StewartBrown: 60% of residential aged care homes are running at a loss

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The StewartBrown December 2021 Aged Care Financial Performance Survey found 60% of residential aged care homes are now running at a loss. In rural and remote homes the situation is worse – 65% are making a loss.

StewartBrown Senior Partner Grant Corderoy (pictured) said costs to providers are rising, occupancy rates are falling and operators have lost the COVID-19 payment since 1 July. The survey found $8 of the Federal Government’s new basic daily fee supplement, an extra $10 per resident per day, was being used on the bottom line.

The quarterly survey – which covers financial and supporting data from 1,198 aged care homes (97,080 beds/places) and 56,223 home care packages across Australia – is the largest benchmark in the aged care sector.

It found that providers on average are making an operating loss of $10.31 per bed per day. The result is worse than 2021 July-September quarter ($7.30 loss), the same six-month period in 2020 ($4.96 loss) and the 2020-21 financial year ($8.43 loss).

“This remains an unsustainable result and affects both the investment into the sector and the ongoing viability of a number of providers. There is a necessity for providers to accumulate retained profits and cash reserves to reinvest to replace and maintain capital building stock,” said Grant.

One positive note was that the average full Refundable Accommodation Deposit (RAD) taken in the December 2021 six months increased to $449,043 nationally, an increase of $12,565 in the period from December 2020 ($436,479).