Single rooms too expensive for aged care

Adele Horin writes in today's Age:

An aged-care survey by accountancy firm Grant Thornton showed modern high-care facilities with single bedrooms reported the worst financial results in 2008, with a return on investment of about 1 per cent. The operating profit on a bed in single-room facilities was about half that of older facilities with shared rooms.

A report by accountancy firm Stewart Brown showed more depressing results, with average operating losses of $10 a bed in single-room facilities, double that of shared-room facilities. Stewart Brown also reported that 70 per cent of high-care facilities in the non-profit sector were operating at a loss.

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The aged-care industry is stepping up its lobbying of the Federal Government to review the funding of nursing homes, known as high-care facilities. The Government will not allow operators to charge bonds for high-care facilities to avoid residents having to sell the family home. But nursing homes are allowed to charge a maximum, daily accommodation fee of $26.88 to help fund new buildings and refurbish old ones.

A group of church-based operators is expected to soon release a report that shows the charge needs to be increased to at least $40 a day.

The chief executive of Japara, a big private operator, Andrew Sudholz, recently told a Senate inquiry new high-care facilities were not being built because the cost "far exceeds the end value" under funding policies.

Operators said they had survived by building low-care facilities — or hostels — for which they are allowed to charge a bond.