Nursing homes lose $2.75bn in three years

Aged-care providers are operating in an unsustainable financial environment and need at least 18,000 new direct care workers to comply with new laws, a new report finds.

Aged care is an area that will require more trained staff in the future.

Nursing homes across Australia lost an estimated $2.75bn in the past three years, a new analysis shows, and home care services’ fin­ancial performance dropped 40 per cent in the past year alone.

Chronic workforce shortages, estimated at 18,000 direct care workers including 7000 registered nurses, add to the parlous state of the aged-care sector, the report from the University of Technology Sydney Ageing Research Collaborative concludes.

Fewer than 5 per cent of residential aged-care homes have a workforce that would meet new minimum standards to start in the second half of next year, it says.

The study finds the sector’s funding model introduced in Oct­ober in response to the aged-care royal commission may already be falling short in terms of money needed to support aged-care facilities to deliver quality care, with inflation and wage costs rising much faster than anticipated.

The report, Australia’s Aged Care Sector: Full-Year Report 2021-22, paints a sobering picture of the sector’s financial future, with ramifications for care quality. Sixty per cent of the sector’s providers operated at a loss last fin­ancial year, with a higher proportion, 67 per cent, for nursing homes, despite a significant boost in care funding from the taxpayer.

“These persistently low returns are unsustainable,” UTS health economist Mike Woods said. “They pose a real threat that older Australians won’t be able to receive the quality and quantity of subsidised care they need.”

The report notes that residential aged-care homes lost $16.13 a day for each resident, totalling $2.75bn over the past three financial years and “intensifying via­bility concerns” for the sector.

“There are varied reasons for these persistently poor outcomes, including declining occupancy (down to 91 per cent), financial impacts of the Covid-19 pandemic and the low indexation of subsidies that have not kept pace with the rising costs of care,” it says.

In-home care providers were managing to clear just $3.42 a client a day, an average margin of 4.1 per cent and down significantly from last year.

The study also throws doubt on the adequacy of the AN-ACC funding model: “Analysis … indicates that the initial price settings may not be sufficient to meet the inflationary and wage costs which have accelerated in 2022.”

On future staffing required to meet the new standards of aged care in nursing homes, the study finds 18,000 extra direct care workers would be required, including 7000 registered nurses.

“This is a conservative estimate, as it doesn’t incorporate the attrition of workers from the sector, nor working conditions, such as overlapping shifts, rostering constraints or preferences for part-time work,” report lead auth­or Nicole Sutton said.