It is almost a week since ACFA released its annual report for the 2015-16 year and the response from industry has been somewhat quiet.

The most detailed review we have seen came from Catholic Health Australia, in which Nick Mersiades – who is also the Deputy Chair of ACFA – provided a digestible summary of the 166-page report with commentary that we can best describe as very measured.

You can read Catholic Health’s full summary here or see ACFA’s full report here.

In a nutshell, while ACFA concludes the financial performance of the residential sector and investor sentiment continued to improve during 2015-16, mainly due to what is believes is a result of the reforms, it was ‘other income’ ie non- operating income that offset the sector’s overall net operating loss of $240 million.

In the home care space, there was an overall decline in financial performance with average EBITDA and NPBT both dropping by 7 per cent, though in both residential and home care providers in the top quartile showed strong increases in average EBITDA (42 per cent increase in home care to $6,190 per package and in res care average EBITDA was $25,254).

Within the bottom quartile, there is a significant variation in average EBITDA by ownership. Government providers reported a negative EBITDA of $21,025, compared with negative $1,802 and positive $514 for not-for-profit and for-profit providers respectively. Government providers represent 59 per cent of the bottom quartile providers.

The for-profit sector continues to out-perform other groups in financial terms, with EBITDA and NPBT margins in 2015-16 of 13.6 per cent and 9.1 per cent respectively compared with 11.2 per cent and 5.6 per cent for the not-for-profit sector. Government providers reported the poorest returns, with EBITDA and NPBT of 0 per cent and -11 per cent respectively.

There has been further consolidation in the residential aged care sector, with the number of providers declining from 1,016 in 2013-14 to 949 in 2015-16, despite an increase in the number of operating beds.

Single home providers still account for 65 per cent of all residential providers but they only have 23 per cent of beds.

There were 496 providers of home care in 2015-16, however, about 170 new home care providers were approved between 1 July 2016 and 30 April 2017, most of which were existing home support or residential care providers.

There was an average real increase in ACFI care revenue of 5.2 per cent per resident per day, though the latest data from the Department of Health shows a significant decline in real growth rates in ACFI revenue to 2.1 per cent per resident per day for the period 1 July 2016 to 31 March 2017.

While average occupancy in residential care at 30 June 2016 was slightly down on the previous year at 92.4 per cent, the utilisation of home care packages dropped further to 82.6 per cent in 2015-16, with utilisation rates decreasing with remoteness.

Home care utilisation rates vary significantly across States, from 68 per cent in WA to 93 per cent in Victoria.

Utilisation rates also vary across package levels (68 per cent for level 1; 81 per cent for level 2; 80 per cent for level 3; 93 per cent for level 4).

Mersiades notes it will be important to track whether the national prioritisation process for assigning packages to individuals introduced in February 2017 leads to a reduction in geographic variations, however the Department has still not made this information available.

What is always interesting with reports like this is what has been skimmed over or not addressed at all.

ACFA is clearly concerned that total liabilities have increased by $4.1 billion and there have been warnings in the wind that arrangements for Refundable Accommodation Deposits (including bonds), which increased from $18.2 billion to $21.9 billion, could be impacted by the outcome of the Tune review.

That wage increases of 3.3 per cent have coincided with the ACFI indexation pause and increased operational costs across the board will no doubt have an impact on next year’s results.

Meanwhile the biggest elephant in the room remains ACFI and how drastic the first wave of changes will be when they arrive.