How did aged care fare in 2022?

Key points:

• The Department of Health and Aged Care released the latest Financial Report on the Australian Aged Care Sector 2021 – 2022, which offered providers insight into performance across the industry

• The residential care sector operated at a loss of $2.264 billion dollars in total — an average net loss per resident per day of $32.97

• The home care sector remains profitable, however there was a decrease in profitability for the 2021 – ‘22 financial year compared to the 2020 – ‘21 FY

The newly released Financial Report on the Australian Aged Care Sector 2021 – ‘22 revealed that the industry had likely reached the lowest financial performance in the latest financial year, following a steady decline which began in 2016 – ‘17.

The Report highlighted that better results are expected across the industry in future years following key reforms which will come into effect following the ‘21 – ‘22 FY, such as:

Key reforms

• An additional 9,500 home care places in 2023 – ‘24
• The roll out of the Australian National Aged Care Classification — AN-ACC — funding model, which started on October 1, 2022
• The expanded role of the Independent Health and Aged Care Pricing Authority which will provide advice to the Government to ensure care funding moves in-line with the costs of delivering care — IHACPA’s first recommendation to the Government was delivered in May, 2023 and AN-ACC funding increased by 17 percent
• Funding for higher wages for aged care workers
• Additional Australian Government investment into care and nursing, which is intended to restore confidence in the quality of residential aged care

The home care sector changed from the 2020 – ‘21 FY to the ‘21 – ‘22 financial year, through:

Home care sector — 2021 – ‘22

• A 22.51 percent increase in home care recipients, as of June 30, 2022
• 23 fewer home care providers
• An increase of 4.76 percent in Australian Government funding
• A 31.25 percent decrease in average earnings before interest, tax, depreciation and amortisation — EBITDA/profitability, per resident
• A 35.31 percent decrease in net profit before tax — NPBT

The residential aged care sector, however, saw a relative:

Residential aged care sector — 2021 – ‘22

• 2.75 percent increase in Australian Government funding
• 101 percent decrease in EBITDA per resident
• Average operating loss of $32.97 per resident, per day
• 15 percent fewer profitable providers in the sector
  

As for the Commonwealth Home Support Programme in ‘21 – ‘22, there were:

Residential aged care sector — 2021 – ‘22

• 0.87 percent fewer CHSP recipients
• 1.75 percent fewer CHSP providers
• 5.45 percent more Australian Government funds directed towards the CHSP

The Report noted that the residential aged care sector had already improved as a result of the AN-ACC commencement in October, as highlighted in the second quarterly financial snapshot for 2022 – ‘23.

What do you believe the future of the aged care industry will look like? To review the Report in full, please visit the FRACCS data analysis here.