LASA MR Aged care providers facing a $750 million revenue shortfall 100812
CIE Report Estimate of ACFI impacts – 130812
Aged care providers face a revenue black hole of more than $750 million over the next two-and-a-half years, a new independent financial analysis of changes to the Federal Government’s Aged Care Funding Instrument (ACFI) has revealed.
The research, undertaken by the Centre for International Economics (CIE) for Leading Age Services Australia (LASA), predicts that 89 per cent of aged care facilities will face “unrecoverable” losses of revenue under the revised funding model, which came into effect on 1 July, 2012.
“This ultimately means an average reduction of between $20,000 and $23,000 in care funding for each affected resident every year, ” Mr Mansour said.
“Many nursing homes and in-home care providers are already under financial pressure and LASA has serious concerns that if the way aged care is funded is not addressed, there could be an impact on staffing levels and on the important services which are the very foundation of quality care.
“The average loss per aged care facility is more than $125,000 each year, with some facing revenue shortfalls of up to $560,000. Smaller and rural facilities are potentially the most affected.
“As running costs continue to rise, aged care providers – unlike most businesses – cannot increase care fees as they are set by the Federal Government.
“While we agree that the initial ACFI reforms in 2008 were a positive step, we cannot accept the Government’s new regime which redirects money from resident care to other elements of the Living Longer, Living Better (LLLB) aged care package.”
LASA’s immediate priority is to work with the Federal Government to:
- Commit an additional $1.1 billion over the next four years to counter the need for re-direction of residential care funding to LLLB reforms
- Return ACFI funding to its previous levels, which were frozen on 1 July, 2012 and to provide an annual 1.6 per cent increase to compensate for indexation changes.
Mr Mansour said LASA was committed to identifying a long-term solution to aged care funding.
“The Australian aged care industry argues that the way government funds aged care needs to change,” he said.
“To ensure a viable aged care industry , we’re strongly advocating a move away from a funding model which is artificially constrained by the Federal Government’s budgetary limitations, to one which genuinely matches care funds to people’s needs.
“LASA strongly supports the call of the National Aged Care Alliance for an independent and comprehensive cost of care study as an urgent priority.
“We support the importance of aged care reform. We will work collaboratively with the Federal Government and other aged care stakeholders to refine when and how some of those reforms are introduced so that Australia has a sustainable aged care industry that meets the needs of older Australians.”
Key points
- Annualised revenue losses associated with the recently announced changes rise from $98 million in the second half of 2012 to more than $350 million in 2014
- Average revenue loss per affected resident is $20,000 – $23,000 per annum or $56 – $63 per day
- The total revenue loss from 1 July until the end of December 2014 is $751 million
- Average annual loss per facility is $125,143.49 per annum.
About the study:
Changes to the Aged Care Funding Instrument (ACFI) were announced to occur from 1 July 2012. LASA engaged QPS to undertake an independent collection of data from aged care providers across Australia. QPS analysed the impact of the data from a sample size of 275 residential aged care facilities at a total of 18,345 residents, a sample size of over 10 percent of all aged care residents nationally.CIE was engaged to undertake an independent analysis of the sample data collected by QPS and project the impact across the entire industry by developing a robust population wide model of aged care residents
Further information: Gerard Mansour, 0417 518 103