Non-profit aged care funding under scrutiny

Crying poor while raking in the money: Non-profit aged care homes under scrutiny in new report

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New report claims some non-profit aged care operators are making substantial profits.

New report claims some non-profit aged care operators are making substantial profits.

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Report claims the largest non-profit residential aged care operators fail to account for billions of dollars in Federal Government funding.

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While many not-for-profit nursing homes are crying poor and calling for increased funding from the Government, a new report has shown some providers are generating large profits.

Entitled "Caring for Growth, Australia's largest non-profit aged care providers", the report by the Centre for International Corporate Tax Accountability & Research, claims that the largest non-profit residential aged care operators fail to account for billions of dollars in Federal Government funding and prioritise investment over care.

"It is worth noting that the vast majority of aged care operators are small entities, many of whom struggle financially and genuinely attempt to provide the best quality of care possible," says the report.

"Likewise, the vast majority of the growing number of frontline workers across the entire sector, including the operators in this report, attempt to provide the best quality services with the resources provided."

However, the report says the largest residential aged care operators, whether for-profit or not-for-profit, are generating substantial incomes.

An analysis of available public financial reports and Government funding data on nine large non-profit church and charity run operators reveals a pattern of extracting revenue from Government subsidised residential aged care to fund property investments.

The report follows previous analyses of Australia's largest for-profit operators and sheds new light on the underlying structural problems in aged care as the COVID-19 pandemic devastates Victoria's nursing homes.

The report analyses the available public financial reports and Government funding data of BlueCare, Uniting NSW, Mercy Aged Care, Bolton Clarke, Catholic Healthcare, Anglicare, Juniper and Southern Cross Care in SA and NT and Southern Cross Care Tasmania who received $2.4 billion in Government funding and controlled 11 per cent of total nursing home beds at 317 facilities.

On average they were paid $66,516 in government subsidies for each of 23,745 aged care places in 317 facilities.

According to the report, while four of the top six operators reported losses in 2019, those losses were driven by property investment. Each of the six operators generated between $26 million and $62 million in net cash from operations.

It claims these non-profit operators provide limited detail on how hundreds of millions in Government funding is spent, so like the 'for profits' and 'family owned' aged care companies, it is impossible to see how much is spent directly on providing care.

Hundreds of millions in public subsidies are provided with no strings attached and no requirements for transparency and accountability. - Jason Ward, CICTAR

"Hundreds of millions in public subsidies are provided with no strings attached and no requirements for transparency and accountability," says report author Jason Ward.

"Large for-profit and not-for-profit aged care operators appear to be driven by a privatised market-based approach that - despite large government subsidies - is failing to provide care and dignity to Australia's most vulnerable residents."

The report also reveals that the nine non-profit providers paid executives and board members collectively over $30 million in total compensation in 2019. It says lack of reporting requirements meant that in most cases it was not possible to identify how much each individual executive or board member was paid.

"It is no wonder that the underlying problems in aged care have been further exposed by the Coronavirus crisis," says Mr Ward a corporate tax issues analyst and spokesperson for the Tax Justice Network - Australia.

The report has been submitted to the Aged Care Royal Commission and in support of a Senate bill that would increase financial transparency in aged care.

Large for-profit and not-for-profit aged care operators appear to be driven by a privatised market-based approach that - despite large government subsidies - is failing to provide care and dignity to Australia's most vulnerable residents. - Jason Ward CICTAR

A CICTAR statement says "All aged care operators must be required to prioritise the needs of Australia's elderly above all else. The report demonstrates the lack of public accountability and transparency and provides a set of simple and common-sense recommendations for reform."

All operators in the report are non-profit and exempt from income tax payments, except on profits generated by for-profit subsidiaries or joint ventures. While laws vary between states and territories, non-profit status can also allow for exemption from payroll taxes, exemption from local council rates and other benefits.

Key recommendations from the report are:

  • Targeted funding and support for small community-based providers with a track record of high-quality care should be prioritised
  • Aged care operators with over $10 million in annual federal funding must be required to file full and complete Tier 1 financial reports, with complete business segment breakdowns and clear standards for reporting government funding
  • All aged care operators with less than $10 million in annual federal funding must be required to file Tier 2 financial reports, if not doing so already
  • Aged care operators must be required to publicly disclose government funding and total expense by type at a facility level.

"The not-for-profit aged care sector exists to provide care in the community and returns any surplus to achieving this key, essential purpose,"says Patricia Sparrow chief executive of Aged Care Services Australia which represents not-for-profit aged care homes.

"ACSA and its members agree compliance and transparency should underpin financial arrangements for all operators in the aged care sector, whether they are run for-profit or not.

"Property investments are required in aged care so that accommodation and care needs of our elderly residents in the community can be met.

The not-for-profit aged care sector exists to provide care in the community and returns any surplus to achieving this key, essential purpose. - Pat Sparrow, ACSA

"Aged care providers meet multiple reporting and financial compliance requirements with reports to the Australian Charities and Not-for-profits Commission made publicly available on an annual basis."

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