The Department of Health and Aged Care’s latest quarterly report on information from providers highlights the decline in financial performance of the residential aged care sector.
The Quarterly Financial Snapshot Aged Care Sector Quarter 1 2024-25 July to September 2024 has largely attributed this decline to the reforms introduced in the lead up to 1 July.
The September 2024 year-to-date results have shown a marginal decline in the financial performance of the residential care sector from the same period the year before, with less earnings before interest, tax, depreciation and amortisation being reported by providers, and net profit before tax decreasing slightly.
On average, residential care YTD EBITDA decreased to $34.40 per resident per day from $43.45, a difference of $9.14. Three quarters of providers reported a positive YTD EBITDA (75.5 per cent), down 5.6 percentage points. For-profit providers were more likely to report a profit in this area (86.9 per cent) than their not-for-profit counterparts (69 per cent).
The decline was due to the growth in operating expenses of 10.3 per cent exceeding the growth in revenue of 7.1 per cent.
Growth in the operating expenses was driven by the higher salaries and employee benefits – among other higher labour costs – while revenue increases were driven by the $500 million increase in AN-ACC funding and slight increase to the hotelling supplement of $11.24 to $12.55 on 20 September. Regular indexing of the hotelling supplement will continue and a further increase of $1.89 will take effect on 1 July 2025.
YTD NPBT performance decreased by $0.41 per resident per day, totaling $9.95. While fewer than two-thirds of providers overall reported a profit (63 per cent), this was true for three-quarters of for-profit providers (76.3 pe rcent) and just over half of not-for-profit providers.
The total YTD NPBT for the sector was a profit of $175.6 million.
Home care
Home care remained relatively consistent to the results from quarter 1 in 2023-24 with YTD EBITDA declining by $0.03 per care per recipient per day, totaling $6.11.
YTD NPBT for the home care sector was a profit of $138.3 million, a 7.1 per cent increase of $9.2 million compared to $129.2 million in quarter 1 2023-24.
However, revenue increased by 17 per cent and expenses increased by 17.8 per cent, resulting in the NPBT margin at the sector level to drop 0.7 percentage points.
Around three-quarters of home care providers reported a profit across both EBITDA and NPBT measures.
Like the residential care sector, the change in expenses for home care is attributed to an increase in labour costs while the increase in revenue is attributed to increases in claim days and higher utilisation of home care packages.
The department indicated they expect to see a continuation of the operational and financial impacts from the recent reforms in the remaining 2024-25 financial year across the sector.
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