COVID-19 and the aged care financial fallout

Key points:

• 66 percent of aged care providers operated at a loss between July – September 2022, with just 25.9 percent of not-for-profit aged care operators recording a net profit

• Aged care providers are still holding out hope that hundreds of millions in emergency COVID spending will be reimbursed by the Government, years after the pandemic

• As pay rises are introduced across the sector to try and incentivise employees to join the industry which has been haemorrhaging money, a growing list of providers are demanding answers

Aged Care Minister Anika Wells had previously told aged care providers that the Government would “[…] deliver these reform measures—for older Australians today, and for many years to come,” through the new Australian National Aged Care Classification [AN-ACC] funding model.

However, Catholic Health Australia’s Director of Aged Care Jason Kara said that the Government has still not reimbursed expenditure from 2021 – ’22 and 2022 – ’23, to cover vital costs which providers took on to make it through COVID-19.

“With around 70 percent of residential homes running at a loss, age care providers cannot continue to be left out of pocket for COVID-related expenses,” Mr Kara said.

Catholic Health Australia provided the following itinerary of outstanding costs:

• Calvary Health Care: $55 million worth of COVID grant claims submitted, with only five million dollars paid out
• Southern Cross Care [SA, NT & VIC]: six million in grant claims submitted, with only $230,000 paid out
• Southern Cross Care [NSW & ACT]: six million in grant claims submitted, with $2.2 million dollars outstanding
• Southern Cross Care [Western Australia]: $3.946 million in grant claims submitted, without any reimbursement
• Southern Cross Care [Tasmania]: $1.23 million in grant claims submitted, without any reimbursement paid out
• MercyCare in Western Australia: $1.55 million in grant claims submitted, with only $55,000 paid out
• Southern Cross Care [Queensland]: all 2021 – 22 grant claims have been paid, with $600,000 outstanding from 2022 – ’23 claims made

Mr Kara stated the outstanding costs and transparency between the Australian Government and aged care providers made it difficult for efficient financial management, as the CEO said “bureaucracy” was a hurdle in settling outstanding claims.

“Bureaucracy has placed numerous barriers to reimbursing providers for their expenditure. This includes insisting on separate claims for each home and outbreak and multiple agencies querying the same claim,” Jason said.

“We have a system that has almost been designed to fail. Claims worth hundreds of thousands of dollars are held up for months by the government agency querying a $100 test expenditure. Common sense tells us that this could be streamlined through paying the approved amount immediately and allowing further discussion on any small, disputed amounts to occur later.”

Mr Kara said the process of claiming previous expenditure had already been a massive strain on providers, who had sought to pull through the regulation and cost-expenses of the pandemic. Recent Senate estimates testimony disclosed there were 11,000 grant applications and at least half a billion dollars still to be paid to providers.

“We have now entered the third financial year of the COVID grants payment scheme and the Government are [sic] not learning the lessons of the pandemic and improving the system. The cost of delivering this labour-intensive process would be better redirected to services,” Mr Kara said.

The ABC reported on July 24, 2023, that the exact figure which needed to be reimbursed could not be tabulated at the time of industry backlash, which was made available to the media at midday.

In April, a six-month review — provided by market intelligence firm Stewart-Brown — reiterated that the sector was still operating at a loss. Of 1,138 residential care facilities, 63 percent weren’t making enough to break even as of 2023, with workforce shortages and a declining occupancy rate cited as a particular concern.