The January to March 2023 period marks the second quarter under the new AN-ACC funding model introduced on October 1, 2022, for residential aged-care providers. The government’s Quarterly Financial Report (QFS) reveals positive trends in financial performance.
Residential care providers have shown improvement in year-to-date earnings before interest, tax, depreciation, and amortisation (EBITDA) of $6.09 per resident per day, totalling $19.02. It also sees the number of residential aged care providers reporting a year-to-date net profit before tax increase to 48.6%, an increase of 2.2%. However, the sector still incurred a net loss before tax of $674.4 million in March 2023.
Occupancy rates for residential care providers averaged 86.0% in Quarter 3 of the 2022-23 financial year, a slight increase from the previous quarter. Care minutes per resident per day increased by one minute, reaching 190 minutes, with an expectation of further increases as care minute targets become mandatory.
Wages for residential care providers rose to a median of $179 per resident per day in Q3, as expected to meet care minute requirements. Home care providers remained profitable, with EBITDA per recipient per day increasing to $4.17. Net profit before tax also saw a slight increase to $3.65 per recipient per day.
Notably, capped fees for care and package management were introduced, ensuring more funds are available for home care recipients. COVID-19 continued to impact the aged care sector, leading to increased operational costs, particularly for residential providers.
The government approved approximately $142 million in reimbursements for the COVID-19 Aged Care Support Program Extension during this period, highlighting the ongoing financial challenges posed by the pandemic.
Lastly, the removal of the Aged Care Approvals Round (ACAR) led providers to adjust the treatment of bed licenses as intangible assets, affecting their balance sheets, with many yet to write down their value in full. From July 1, 2024, when aged care places will be directly allocated to older individuals in Australia, providers will need to completely remove any remaining value attached to bed licenses.
Overall, the QFS for January to March 2023 indicates improved financial performance in the aged care sector, but challenges related to COVID-19 and regulatory changes persist.
Inside Ageing and Pride Living are hosting a webinar series for aged care operators, focusing on long-term financial sustainability. Covering topics like optimising business models, return on equity, occupancy strategies, diversified income sources, and resource allocation, this series aims to provide insights into achieving financial stability for both residential aged care (Sept 26, 2023) and home care (November 1). Further information here.