By Jasmeen Ara Islam Shaikh
Sept 3 (Reuters) – Australia’s Regis Healthcare said on Thursday that an increase in the government’s funding rate for residential aged care would not keep pace with inflation across the sector and economy, sending its shares to a more than two-year low.
The Department of Health, Disability and Ageing increased the Australian National Aged Care Classification (AN-ACC) starting price from A$295.64 ($211.83) to A$303.19, effective October 1, on Wednesday, taking the average funding from an estimated A$317 per resident per day (prpd) to about A$325.
“Regis is disappointed that the funding outcome does not reflect the underlying cost of care,” the aged-care provider said in a statement.
The 2.55% increase in starting price is below the rise in annual wages for nurses and cost pressures, the aged-care provider added.
Australia’s consumer inflation reading exceeded forecasts in July as prices jumped due to rising fuel costs, adding to the risk of another interest rate hike.
Regis’ shares closed down 27% at A$4.3, in its worst-ever session and lowest since late August 2024, before plunging as much as 34.6% earlier in the session.
A spokesperson for the Minister for Aged Care and Seniors said in an emailed response that the department would work with the sector “to give older Australians greater access to residential aged care”, but did not comment on Regis’ statement.
The Independent Health and Aged Care Pricing Authority (IHACPA), which advises on pricing determinations, told Reuters the recommended AN-ACC price is based on the latest available cost data and reflects changes in government policy, provider operating models and inflation.
“The latest funding determination does not introduce a new problem; it indicates that the existing gap between government indexation and operating costs may persist into 2027,” said Mark Elzayed, chief investment officer at Vestra Capital.
The funding decision has lowered the near-term earnings floor, but it has not necessarily destroyed the long-term franchise, Elzayed added.
Regis said it was increasing room prices and other services to mitigate ongoing margin pressure linked to government funding settings.
($1 = 1.3957 Australian dollars)
(Reporting by Jasmeen Ara Shaikh in Bengaluru; Editing by Rashmi Aich)
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