The result is in marked contrast to previous years. In 2018 BHS made a $311,000 net operating profit; it made $63,000 in 2017 and $310,000 in 2016.

While income was up by $306,000 and total assets grew by almost $900,000 in 2018-19, a revaluation of long service leave liability caused a $4.1 million loss.

According to the auditor's financial statement for BHS, the 'revaluation of the present value of the Long Service Leave liability due to changes in the bond rate movements, inflation rate movements and the impact of probability factors' was responsible for the changed economic flow.

Ballarat Health Services CEO Dale Fraser told The Courier the operating loss was the result of several factors over the year.

"We're a very large aged-care provider, and the Royal Commission into Aged Care has had several hearings about the costs for providers," Mr Fraser said.

"Every year we see extra patient complexity, or resident complexity coming in, and we have to increase our clinical effort, and it isn't necessarily matched by revenue. That has contributed substantially to our overall result this year... we're exposed to that and every year we have extra costs; the Commonwealth funding model isn't as responsive as to those costs."

Income from donations also fell substantially. However Mr Fraser says BHS has little control over the circumstances by which donations are made; a substantial bequest such as a property may factor in one year's results and not the next.

"Our donation numbers are fairly consistent if you take out the unique one-offs," he says.

Capital purpose income - comprising 'all tied grants, donations and bequests received for the purpose of acquiring non-current assets, such as capital works, plant and equipment,' fell by almost $4 million, down to $7.37 million from $11.83 the year previously. In previous years this amount was never less than $18 million.

Mr Fraser says the end of the Run Ballarat initiative also reduced income. Another significant increase in costs was for medical and surgical supplies, which rose by over $12.5 million.

"I'm hopeful - although hope isn't a plan - with the outcome from the Royal Commission that the Commonwealth Government recognises there's more required to sustain our older Australians in their care needs," Mr Fraser said.

He also expects improvement in funding for outpatient treatment in the coming year, an area which had a shortfall in these results.

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