AN-ACC’s hit-and-miss financial impact still inspires innovation, survey finds

There are mixed reactions to the AN-ACC (Australian National Aged Care Classification) funding model’s long-term impact with just over half of the sector responding to a Mirus Australia survey and confirming their business is financially better off compared to the previous Aged Care Funding Instrument (ACFI).

Despite the challenge of adjusting to AN-ACC, the overall survey results reveal the sector is proactively seeking innovative solutions to meet future profitability. 

“The transition to AN-ACC has brought both opportunities and challenges. Our survey shows a cautiously optimistic view, with 60% of respondents agreeing that their business is financially better off under the new structure,” Andrew Farmer, CEO of Mirus Australia, explained.

“However, there’s still a significant portion – 32% – who are unsure about the impact, indicating the need for continued support and adaptation.” 

Key points

• Mirus Australia surveyed 233 aged care leaders from 170 organisations to see how they are adapting to new funding structures
• They found that 16% of respondents strongly agree their business is financially better off under AN-ACC, while a further 44% said they agree with the statement
• However, one-third of providers are still unsure about the funding model’s impact and a small percentage outright disagree that there is any positive financial impact on their business

The feedback for AN-ACC comes at an important time; there are ongoing conversations about how aged care can become more sustainable. Increased consumer co-contributions is one likely avenue the sector will take, and so too is the dependence on non-care income. 

More providers are looking at additional services that go above and beyond traditional Government-funded care services as the solution to their financial needs. In fact, more than half of respondents – 7% strongly agree and 44% agree – say that future profitability will depend on non-care income. 

Although 43% sit in the middle and are uncertain about that dependence, there are more and more providers tapping into lifestyle services that offer something new to consumers. 

“The emphasis on non-care income and the proactive review of alternative strategies indicate that aged care leaders are keenly aware of the need for financial innovation,” Mr Farmer said.

“Identifying alternative revenue streams and adopting a multifaceted approach to profitability are critical for ensuring long-term viability.” 

As for the other key factors for future profitability, Mirus reports that: 

• 10% see increasing accommodation prices as key
• 15% focus on increasing consumer contributions to daily living
• 14% plan to increase revenue from additional services
•  9% consider retaining a component of deposits
• 11% are exploring other innovations
• 41% believe a combination of all these strategies is essential

“The fact that 41% of respondents believe a combination of strategies is essential really tells the story of complexity of the financial landscape in aged care. It’s not just about increasing prices or consumer contributions; it’s about integrating multiple approaches to build a sustainable business model,” Mr Farmer added.

The vast majority of providers are likely to shift some of their attention to potential combinations of strategies with just 16% stating they’re uncertain about implementing any strategic reviews over the next year.