Nursing homes not sustainable: report

The aged-care sector says a new report proves the system is not sustainable with the cost of providing modern single-room nursing home accomodation double the fee the commonwealth pays for the beds to be built.

Nursing homes and hostels that provide high-care beds receive just $32 a day for accommodation costs.

But a report commissioned by a group of industry peak bodies and providers suggests the capital cost is at least $73 per bed.

The separate cost of providing care is $144 each day leading to an overall funding shortfall of up to $62 per bed per day, the research by Grant Thornton Australia, released on Thursday, suggests.

"The study affirms the urgent requirement for reform and the removal of out-of-date regulation which inhibits the provision of new services designed to meet client need," Aged Care Association of Australia chief executive Rod Young said in a statement.

The Australian Cost of Residential Aged Care Research report says research "confirms that returns generated by operators of modern facilities are inadequate to justify investment in new supply".

The research found that providers would need to make between $26,500 and $32,200 from each high-care bed before tax every year to achieve an acceptable rate of return on their capital investment.

But average earnings were just $6700.

The Productivity Commission has acknowledged the sector is facing a crisis.

In August last year it recommended a complete overhaul of the system, with separate charges for care and accommodation.

It proposed "progressively" deregulating the number of care packages provided in the community and the supply of hostel and nursing home beds.

Older Australians would contribute up to $60,000 for the cost of their aged care and face "uncapped" charges for nursing-home accommodation under the proposal now being considered by the federal government.

The commission believes accommodation bonds should be allowed for all residential care - they are currently banned for high-care places - but they would be optional.

The government is yet to respond to the commission's recommendations but Prime Minister Julia Gillard has promised Labor will "start aged-care reform in this term of government".

Thursday's report was commissioned by groups including Aged Care Association Australia, Australian Unity, Aged and Community Services Australia and Catholic Health Australia.