Why Filling Beds is Not Enough Anymore: Understanding Your Business Drivers in Aged Care
Running an aged care organisation means keeping an eye on many moving parts, cash flow, occupancy, staff costs, and compliance to name a few. For CEOs, the challenge isn’t just having enough information, it’s knowing which measures truly drive performance and how to act on them with confidence.
In this blog, we’ll break down the core business levers that shape profitability, sustainability, and solvency in aged care. You’ll learn why these levers matter, how they connect and the practical steps leaders can take to manage them effectively.
By the end, you’ll have a clearer view of how to approach these drivers,so you can focus on the right measures, avoid common pitfalls and strengthen both your organisation’s financial position and the quality of care you deliver.
“We have an occupancy problem.”
In aged care, when financial performance takes a hit, the common reaction is: “We have an occupancy problem.” At first glance, it makes sense. Empty beds mean less revenue. But here is the reality: Occupancy on its own does not make a business profitable. We have seen facilities that are full but still losing money. We have also seen providers with 80 per cent occupancy producing a healthy surplus. Have you ever sat in a board meeting where someone wants to go through invoices one by one? Or question why a particular supplier cost increased by 15 per cent? It is understandable, but is that really the best way to assess the health of the business?
Often, this kind of scrutiny happens because there is no confidence in the bigger picture. When you do not understand your business drivers, you zoom in too close. You end up focusing on the small items and miss what really matters. So if the problem is not just occupancy, and the solution is not about cutting small costs, what should you be looking at? It starts with this. You need to understand your business drivers. Not just what happened in the last quarter. You need to understand why it happened and what you can actually control.
Start With Three Simple Questions
If you are a CEO, board member or executive in aged care, these three questions should shape your thinking, your reporting and your planning.
1. Are We Solvent?
Solvency means this. Can we pay our bills when they are due? You might own a lot of assets or be funded on paper. But if you are struggling to pay staff or suppliers on time, there is a solvency issue. Solvency is about short-term financial health and breathing room. Key things to track:
- Working Capital Ratio. Can you meet short-term obligations?
- Cash Flow Adequacy. Are you generating enough cash from operations?
- Prudential Ratio. Are you protecting refundable deposits as required?
Why this matters: If you do not stay solvent, all it takes is one late claim or one payroll delay to put your entire operation under pressure.
2. Are We Profitable?
Profitability means this. Are we generating enough surplus to reinvest in the business? Aged care operates on tight margins. But you still need a surplus if you want to:
- Improve your facilities
- Support and retain staff
- Cover unexpected expenses
- Grow or innovate
Key things to track:
- Total Opening Surplus. This is your real starting point each year.
- EBITDA. This shows the performance of your core operations.
- Operating Margin. What is left after your costs?
- Surplus per Occupied Bed Day. This links financial health directly to care delivery.
Why this matters: You cannot upgrade, attract talent or deliver better care without a surplus.
3. Are We Sustainable?
Sustainability means this. Will we still be around in five or ten years, and will we be in good shape? Many providers seem fine now but are not investing enough to be ready for the future.
Key things to track:
- Depreciation Impact. Are you planning for asset replacement?
- Reinvestment. Are you putting enough back into systems, staff and infrastructure?
- Debt Per Bed. How much risk do you carry per resident?
- Interest Cover and Debt Servicing. Can you manage repayments without strain?
Why this matters: A business that neglects investment in its future will eventually run into trouble, even if the day-to-day looks fine now.
It Is Not Just About Finance. It Is Also About Operations.
These numbers are not just in spreadsheets. They are shaped by what your teams do every day. Two core metrics sit behind many financial outcomes. They are Occupancy and Staff Minutes per Occupied Bed Day.
Occupancy: More Than Just a Number
Yes, occupancy affects revenue. But on its own, it is not enough. Two facilities can have the same occupancy rate and very different financial outcomes.
Why? Because profit depends on:
- Length of stay. Bed days are more important than headcount.
- Funding mix. Higher needs often attract higher funding.
- Quote accuracy. If quoting is unclear or incorrect, margins suffer.
What to measure:
- Occupancy Bed Days
- Average Occupancy
Tip: Do not just focus on filling beds. Focus on keeping them filled with the right residents, receiving the right care, and charged correctly.
Staffing: Your Biggest Cost and Your Biggest Lever
Your workforce is your biggest expense. It is also the area where you have the most room to improve performance. Yet many aged care providers do not link staffing metrics with financial health. They simply aim to fill rosters.
What to measure: Staff Minutes per Occupied Bed Day (Total, Registered Nurses, Enrolled Nurses)
Why this matters:
- Over-rostering adds cost and lowers surplus.
- Under-rostering risks non-compliance and poor care.
- Doing both usually means the systems are broken.
Ten Levers At Your Fingertips
You cannot control the job market. You cannot control funding decisions. But you can control internal levers that shape how your business performs.
Levers That Help With Solvency
These levers improve short-term cash flow and stability.
- Faster admissions and onboarding
- What it improves: Improves cash flow and occupancy bed days.
- Product: Resident Select
- How it helps: Streamlines enquiry to admission, speeds up decisions, reduces delays.
- Improve billing follow-up
- What it improves: Helps ensure invoices are paid on time.
- Product: Inerva Cloud ERP
- How it helps: Provides financial reports and data to track billing and follow-up.
- Reduce manual admin
- What it improves: Reduces payroll errors and improves claiming speed.
- Product: Inerva Cloud ERP
- How it helps: Centralises data, reducing duplication and manual entry errors.
- Optimise agency usage
- What it improves: Brings down volatile staffing costs.
- Product: Inerva Cloud ERP
- How it helps: Tracks staffing data to highlight over-reliance on agency staff.
- Shift RAD and DAP mix
- What it improves: Balances liquidity and longer-term income.
- Product: Resident Select & Inerva Cloud ERP
- How it helps: Resident Select helps with accurate quoting; Inerva Cloud ERP provides financial visibility.
Levers That Support Profitability
These increase surplus and operational efficiency.
- Accurate quoting and funding alignment
- What it improves: Stops revenue leakage and protects margins.
- Product: Resident Select
- How it helps: Delivers clear, compliant quotes to ensure correct funding and pricing.
- Track staff minutes per bed
- What it improves: Avoids excess labour cost.
- Product: Inerva Cloud ERP
- How it helps: Captures detailed staff minutes data to manage rostering efficiently.
- Link rosters to real demand
- What it improves: Matches care delivery with actual need.
- Product: Inerva Cloud ERP
- How it helps: Enables analysis of staff allocation vs actual care needs.
- Shift RAD and DAP mix
- What it improves: Also contributes to surplus, depending on how income is structured.
- Product: Resident Select & Inerva Cloud ERP
- How it helps: Combines quoting and financial data to optimise income streams.
Levers That Build Sustainability
These help the business grow and adapt over time.
- Monitor debt per bed
- What it improves: Prevents long-term overexposure.
- Product: Inerva Cloud ERP
- How it helps: Provides financial reporting on debt and capital structure.
- Reinvest in systems and people
- What it improves: Supports retention, growth and reform readiness.
- Product: Inerva Cloud ERP
- How it helps: Highlights areas for investment based on operational and financial data.