All cash and little care
‘Broke’ system under scrutiny as providers fail to reveal how taxpayer and residents’ money spent
THE coronavirus death toll of Australians in aged care facilities has exposed a crisis in the $44bn system and there are calls for forensic accountants to scrutinise homes.
CLAIMS by the $44bn residential aged care industry that it is going broke have prompted calls for forensic accountants to be brought in to scrutinise the finances of nursing homes and their wealthy owners.
The devastating COVID-19 death toll of elderly Australians in aged care facilities has exposed the growing crisis in the system, which a royal commission has found neglects rather than cares for our most vulnerable Australians.
News Corp Australia today launches Aged Care 360 — a special investigation bringing experts, those on the frontline and the families of those in aged care together to dissect the sorry mess and offer solutions.
The investigation has found that taxpayers have no visibility on how the tens of billions of dollars they provide to the sector through federal government funding is spent, and whether it is getting to the people who need it — the residents.
“Providers are not required to provide receipts [but] they must comply with Quality Standards and lodge an ACFR (Aged Care Financial Report),” the federal Department of Health told us.
Neither are aged care providers required to report to the government on how the money is spent at each individual home they operate.
All they have to report is a balance sheet with income and expenditure across all their homes.
We asked major aged care providers to tell us how much taxpayer money they received last year, how much they spent on staff and food and where the rest of the money went. Only Estia supplied a detailed response, while another two provided very general responses. The remainder did not bother to respond.
Centre Alliance senator Stirling Griff introduced a Bill into federal parliament last year that would have required aged care homes to report similar information. It was fought by the industry and blocked in the Senate by the Coalition and One Nation.
Monash University’s Head of Health Law and Ageing Research Unit, Professor Joseph Ibrahim — who is a member of our expert Aged Care 360 panel — has called for forensic accountants to be engaged to scrutinise just how Australian residential aged care facilities spend their money.
The industry receives more than $13bn a year in government subsidies, on top of the $4.3bn it gets from resident payments and the $27.5bn it hold in bonds.
Accounting firm Stewart Brown, which conducts quarterly surveys in about 1000 aged care homes nationwide, found that 60 per cent of them were losing an average of $2313 per resident per year, rising to $3646 in regional areas and $5098 in more remote areas.
The News Corp investigation found aged care homes currently receive an average of $93,000 per resident per year — but we can’t track how that money is spent.
Before changes in 1997, aged care homes had to account to the federal government for the funding they received and prove it was spent on nursing and food. Any surplus had to be returned to the government.
Stewart Brown concedes that in
the year to March, the top 25 per cent of aged care homes made an average profit before tax of $8544 per bed per year.
Just over half (56 per cent) of aged care providers are not-for-profit, more than a third (36 per cent) are for-profit providers and 8 per cent are public providers.
Private providers include Regis Aged Care, which reported a profit of $50.89m in 2019, and Japara, which made a profit of $16.433m — and then in 2020 posted a net loss of $292m after writing off goodwill.
Estia reported a $117m loss in 2019 but still paid out $20m in dividends to shareholders. BUPA reported a $70m loss in 2019, and another loss of $66m in 2020.
It is the for-profit homes that are the least likely to meet standards, with only 4 per cent of them classed as “top quality” by the researchers that reported to the aged care royal commission.
The same research found that the for-profit homes had the highest proportion of facilities that fall in the “poor quality” group.
A series of detailed financial analyses of the industry by the Centre for International Corporate Tax Accountability and Research found that it is almost impossible to discover where the taxpayer funding for aged care goes.
“Several of the largest familyowned aged care companies, owned by some of Australia’s richest families, have complex corporate structures, intertwined with trusts. Despite receiving an average of nearly $60,000 per year per resident, there is very limited public information available on these companies,” researcher Jason Ward, who is also on our expert Aged Care 360 panel, writes in the report.
TriCare, one of the largest residential aged care providers in Queensland, is owned by the O’Shea family through Norfolk Island, which was until 2016 a tax haven and is still exempt from capital gains tax, according to the report.
This company owns not a single aged care home on the island but receives almost as much taxpayer funded aged care revenue as the island’s entire GDP.
Last year, BUPA paid the Australian Taxation Office $157m with no admission of liability after settling a long-running dispute.
It is also in the process of compensating thousands of aged care residents who were charged for extra services that it never provided.