Media Release
21 March 2021
More than 140,000 older Australians in communal residential aged care are living in facilities that made a financial loss last year, putting their care and the sustainability of their homes at risk, the Australian Aged Care Collaboration said today.
The latest independent StewartBrown report found 58 per cent of aged care homes surveyed operated at a loss in the first six months of this financial year, with an average operating deficit of almost $2,750 per bed per annum.
AACC representative Patricia Sparrow said the StewartBrown report demonstrated the scale of the crisis the upcoming federal budget had to address.
“This shocking financial update is unfortunately of no surprise to anyone. There are no hidden stories here, aged care is deep in the red and it is older Australians who are suffering,” Ms Sparrow said.
“If there is anything less than a total overhaul of aged care services, and the way they are financed in Australia, in this year’s budget it will be a failure for older Australians.
“The system is broken, and 1.3 million older Australians receiving some form of aged care either in their own homes or in a communal residential aged care facility deserve better.
“Older Australians need additional funding to ensure they have more nursing and care staff, and that those staff are better paid and trained.”
The StewartBrown December 2020 Aged Care Financial Performance Survey incorporates detailed financial and supporting data from 1,200 aged care homes (97,056 beds/places) and 45,553 home care packages across Australia.
The quarterly survey is the largest benchmark in the aged care sector and provides invaluable insight into the trends and drivers of financial performance at the sector level and at the aged care home or program level.
It found the average residential aged care facility in the six months to the end of December 2020 recorded:
- An operating deficit of almost $2,750 per resident (on an annualized basis)
- a $717,000 operating deficit – on top of a $904,000 deficit for the corresponding period in 2019 • an operating return on assets (EBITDA) of only 1.0%
- employee expenses reaching 70.1% of total operating revenue.
AACC representative Sean Rooney said older Australians were being denied the quality care the community expected because Australia devotes less than half of what comparable countries do to aged care (1.2% vs 2.5% of GDP).
“We appeal to the Government and the Parliament to provide older people with quality care, choice, and respect,” Mr Rooney said.
“With a significant surge in operating losses forecast for residential care, older Australians need urgent action on the Royal Commission recommendations.
“The final Royal Commission report said collective decisions of successive governments had cut more than $9.8 billion from the budget for aged care in 2018–19, prompting lengthy waiting lists for home care and serious stress and deficiencies in residential care.
“Financial subsidies for residential aged care are not keeping pace with the real costs of caring. Aged care staff with limited resources battle every day to provide top-quality care to older Australians.”
Under-resourced aged care homes were described as in an ‘impossible situation’ by Counsel Assisting the Royal Commission, with 64 per cent of residential aged care homes operating at a loss, rising to 78 per cent in rural and regional areas.
The problem:
- 16,000 vulnerable Australians died in 2017-18 while waiting for a government-subsidised support package in their own home.
- An additional 100,000 people are waiting for home support at their approved level – with those in need of the highest-level packages typically waiting at least 12 months.
- Separately, a further 88,000 places will be required in communal Residential Aged Care over the next 10 years, at a cost of $55 billion, to ensure older Australians are given the care they need.
The AACC represents more than 1,000 organisations who deliver 70% of government-subsidised agedcare services to 1.3 million Australians, either in their own homes or in communal residential settings.
It includes not-for-profit providers, primarily church and other charity organisations, and a number of private operators, as a new single industry voice delivering quality care for older Australians.
The future
More than 4.1 million Australians, or almost 16% of the population, are currently aged over 65. By 2057, that will rise to 8.8 million, or 22% of the population, and by 2097 it will reach 12.8 million people, or one in four Australians.
Sean Rooney is the CEO of Leading Aged Services Australia (LASA) and Patricia Sparrow is the CEO of Aged & Community Services Australia (ACSA).
Types of government-subsidised aged care
Broadly speaking, Australians access government-subsidised aged care services in three different settings:
- Own home – for people with low care needs (Commonwealth Home Support Program CHSP) – 840,000 people.
- Own home – for people with greater care needs (Home Care Package Program) – 174,000 people.
- Communal care homes – where residents generally receive nursing and personal care 24 hours per day, either on a permanent basis or as short-term respite stays (Residential Aged Care Homes) – 244,000 people.
Spending on aged care
- Total expenditure on aged care in Australia in 2019-20 reached about $26 billion. • The Australian Government spent $21 billion, with most of the remainder paid directly by consumers.
Own home
- About 16,000 Australians have died while waiting for a home care support package. • An additional 100,000 people are waiting for home support at their approved level – with people in need of the highest-level packages typically waiting at least 12 months.
Communal residential aged care
- Australia’s financing of aged care is highly skewed towards residential aged care, with 6.4% of over 65s in Australia living in these communal homes, compared with an OECD average of 3.6%. • Approximately 63% of all government aged care funding, or $13.5 billion, is spent on communal residential aged care.
- A further 88,000 places will be required in communal Residential Aged Care over the next 10 years, at a cost of $55 billion.
Staffing
- 78,000 extra workers are needed in the next 10 years to deal with the country’s ageing population.
These figures may explain why the Royal Commission into Aged Care Quality and Safety found that Australians strongly support increased funding to ensure access to high-quality care in the future.