Aged Care Sector Financial Comparators

These days I only read the newspaper on the weekend.  My favourite is still The Weekend Australian.  It often has thought provoking articles, and occasionally some fodder upon which one can reflect from an aged care sector perspective.

The December 8-9, 2018 edition is just one of those occasions.

On page 2, there is an article bemoaning the recent year upon year increase in private health insurance premium rates.  The article reports that ‘Health Minister Greg Hunt … expected to approve an industry average below 3.95 per cent … the lowest since 2001.’ It also includes commentary about the anticipated significantly lower rate increase out to 2022 promised by the current Federal Opposition.   

According to Australian Prudential Regulation Authority (APRA) figures cited by The Weekend Australian, the industry weighted average premium increases approved by the Minister for Health since 2015 are as follows:

2015: ​​6.18%

2016: ​​5.95%

2017​​: 4.84%

2018​​: 3.95%

2019​: Under​ 3.95%

I understand the impact of high levels of private health insurance premiums, that seem reachable by those who for whatever reason determine them to be affordable.  What is more, in contrast to aged care funding, the payment of insurance premiums does not come from the Government purse, but rather from individuals who have determined their affordability.

I find this article useful, if only because for almost the past twenty years I have been monitoring Health Ministers making similar approvals for health insurance premium increases yet at the same time, as the senior Minister over the aged care portfolio, makingstarkly lower indexation for payments for recipients of care or, more indirectly, to the providers of care to aged care recipients.

The comparison of funding increases made to aged care providers through the various indexations against several alternate indicia is shown below:

The chart above clearly shows that whilst aged care funding indexation has indeed kept fairly much in line with CPI, it has failed to keep close to Work Price Index (“WPI”), Average Weekly Earnings (“AWE”), and the greatest gap is between aged care funding and private health insurance premiums.

I will be among the first to say that additional funds are not always the determinant of better quality.  Yet the absence of an equitable funding methodology in residential aged care since 1997, and growing concern about insufficient supply of places in community based aged care since February 2017, seems obvious.  

Inclusive of some $1.7 billion removed from forward funds in 2015 and 2016, there is a clear pattern of diminishing Government expenditure in aged care over the past twenty years to a point where it is highly unlikely that even courageous and good providers of care will be able to sustain their service provision without a sizeable injection of funding.

It has been just three days since the Federal Standing Committee on Health, Aged Care and Sport recommended support for the Aged Care Amendment (Staffing Ratio Disclosure) Bill 2018.

I support the recommendation that aged care providers disclose their staffing ratios. However, it would be unreasonable to expect that providers will be able to achieve a reasonable staff ratio without an immediate and substantial injection of funds – albeit with reporting requirements.

Perhaps the Royal Commission can consider this matter in their review processes into the whole aged care sector quality and safety funding and performance?

Nice chatting

Wayne L Belcher

Bibliography

Alex Grove, Residential aged care funding: recent developments Parliament of Australia

House of Representatives Standing Committee on Health Aged Care and Sport, ‘Advisory Report on the Aged Care Amendment (Staffing Ratio Disclosure) Bill 2018’ (Commonwealth of Australia, Canberra), December 2018 

Sean Parnell, ‘Rise in health premiums likely lowest in decades’, The Australian (Sydney, NSW), 8 December 2018

Funding Cuts: You Decide!

I gathered these thoughts together the day the Royal Commission into Aged Care Quality and Safety was announced – Sunday 16 September 2018 if my memory serves me well.

This information gathering was in response to the first question of the Prime Minister when making the announcement. The question was around the alleged $1.2 billion cuts to aged care.

Folks, I get it – there have been many cuts from both major sides of our Australian Government over a number of years. And there has been continuing growth in aged care funding based on population related indices etc. But what is galling around these discussions is that the major political parties and the bureaucrats seem unwilling to give simple, transparent responses to questions about these matters.

The recent Federal Senate Community Affairs Committee Hansard from 24 October 2018 make for mind numbing obfuscation around this very issue, with Opposition asking relevant questions, and Government, and Officers, all putting in their opinions, without any direct answer to what should be a simple question. This of course happens regularly at such Committees and is not confined to Aged Care. But this Australian is over it!

Why cannot our elected leaders and paid Officers answer simple questions and be held accountable for the policy and funding interventions they create into valued human service provision? We are projecting tens of thousands shortfall of residential aged care places by 2025 (ref 1) and now some 121,000 not provided with an appropriate level of community care packages short for older Australians already assessed by Government as needing community delivered aged care services. (ref 2).

Of that number, almost 57,000 had no package allocated. A discussion around the residential care funding issues can be found below. Parliamentarians prefer to support their side of the debate, but the Department of Health and Federal Parliamentary Library advice really does paint a helpful and insightful picture into this matter of “funding cuts”.

I shall leave it to you to decide. But if you were to ask me, a return to the residential aged care sector of the $1.2 billion in ACFI funding cuts, along with a requirement for providers to sign off on their direct care staff ratios, would provide, on average, an immediate return to a ratio of 3.2 Hours per Resident per Day (“HRPD”), and begin a move to the 4.3 (or from my research, 4.2) HRPD as soon as possible.

Recent changes:

ACFI subsidy expenditure has been growing more quickly than expected. The Australian Government believes the unexpected growth in claims cannot be explained by an increase in the frailty of residents, although many in the industry disagree. In order to rein in expenditure, around $1.7 billion in savings over four years were included in the Mid-Year Economic and Fiscal Outlook 2015–16 (MYEFO) and the 2016–17 Budget, to be achieved through changes to ACFI scoring and subsidy indexation. Despite these savings, residential aged care expenditure was still forecast to grow at around 5.1 per cent per annum.” A summary of the impact of these two difficult measures can be found below – https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Librar y/pubs/rp/BudgetReview201617/AgedCare 

“Rein in expenditure.” Is that not just a euphemism for a cut to funding?

You decide. Nice chatting!

References:

Ref 1- Aged Care Financing Authority, ‘Sixth report on the Funding and Financing of the Aged Care Sector’ (Aged Care Financing Authority, 2018), 36.

Ref 2 – Department of Health, ‘HOME CARE PACKAGES PROGRAM Data Report 4th Quarter 2017 – 18’ (Department of Health, 2018), Table 7, 11.

Image: Courtesy Business News.

What to do with a Royal Commission?

I am a person with no clinical or “care” background. But after almost forty years in senior management and executive roles across the spectrum of health and aged care – particularly aged care – I have gathered some insights into the nature of care being provided throughout our care services.

And before I suggest anything more, let me say this – my view is that if the major hospitals around Australia – public and private – were put under the same scrutiny and regulatory framework that residential aged care services are for the quality and accreditation of services that are provided in and through them, we would see hospitals falling into sanctions.

I am of the view that we have an aged care system that is too focused on beating the regulatory compliance framework as opposed to funding and providing appropriate levels of care and support to all clients.

On the one hand I am an incredibly strong advocate of high quality services accompanied with some form of accreditation. On the other hand, I believe we have an aged care accreditation system that we can really ill afford.

It underpins inadequate funding levels that cannot provide enough resources for many providers to meet the expressed needs of care for residents. In the same way, our community aged care system is creaking because we cannot provide enough funding for the community aged care packages assessed by the Australian Government as needed by our citizens.

I hear staff all over Australia clamouring, not always for more wages, but for more pairs of hands to do the work. To do more than the system underpins…To go the extra mile… To sit for a few minutes when that is what the client really wants, and really needs… To spend time hearing what the real story is…

To quote a UK study of its Home Help services from the early 1980s – “Too much Charring and not enough Chatting”.

I could ask the question – Which provides more care, the Chatting or the Charring? Neither is necessarily more correct, but often we cannot even get to the question. The bureaucratisation of aged care is with us and the paperwork must be done at our own peril.

I have colleagues that will not (at this time) support minimum staff ratios. Quite rightly they see them as an un-affordable cost under the current funding methodology. How sad that we do not all see them as providing perhaps the single greatest opportunity right now to see a reduction in abuse, and a reduction in short cuts in care. How sad that we do not see minimum staff ratios as an opportunity to support our staff and see a visual improvement in the increased in quality of care. But implementation of minimum staff ratios will be quite costly.

I am still of the view that in Australia we have one the best aged care systems in the world. But for a range of reasons it is creaking.

Let’s all is to consider how much of a cost is there to stop, take stock, and with the next round of changes, really consider the long term impact of where we are heading and fight more intensely to protect the rights of those who are dependent upon us, the general public, for their livelihoods?

And who knows – the Royal Commission might investigate several inter services aspects around care of our elderly folks? One matter that I have discussed for the past decade is how much more proactive care we can provide in our aged care facilities, that might actually have a positive, beneficial impact on our national health and hospital care services.

In the past twenty years we have missed the opportunity to think outside the square with respect to fixing major State based hospitals. As a “cohort” of patients, frail elderly people are significant and frequent users of hospital services. Perhaps if we reviewed the aged care sector and its inherent possibilities we might find better solutions to our hospital problems.

Chatfield’s cartoon below was first published by me in December 2010 in an article containing many of the words in the commentary above. Not much has changed it seems!

To fix hospitals, first fix aged care!

I get it… Do You?

Elephant in the room?

So, what is the elephant in the room with aged care at the moment?

In a report released Friday 17 August 2018 that showed a recent increase in home care funding for elderly care recipients, there was a worrying trend in demand versus ability to provide that needed care.

That is, despite the growth in older people desiring home care services, the number of home care packages assigned (or available) is simply not keeping up with demand.

At 31 March 2018, according to figures only released on 17 August 2018, the queue waiting to receive a package had risen to 108,456 people.  That is an increase of 3,854 on those waiting at 31 December 2017.  Not only that , but just over half of all those in the queue have been assigned a package at a lower level than their needs require.  Remember this is all based on the Australian Government’s own approved needs assessment, and allocation of packages.

Contemporaneously we have demographers projecting the number of residential aged care places required to be built/developed is now at about 75,000 by 2025.  That is only eight years away.

Continue reading “Elephant in the room?”

Minimum – What Ratios?

I have never been a great advocate for regulated minimum staffing ratios, but prefer regulation of the things that are really important around provision of care services to the people, our care recipients.  If you like, having enough of the right people at the right time, and not just to fulfil a compliance requirement around the number of pairs of hands.

In completing this Review my own views around staffing, quality of care, industrial considerations and the like have changed – for the better.  It remains to be seen if those with the capacity to make an even more profound difference to improve care outcomes for frail, vulnerable, mainly elderly recipients of care – the Australian Government and Parliament – will actually choose to support those whom we serve.

Introduction

It seems that in Australia rarely a month goes by where the public is not informed of another aged care failing.  There is wide spread public perception of a lack of care and low quality of life for residents within the aged care system.  The call for greater regulation of minimum staffing standards and additional funds to meet them is prominent but seems to fall on deaf ears of the Australian Government.

Without residential aged care provision, residents would likely be inpatients in State based hospitals at several times the daily cost of care of a residential aged care facility.  However, the proportion of funds spent on care and service provision should be acquitted on what really matters – the care of people.

Keep reading >>

Download the full report >>

Reflections

In late January and early February 2018 I had the privilege of joining the Global Conference on Integrated Care (“GCIC”) in Singapore.  I am delighted to say that for me this was the most beneficial conference that I have attended since my re-connection to the aged care sector in August 2016.

Every nation represented at the Conference shared information about their significantly growing healthcare budget and rapidly ageing population. All nations have health and aged care systems that were created for a previous generation. They are not designed for the massive ageing population growth that require more and more health, social and aged care services.

As often as I remind others of the difficulties aged care providers, their workforce and clients are confronted with, I remind myself that we belong to a bigger system of health and social care provision.

Many parts of that system attract what seems to us, by comparison, to be outrageous funding.  Maintenance care only in a hospital costs approximately $1,200 per day.  A day of care in an intensive care unit costs $6,000 plus per day.  That is not to say of course that these services are not important and desperately needed.

Continue reading “Reflections”

Direction of Australian Aged Care?

Hi Folks,

I am about to board a plane for Singapore where this week I will be speaking at the GCIC 2018 conference on integrated care.

My topic will look at where the industry may go next in its clinical governance responsibilities. I thought this was interesting to look at twenty years on from the introduction of the Aged Care Act in 1997.

I will share my full paper next week and explore some further ideas following the conference. In the Essay, I have strived to briefly describe the history of residential aged care in Australia and show how economic drivers that largely determine the funding of care may also be diminishing the clinical appropriateness of care. This can place care recipients, providers, and program funders alike potentially at risk of failure of service in financially constrained times.

Continue reading “Direction of Australian Aged Care?”

Presenting at a Global Conference on Integrated Care

The below is from Braemar’s Media Release:

Wayne Belcher (OAM) will speak at the Global Conference on Integrated Care at the start of February, where he will present an analysis of Australia’s aged care sector, two decades after the Aged Care Act (1997) was implemented.

His presentation will cover areas including the history of aged care in Australia and how it has transitioned from basic care homes to a major industry, a review of the care models currently being employed as deregulation takes effect, and a review of clinical governance.

International experts from the USA, UK, Canada and Hong Kong will be among the conference speakers, which will take place at the Resorts World Convention Centre in Singapore from 1- 3 February 2018.

Continue reading “Presenting at a Global Conference on Integrated Care”

Your Thoughts Wanted

Hi folks,

Two quite important matters are being discussed by parliamentary committees here in Western Australia over the next twelve months or so, and I seek your advice, attitudes, and thoughts on these matters.

The first matter, and also being discussed by the New South Wales and Victorian Parliaments respectively, is around “end of life choices”.

I seek your advice, attitudes, and thoughts about this important matter.

Continue reading “Your Thoughts Wanted”