A new report has highlighted the dire financial state of Australia’s aged care industry. According to accounting Firm Stewart Brown’s Aged Care At The Crossroads report, government action is required to ensure aged care homes remain profitable and can meet rising demand. It calls on the Albanese government to adopt the recommendations of its aged care taskforce, which it received in December last year. The new analysis comes amid increasing cost pressures for many aged care facilities.

Thanks to The Australian, the Sydney Morning Herald, and the ABC, we explore the issues aged care facilities are currently facing and the taskforce’s recommendations.

The taskforce made several recommendations, including that those who have the means should pay more for non-direct components of their care. This includes accommodation, food, gardening, and cleaning. Currently, aged care residents are charged 85% of the aged pension, or $61 daily for these services.

The taskforce said increasing this rate was preferable to introducing taxes. They believe it is unfair for the working-age population to pay increased taxes when older Australians are retiring with growing levels of wealth.

According to the taskforce, government funding should focus on care services rather than everyday living expenses. This is because people must cover their everyday living expenses at every other stage of their lives.

So, just how bad is the financial state of Australia’s aged care facilities?

Australia’s aged care homes have lost a combined total of $5 billion over the last five years.

2,000 residential aged care facilities are making persistent losses and may be forced to close if the government does not act on the recommendations. Many of these are in rural and regional areas, with limited alternative options available.

Half of Australia’s aged care homes are currently losing money, with Stewart Brown predicting this will increase to 75% if changes aren’t made.

Inevitably, this will lead to more facilities being forced to close.

Currently, the worst performing homes are losing just under $15 per bed per day, with this figure not expected to improve for the foreseeable future.

Due to financial uncertainty, older homes are closing and not being replaced by new ones, even though demand is rising. This has led to fears that the industry will not be able to cope with the needs of an ageing population.

It has been estimated meeting demand for aged care in 2050 would cost $37 billion.

The effects of a lack of aged care beds are already straining the wider health system. It is leading to hospital beds being occupied by people who should be in aged care, creating a ripple effect across the healthcare sector.

A wage rise for aged care workers announced earlier this year was welcomed. However, it has placed added financial pressure on many aged care facilities. One facility in Esperance, Western Australia, estimated that the wage rise could cost it an extra $1.5 million a year, money it simply doesn’t have.

It is calling for increased government funding to help address rising expenses. Requirements introduced to have a registered nurse on site 24/7 have also increased pressure on homes, especially in rural and regional areas.

With demand on the rise, significant changes are needed to ensure that Australia’s aged care system can provide the support older Australians need and deserve.

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