by StewartBrown).

That works out to $2.9 million a day or $1.076 billion a year. So, the Government could have boosted the sector’s occupancy levels by 2% based on the $496 million that Prime Minister Scott Morrison announced for the 10,000 packages last week.

Consider this too. There are currently 120,000 older people on the home care prioritisation queue.

If 10% of that number – 12,000 people – are forced into residential care, that would also bring the levels back up to 95% – at a cost of $1.076 billion a year.

It’s no wonder then that the Government doesn’t want people entering aged care homes.

You must ask the question too – why is occupancy down to 89%?

Some of the issue – as discussed before in our 12 March 2019, 21st edition – is the number of shared rooms in ageing facilities in middle-ring suburbs that don’t meet families’ expectations.

Australia also continues to build more aged care facilities – adding 6,826 residential and flexible aged care places since 30 June last year, the Operations report states.

But we also have more people on the ageing journey and more people being approved for home care but not receiving it.

Yet occupancy is still going down – and providers are now turning to sales staff.

There appears to be three other explanations – one, there is a group of people who now flatly refuse to enter residential care because they have lost ‘trust’ in the system to care for them.

The Royal Commission’s Interim Report labelled the aged care system “cruel and unkind”, but is it not cruel and unkind that there are people living in our community who desperately need services but are not willing to receive them?

The second is that there are individuals and families who are footing the bill for home care services themselves – which is happening.

The third is that sadly these people are dying – which is also the case. We know 16,000 Australians died waiting for a package in 2017/18.

The Royal Commission may well succeed in its goal to fundamentally re-design the system, but it seems clear this could come at a cost: the fear of the community to receive care.

What are your thoughts?