specialty focus
On the money
How aged care providers can increase revenue .
By Elise Hartevelt .
Providers can move to raise their revenue by optimising facility design , according to an aged care advisory firm .
StewartBrown ’ s latest review into the sector estimated that up to 50 residential care homes could be closing their doors in the next 18 months because they can no longer afford it .
Just over one-third of aged care homes made a profit last year , according to federal data .
During the first quarter of 2023 , residential aged care providers had a collective net loss of $ 465.3m before tax , equating to a $ 27.90 loss per resident per day .
StewardBrown ’ s senior partner Grant Corderoy said changing a facility ’ s design and optimising staff costs could help to maximise revenue .
“ The newer homes do better than the older , more traditional ones ,” Corduroy said .
“ They are often designed so that the movement of staff around the home and of services is much more efficient .
“ Some of the old aged care homes have long corridors , so the staff have to walk up and down the corridors to visit the residents or move services around .”
Corduroy ’ s recommendations are based on differences between the top aged care
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providers who were ‘ financially successful ’ compared to those facing financial losses .
Traditionally , residential care homes are built similarly to institutions and clinical settings .
In 2021 , the Royal Commission ’ s final report called for an enhanced focus on residents ’ well-being in the overall design of an aged care home .
The pandemic also emphasised a need for an individualised model which prioritised aged care residents ’ personal choices .
Providers have begun deinstitutionalising facilities , opting for more ‘ home-like ’ designs where residents are part of a close-knit community with enclosed green spaces .
Corduroy said these homes had more efficient staff rostering and usage .
Up to 85 per cent of an aged care provider ’ s spending goes to labour costs , averaging $ 173 per resident per day .
“ For example , a design where you might have 15 rooms in a particular wing where staff can move through while also checking in on the residents is more beneficial ,” he said .
“ You get the same subsidy for care , but you ’ ve reduced your staffing costs , which will improve your performance .”
Corduroy said the most profitable homes ranged between 70 to 90 operational beds .
In 2021 , it was estimated that large residential facilities ( 101 or more beds ) delivered the bulk of aged care services .
Medium homes ( 61-100 beds ) provided nearly 33 per cent of services , and small homes ( 60 beds or fewer ) just over 18 per cent .
“ Ideally , you want to get at least 94 per cent occupancy ,” Corduroy said .
“ For larger homes , you have to have a fairly high turnover rate to make that number .
“ In reality , they ’ re more likely to sit at a number of 70 per cent , which reduces a provider ’ s supplement funding paid by the government .”
Providers offering specific services in everyday living , such as hairdressing , or better technology , were also more likely to perform better financially .
Corduroy said that if you can prove these additional services improve resident wellbeing , you can charge an additional services fee .
“ There ’ s a margin that homes can get for these extra services that can improve their revenue line ,” he said .
Overall , Corduroy said it ’ s a fine balance between a home ’ s design , staff efficiency and additional government funding that determines the financial situation .
However , he highlighted that many aged care homes are not able to remodel their facility or offer additional services .
“ Unfortunately , their options are limited ,” Corduroy said .
“ If they can get government grants to help refurbish and rebuild , or consider taking some debt to renovate , that would improve their financial situation .
“ But for those to remain as they are is becoming increasingly difficult and very unsustainable .” ■