8155.0 - Australian Industry, 2018-19 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 29/05/2020   
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Health care and social assistance - additional information for 2018-19

As part of the Economic Activity Survey (EAS), the ABS collects detailed information from a rotating program of industries. For 2018-19 only, the EAS collected additional information from Australian businesses/organisations classified to Division Q Health care and social assistance of the Australian and New Zealand Standard Industrial Classification, 2006 edition (ANZSIC) (cat. no. 1292.0). This included the following subdivisions:

  • Subdivision 84: Hospitals
  • Subdivision 85: Medical and other health care services
  • Subdivision 86: Residential care services
  • Subdivision 87: Social assistance services

A total sample of 1,889 businesses/organisations classified to the private sector component of ANZSIC Division Q Health care and social assistance were selected to receive an extended EAS questionnaire. There was an 89.8% response rate from all businesses that were surveyed and found to be operating during the reference period. Data were imputed for the remaining 10.2% of businesses. This imputation contributed 7% to the estimate of total income for Health care and social assistance.

The Health care and social assistance division covers a diverse range of activities. The ABS used an activity view when designing the questionnaires to maximise the information collected whilst minimising the provider load placed on survey respondents. The tables contained in the 'Health care and social assistance industry' data cube are also presented on this basis.

The Health care and social assistance division component of the EAS was fully integrated, which means that other data cubes in this release which contain estimates relating to Health care and social assistance are consistent with the 'Health care and social assistance industry' data cube.

Key points

The private sector Health care and social assistance industry division experienced growth across most key indicators in 2018-19, compared to 2017-18:
  • Employment increased by 109,000 people (9.0%) to 1,319,028, the highest growth of any industry division in 2018-19.
  • Total income increased 8.9% ($12.5b) to $152.2b.
  • Total expenses increased 10.2% ($11.6b) to $125.3b.
  • Operating profit before tax (OPBT) increased 3.5% ($901m) to $26.9b.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 7.2% ($1.9b) to $27.9b.

Health care and social assistance continued to be the second largest employing division with 1,319,028 people, after the Retail trade division (1,331,000).

The main sources of total income ($152.2b) in 2018-19 were:
  • sales and service income $129.6b (85.2%)
  • funding from government for operational costs $18.2b (12.0%).

The largest components of total expenses ($125.3b) in 2018-19 were:
  • wages and salaries $59.8b (47.7%)
  • purchases of goods and materials $12.9b (10.3%).

More detailed analysis of income, expenses and employment is included below for each subdivision.

The following table and chart provide key figures for the financial and economic performance of the businesses classified to the private sector Health care and social assistance ANZSIC division by subdivision for 2018-19. Historical figures mentioned in the text can be found in the 'Australian industry by subdivision' data cube. Movements in data quoted in the text are between 2017-18 and 2018-19.

All other data in this article can be found in the 'Health care and social assistance industry' data cube, which also includes more detailed data items as well as class level indicators.


Key figures


Subdivision 84
Hospitals (private)
Subdivision 85
Medical and other
health care
services (private)
Subdivision 86
Residential care
services (private)
Subdivision 87
Social assistance
services (private)
Division Q
Health care
and social
assistance
(private)

Employment at end of June
no.
137 384
430 872
326 069
424 703
1 319 028
Wages and salaries
$m
8 654
19 379
14 432
17 297
59 763
Sales and service income (a)
$m
17 012
69 019
22 102
21 477
129 610
Total income
$m
19 794
74 525
26 102
31 733
152 153
Total expenses
$m
19 068
52 043
24 937
29 266
125 315
Operating profit before tax (OPBT)
$m
*767
22 502
*1 163
^2 467
26 899
Earnings before interest tax depreciation and amortisation (EBITDA)
$m
^1 420
23 396
1 808
*1 253
27 877
Industry value added (IVA)
$m
11 276
45 961
18 485
21 553
97 275
Profit margin (a)
%
4.5
32.6
5.3
11.5
20.8

Note: All data are reported in current prices
(a) See below for information about improvements to estimates for the Health care and social assistance industry
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
* estimate has a relative standard error of 25% to 50% and should be used with caution


Chart showing the percentage distribution of the total level of key indicators across all four subdivisions in the Health care and social assistance division. Indicators include employment, income, expenses and profit measures.

The division is dominated by the Medical and other health care services subdivision, which accounted for 49.0% ($74.5b) of total income and 41.5% ($52.0b) of total expenses for the division in 2018-19.


Hospitals

The private sector Hospitals subdivision was dominated by the Hospitals (except Psychiatric hospitals) class, accounting for 98% of employment, total income and total expenses, with the Psychiatric hospitals class accounting for the remainder.

The subdivision experienced both increases and decreases in key indicators in 2018-19, compared to 2017-18:
  • Total income grew 1.3% ($246m) to $19.8b.
  • Growth in total expenses outpaced total income, increasing 6.0% ($1.1b) to $19.1b.
  • OPBT declined 51.3% (down $809m) to $767m.
  • EBITDA declined 25.5% (down $487m) to $1.4b.

Sales and service income:
  • Sales and service income for the subdivision was $17.0b in 2018-19.
  • Services provided directly to patients ('patient services income') accounted for most of sales and service income $15.4b (90.6%) and included accommodation and bed fees, theatre fees and prosthetic revenue.
  • The remaining $1.6b (9.4%) was generated by other services such as rent, leasing and hiring and car parking, as well as sales of goods.

Sources of patient services income ($15.4b):
  • Income from private health insurance companies was the largest source of revenue, accounting for 77.5% ($11.9b).
  • Government subsidised fee for service income, including Pharmaceutical Benefits Scheme payments and Department of Veterans' Affairs payments, accounted for 12.7% ($2.0b).
  • Payments made directly by patients ('out of pocket costs') represented 4.8% ($740m).

Additional funding from government:
  • Businesses in the the private sector Hospitals subdivision may also operate public hospitals or receive government funding for treating public patients.
  • Funding from government for operational costs was $2.6b, representing 12.9% of total income ($19.8b).

Types of government funding included activity based funding and block funding. Activity based funding is a system for funding public hospital services based on the number of services provided to patients and the price to be paid for delivering those services. Block funding is provided to support teaching and research undertaken in public hospitals and for some public hospital services where it is more appropriate, and particularly for smaller rural and regional hospitals.

Expenses:
  • Total expenses were $19.1b.
  • Labour costs represented just over half (50.8%) of total expenses at $9.7b.
  • Purchases of medical and surgical supplies accounted for 11.5% ($2.2b).
  • Purchases of drugs and pharmaceuticals were 4.9% ($931m).

Employment by occupation:
  • 137,384 people were employed in this subdivision in June 2019.
  • The most common occupation category was nursing staff, with 66,608 people, or 48.5% of total employment.
  • Administrative, clerical workers, managers and professionals accounted for 19,722 people (14.4%).
  • There were 16,291 ancillary workers, including cleaners, catering staff, orderlies and wardspersons, which made up 11.9% of total employment.
  • Medical practitioners (a category including general medical practitioners, psychiatrists, pathologists and radiologists among others) included 8,231 people (6.0%).


Chart showing the top 10 occupation categories as a proportion of total employment for the Hospital services subdivision


Medical and other health care services

The private sector Medical and other health care services subdivision consists of ten ANZSIC classes, covering a diverse range of services. General practice medical services was the largest individual class, and accounted for 20%-30% of key indicators for the subdivision in 2018-19.

The businesses in this subdivision include a combination of individual practitioners, operating under their own ABN (Australian Business Number), and the practices or clinics from which they consult.

The subdivision reported growth across all key indicators in 2018-19, compared to 2017-18:
  • Total income grew 11.2% ($7.5b) to $74.5b.
  • Total expenses rose 10.6% ($5.0b) to $52.0b.
  • Employment grew 24,872 people (6.2%) to 430,872.

Sales and service income:
  • Total sales and service income was $69.0b in 2018-19.
  • The main component was services provided directly to patients ('patient services income') which was $57.0b (82.5% of sales and service income).
  • The remainder was non-patient related income, including practice management services ($6.6b, or 9.5% of sales and service income) - this represented income earned by providing administrative support, facilities or staffing to contracted practitioners, often collecting patient billings on behalf of practitioners and retaining a proportion as their practice management income fee.

Patient services income ($57.0b) was further broken down, with the largest components as follows:
  • general practice medical services $13.0b (22.9% of patient services income)
  • specialist medical services $11.8b (20.7% of patient services income)
  • dental services $8.6b (15.1% of patient services income)
  • medical imaging services $6.1b (10.8% of patient services income).


Chart showing the top 10 patient services as a proportion of total patient services income for the Medical and other health care services subdivision

Sources of patient services income ($57.0b):
  • Over one third (35.2% or $20.1b) was paid directly by patients ('out of pocket costs').
  • Medicare Benefits payments accounted for $18.0b (31.6%).
  • Private health insurance companies contributed $9.6b (16.8%).

Expenses
Total expenses were $52.0b in 2018-19. The largest individual expenses were:
  • labour costs 42.0% ($21.9b)
  • practice management services 11.5% ($6.0b)
  • purchases of goods and materials 10.5% ($5.5b), with the largest purchase being medical and surgical supplies (including drugs and pharmaceuticals) 4.9% ($2.6b)
  • payments to other businesses for medical and health care services 8.6% ($4.5b)
  • rent, leasing and hiring expenses 7.1% ($3.7b).

Practice management services are reported by an independent medical or allied health practitioner as an expense for utilising practice management services where the practice manager either does not collect patient income but simply charges a fee for managing the practice, or collects fees on behalf of the practitioner but does not deduct their practice management service fee prior to paying the patient income to the practitioner. Note that practice management income and expenses are not captured where the practice collects the full patient fees, retains their service fee, and passes the difference to the independent practitioner.

Employment by occupation:
  • Due to the diverse nature of activity within this subdivision the employment occupations were also varied.
  • Total employment was 430,872 in June 2019.
  • Administrative, clerical workers, managers and professionals was the largest occupation category, accounting for 148,336 people (34.4% of employment).
  • General medical practitioners was the largest type of medical practitioner occupation, accounting for 36,244 people (8.4%).
  • Total allied health, social and welfare professionals represented 69,242 people (16.1% of employment), with physiotherapists the most common of these occupations (17,575 people).

Profit margin:
  • Profit margin for this subdivision was high at 32.6%.
  • The individual classes with the highest profit margins were specialist medical services (43.3%) and general practice medical services (40.9%).

Many independent medical or allied health practitioners operate as sole proprietors under their own ABN, and generally do not pay themselves wages and salaries, rather they draw profits from the business as their income. In these cases expenses are therefore lower, which results in a higher profit margin. This also aligns with the business size profile of this subdivision, where 66.9% ($49.8b) of total income was reported in the small (0-19 employees) employment size category in 2018-19. Further information relating to business size can be found in the 'Health care and social assistance industry' data cube.


Residential care services

The private sector Residential care services subdivision comprises two ANZSIC classes, Aged care residential services and Other residential care services. The Aged care residential services class accounted for 87% of the subdivision's employment, total income and total expenses in 2018-19.

The private sector Residential care services subdivision reported growth in all key indicators in 2018-19, compared to 2017-18, and was the fastest growing of the four Health care and social assistance subdivisions:
  • Total income grew 8.6% (2.1b) to $26.1b.
  • Total expenses grew 11.8% ($2.6b) to $24.9b.
  • Wages and salaries rose 13.4% ($1.7b) to $14.4b.
  • Employment rose by 44,069 people (15.8%) to 326,069.

Sales and service income:
  • Total sales and service income was $22.1b in 2018-19.
  • Income from services provided directly to clients or residents ('client service income') generated almost all (96.4% or $21.3b) of sales and service income.

Client service income ($21.3b) was further broken down, with the largest components as follows:
  • Income from residential aged care services accounted for $14.6b (68.6% of client service income).
  • Income from residential care services for the disabled was $1.5b (6.9% of client service income).
  • Retirement village operations income was $1.3b (5.9% of client service income).
  • Over 10% of client service income came from non-residential care services, with $1.4b (6.8%) from in-home aged care services and $874m (4.1%) from in-home disability care services.

Expansion of activity by residential care services businesses into in-home care services (normally performed by businesses in the Social assistance services subdivision) has likely been influenced by increased government funding via programs including the National Disability Insurance Scheme (NDIS) and Home Care Packages, which encourage elderly people to stay in their own homes for longer.

Sources of client service income ($21.3b):
  • The costs to households of using services provided by this subdivision was heavily subsidised by government.
  • Government subsidised fee for service income accounted for 70.1% ($14.9b) of client service income, with residential aged care subsidies and supplements accounting for $10.4b, NDIS income $1.5b and Home Care Packages $1.1b.
  • Just over a quarter of total client service income (26.6% or $5.6b) was paid directly by clients or residents as 'out of pocket costs'.


Chart showing the sources of client service income as a proportion of total client service income for the Residential care services subdivision. Sources include NDIS, residential aged care subsidies and supplements, Home Care Package and clients

Expenses:
  • Total expenses were $24.9b in 2018-19.
  • Labour costs were the largest expense item at $16.4b (65.9% of total expenses).
  • Depreciation and amortisation accounted for $1.4b (5.5% of total expenses).
  • Purchases of food and beverages were $612m, which was larger than the $296m spent on catering services, indicating more businesses prepare food for clients in-house than contracting out this service.
  • $517m was spent on repair and maintenance services.
  • $433m was spent on electricity, fuel and water.

Due to the costs involved in maintaining and running residential care facilities, the amounts spent on repair and maintenance services and electricity, fuel and water were the largest values reported for these items across the four Health care and social assistance subdivisions, even though expenses overall were second lowest for this subdivision.

Capital expenditure:
  • This subdivision reported the largest amount in capital expenditure for the division at $4.9b, which aligned with the large depreciation and amortisation reported ($1.4b).
  • Expenditure on dwellings, other buildings and structures accounted for $3.0b representing investment in expansions and refurbishments of residential care facilities.

Employment by occupation:
  • Total employment for the subdivision was 326,069 in June 2019.
  • Aged care personal care assistants were the most common occupation category, employing 107,329 people (32.9% of subdivision employment).
  • Nursing staff accounted for 44,856 people (13.8%).


Social assistance services

The private sector Social assistance services subdivision comprises two ANZSIC classes, Child care services and Other social assistance services. Other social assistance services includes disability assistance, in-home aged care and counselling, rehabilitation and welfare services. Many businesses that operate in this subdivision are religious, charitable and not for profit organisations.

The subdivision experienced growth in most key indicators in 2018-19, compared to 2017-18:
  • Total income grew by 9.1% ($2.7b) to $31.7b.
  • Total expenses rose 11.0% ($2.9b) to $29.3b.
  • Employment rose by 35,703 people (9.2%) to 424,703.

Sales and service income:
  • Sales and service income was $21.5b in 2018-19.
  • Income from services provided directly to clients ('client service income') generated 91.4% ($19.6b) of sales and service income.

Client service income ($19.6b) was further broken down, with the largest components as follows:
  • Child care services income was $11.8b (60.0% of client service income).
  • In-home disability care services income was $2.6b (13.2% of client service income).
  • Plan, case management and support coordination services, which includes income received from managing NDIS and Home Care Package plans on behalf of clients, amounted to $595m (3.0% of client service income).

Sources of client service income ($19.6b):
  • The costs to households of using services provided by this subdivision were heavily government subsidised.
  • Government subsidised fee for service income represented 65.7% ($12.9b), with Child Care Subsidy payments accounting for $6.3b, NDIS $4.1b, and Home Care Packages $811m.
  • Almost a third of total client service income (31.3% or $6.1b) was paid directly by clients as 'out of pocket' costs.


Chart showing the sources of client service income as a proportion of total client service income for the Social assistance services subdivision. Sources include Child Care Subsidy, NDIS, Home Care Package and clients.

Expenses:
  • Total expenses were $29.3b in 2018-19.
  • Labour costs represented $19.4b (66.2% of total expenses).
  • Rent, leasing and hiring expenses were also significant for this subdivision, at $1.6b (5.6% of total expenses).
  • Purchases of goods and materials were $1.4b (4.9%).
  • Purchases of food and beverages was the largest individual purchase ($388m), with child care centres often supplying meals and snacks for the children in attendance.

Employment by occupation:
  • Total employment for the subdivision was 424,703 in June 2019.
  • Child care educator was the most common occupation category, representing 134,799 people (31.7% of employment).
  • Personal care assistants made up 81,229 people (19.1% of total employment), with those working in disability care (61,258) more than three times the number of those in aged care (19,971).
  • 12,997 people (3.1%) were employed as support coordinators, including case managers, who assist clients to manage their government funding packages such as NDIS plans and Home Care Packages.


Improved quality for sales and service income and government funding estimates

Businesses operating in the Health care and social assistance industry division receive government funding such as the Child Care Subsidy, Medicare Benefits payments, a number of aged care subsidies and supplements, NDIS payments and grants to pay staff wages and salaries.

The 2018-19 EAS questionnaire provided explicit instructions on how businesses should report such government payments.

This has resulted in improved estimates of sales and service income, funding from government for operational costs, profit margin and sales and service income per person employed for 2018-19.

Caution should therefore be exercised when comparing 2018-19 estimates for these items (which can be seen in the 'Australian industry by division' and 'Australian industry by subdivision' data cubes), with estimates from previous years as these estimates are not directly comparable.

The improved questionnaire instructions will be continued in future EAS collections and subsequent reporting for the Health care and social assistance division is expected to be consistent with the 2018-19 EAS.