industry & reform
On the brink
Call for emergency funding as providers reach ‘ fiscal cliff ’.
Grant Corderoy interviewed by Elise Hartevelt
Experts are calling for emergency government funding to prevent more aged care homes from going under .
StewartBrown ’ s latest March 2022 Sector Report reveals the financial performance of the aged care sector over the previous nine months .
The report showed that 64 per cent of homes have been operating at a loss , an increase by 4 per cent compared to the previous survey .
Senior Partner at StewartBrown , Grant Corderoy , warns this number will rise to at least 67 per cent by the end of 2022 .
“ They are at a critical juncture of their sustainability ,” Corderoy says .
“ Providers have had five years of aggregate losses , and their reserves are now depleted .” Corderoy says emergency funding of $ 3,000 a bed is needed from August and a similar amount in January and February to allow the sector to retain its viability while the government ’ s initiatives start to take effect .
Aged Care Insite discussed the new figures with Corderoy and what they mean for the sector .
ACI : What were the main takeaways of the latest report , and what are the key concerns highlighted ? GC : The main takeaways for the residential aged care sector is a further deterioration of the operating results . It ’ s significantly declined quarter on quarter from FY21 . Of note is that the decline is inclusive of the $ 10 per day basic daily fee supplement , which came in on the 1st of July .
About $ 1.85 of that has been additional costs that providers have used for the supplement . The rest is really recouping for their existing costs . Without the supplement , the decline would have been quite dramatic .
What we ’ ve said in the report is that we believe residential aged care has reached what I call the fiscal cliff because we ’ ve now had five years of aggregate losses . That means that the reserves have been depleted and , really , I think the sector is not in financial peril , but I think it ’ s in a critical juncture of its shortterm sustainability .
Compared to the previous report from December 2022 , aged care
“
Emergency funding would allow the sector to retain its viability .
homes now have an increased loss of 64 per cent , up from 60 per cent . How is it possible that this is continuing ? We ’ re seeing homes that might have been previously break even or slight surplus now moving into the loss-making area .
I would imagine that that percentage will increase to maybe 66 or 67 per cent for the year ending June 2022 . What it ’ s saying there too is that homes are losing money in all regions – in major cities , inner regional and outer regional , rural , remote – which effectively says that , by and large , the funding model is insufficient .
The government has now agreed to increase aged care funding by 1.7 per cent , whereas inflation is at 5 per cent . How will this affect aged care homes ? It will have a significant effect . The National Wage Price Index for the March ‘ 21 year was 2.4 per cent . Since then of course inflation has gone up .
We ’ ve had the Fair Work Commission Minimum Award case which could add about 4.6 per cent to the majority of
16 agedcareinsite . com . au