Australia’s aged care industry has been accused of misleading the public about its finances, with analysis revealing one of Australia’s biggest providers recorded significant earnings and acquisitions last financial year, despite reporting a loss.
The sector has pointed to data from accounting firm StewartBrown showing 70% of providers are running deficits to lobby for more federal funding, but industry analysts say it is an unreliable reflection of the sector’s financial performance.
The Centre for International Corporate Tax Accountability and Research’s (CICTAR) principal analyst, Jason Ward, said more funding was needed to improve staffing and conditions, but stressed it should be directed to smaller, regional operators.
“In the face of reforms to improve the quality of aged care and the dignity and respect of aged care residents in Australia, many of the largest providers resist implementation by claiming losses and demanding more government funding or higher resident fees,” Ward said.
“While the overall funding for the aged care sector will need to increase, the crying poor by the largest operators has been a constant refrain for decades and is not genuine.”
Ward has assessed the financial results of Australia’s largest not-for-profit aged care provider, Bolton Clarke, which recently acquired Acacia Living in Western Australia and Allity, which was worth nearly $700m. It runs 87 residential aged care homes, 38 retirement villages and has 130,000 customers.
Bolton Clarke reported a $1.5m deficit last financial year, but its residential aged care services generated earnings of $49.1m after depreciation and amortisation. Retirement living services generated $10.5m, while at-home support offerings generated $17m.
CICTAR, which is funded largely by unions, including those with aged care workers, said Bolton Clarke’s overall results were driven down by separate domestic and international for-profit businesses, which resulted in an income tax benefit of $14.8m. Interest and finance charges worth $18m were attributed to acquisitions, which enabled Bolton Clark to more than double earnings from operations.
“It remains unclear whether federal funding for aged care has been diverted to expand Bolton Clarke’s growing empire at the expense of high-quality care for residents and decent pay and conditions for care workers,” Ward said.
“What is clear is that Bolton Clarke’s residential aged care business is now generating tens of millions in annual operating income.”
A Bolton Clarke spokesperson rejected Ward’s analysis and said it had “never used federal funds received for the purposes of delivering care to support any other aspect of our operations, including capital acquisitions”.
“Funds are provided for the delivery of care services under specific programs and are only ever used for these programs in accordance with program guidelines and all legislative requirements,” the spokesperson said.
Bolton Clarke said Ward’s analysis did not account for $19.2m in Covid-19 related costs, which were listed as “other” expenses in financial reports and not attributed to aged care services.
But Ward said that figure was “highly misleading”, as Bolton Clarke’s annual report showed it submitted claims for around $16m in Covid grants that were not paid during 2021-22 and will be booked this year. That would reduce Covid costs to less than $4m.
‘Nearly two-thirds of residential homes are run at a loss’
Gabrielle Meagher, an emeritus professor at Macquarie University, said it was difficult to find out how providers spent government funds and money from older Australians.
Meagher also disputed the analysis by StewartBrown, which found 70% of all aged care providers were recording deficits.
“In the December 2022 report, only 30% of the residential care sector was represented in the survey,” Meagher said. “We don’t know how similar or different that subset of providers is from the sector as a whole, which makes it difficult to interpret the finding that nearly two-thirds of residential homes are run at a loss.”
Tom Symondson, the chief executive of the peak body Aged and Community Care Providers Association, said the 70% figure was most likely an underestimation of the financial challenge.
Symondson said federal funding had not kept pace with inflation for almost a decade and providers were spending “huge amounts of money” on agency staff, which charge higher rates, because they cannot attract enough permanent staff.
“When you look at the raw numbers the average loss is $28 per resident, per day, even if you take into account those who are not losing money,” Symondson said. “There are not enough people who are breaking even to outweigh people who are losing money.
“This is also the government’s own data..
“This is a system that is not working and that’s the problem we’ve got to resolve, not screwing down the sector to [a point] where not a single provider can make a surplus.”
