High care and community care best performers in financial report.

There was a significant improvement in the financial performance of residential facilities, particularly those in high care, during the first quarter of the financial year, new figures show.

But the authors of the financial survey said it was unlikely these results would be sustained for the remainder of 2010. However, it may be an insight into what the future holds as the cap on subsidies is removed, they said.

The Stewart Brown financial survey for the three months ended 30 September 2009 found 47 per cent of high care facilities achieved an operating profit, up from 21 per cent in June 2009.

Similarly, 46 per cent of low care facilities achieved an operating profit, up from 39 per cent in June.

“In this current quarter we have seen a significant improvement in the results of facilities that we might classify as high care. In fact, on average, the facilities in bands 1 and 2 achieved results that were almost at a break-even level. Whilst the facilities in bands 3 through to 5 also saw significant improvement in their results, it was not nearly as much as the high care facilities,” the survey report said.

Analysis showed the average result of high care facilities improved by $9.01 per bed day in the September quarter.

“We suspect the main reason for this was the immediate benefit gained in high care facilities from the increase in subsidy rates by another $10 per bed day to the change in the cap level from 1 July 2009. In fact, the average income for facilities in band 1 rose from $178.29 per bed day for the year ended 30 June 2009 to $188.84 per bed day in this survey period.”

Low care facilities also improved – the average operating loss for the quarter was $1.63 per bed day, an improvement of $4.34 per bed day on 2009 results.

However, the report emphasises that improved results in both sectors are not unusual for the first quarter of the year and it is doubtful they would continue for the rest of 2010.

There also appeared to be a significant reduction in care costs in the September quarter. The report said this was more difficult to explain, but suspected it had more to do with reversals of year end adjustments than with actual savings.

“We don’t expect this situation will continue and we will likely see care costs return to normal levels by the end of December,” it said.

Interestingly, the report noted that the difference in expenditure spent on direct resident care in high care and low care is narrowing. The gap is now only 8.7 per cent, compared to a decade ago when it was almost 35 per cent.

Community care continued to provide positive results for operators of CACP and EACH packages. The CACP average result was a profit of $2.82 per client day and for EACH packages it was $13.21 per client day. EACH Dementia packages showed an operating profit of $17.98 per client day.

With regards to size, facilities with 80 to 100 places performed better than any other group. There was little difference between the other groups with the exception of facilities with less than 40 places. The results for this group were considerable worse off than the others – the average loss was $15.25 per bed day whereas the next worse performing group had an average loss of $1.39 per bed day.