95% of aged care providers not confident their business will be able to continue with optimism: DCM survey paints bleak picture of future

The results are in from yesterday’s survey on providers’ optimism for the future – and the numbers are not good.

Check out the graphs above and below.

As you can see, 47% of those who responded said they considered their organisations viable today – meaning that they believed they could continue operating with optimism.

Fast-forward 12 months however and this dropped to just 6%. Three-quarters of respondents (76.5%) said they were not confident in their organisation’s viability if nothing changes in the interim.

A small number said they could continue to be viable, but profits and occupancy would be lower and they were unlikely to be sustainable in the long-term.

Some respondents said they had already been operating in deficit for a number of years.

“Whilst we have good cash reserves, unless there is an increase in funding at some point some hard decisions will need to be made,” one respondent said.

“The organisation has not been financially viable for some time. The pandemic is just helping to mask the current state of affairs,” said another.

For many, COVID has exacerbated their financial woes.

“We have had to employ an additional 300 staff in the past six months so as to ensure that our residents would continue to receive the services they need whilst trying to keep our workforce fresh during the pandemic,” one CEO related.

“We have suffered the largest trading loss in our long history and I am very concerned what this financial year will bring. We have definitely put people ahead of profits but our finances had started to wane well before COVID appeared.”

There was also disappointment that the Royal Commission was relying on out-of-date financial data to help guide its recommendations for the sector.

“I do not believe 74% of operators are profitable and would defer to the StewartBrown figures,” one CEO said.

One respondent pointed out that making a profit does not necessarily mean that a business is sustainable into the long-term.

“There needs to be some return to enable reinvesting in the sector both in infrastructure and the workforce that delivers the care,” they said.

There were calls too for funding to be urgently addressed.

“Wage costs outstrip ACFI funding if you wish to provide care aligned to the aged care standards. Hospitality revenue via the BDCF is insufficient for modern consumer expectations and is only viable with additional or extra service user pay top up. Accommodation is not viable and returns on investment cannot support additional capital investment into the sector,” one CEO summed up.

It is a good point.

The fact is that the sector not only needs to be profitable and viable – organisations also need to feel optimistic for the future.

Providers that have optimism will be planning for the future by investing in new developments and initiatives, recruiting quality staff and preparing for new systems and infrastructure – those that don’t have optimism will be standing still.

At last year’s workforce hearings held by the Royal Commission, the message from CEOs was that there are many in the sector who are tired – and this was pre-COVID.

We have previously predicted an exodus of up to 60% within the next three to five years as senior executives retire or turn to other industries.

How much valuable IP could be lost?

Unlike banking, aged care also does not offer the same cash to attract a new pool of talent.

As always, the answer seems to come back to funding.

It would seem much now hinges on the Royal Commission and next week’s funding and financing hearings – will its recommendations help to restore optimism in the sector’s future?