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.
Many providers are awaiting the next instalment of the StewartBrown financial benchmark reporting for the three month period ending 30 June 2018. Many do not like benchmarking reports, but they do generally provide a good snapshot of where an industry sector is at in terms of confidence and sustainability. The StewartBrown residential aged care benchmarking relies on data form now some 900 plus facilities. That’s around one third of all approved residential aged care services across the country. The data has shown an increasing lack of sustainability since October 2017, with some 43% of all facilities at 31 March 2018 considered to be, in the medium to long term, unsustainable.
The maths is reasonably simple – if a facility, any facility, does not make a margin of around 10% surplus/profit from its operations, then it is going to be difficult to continue in the long term. That is basically because of ongoing pressure for wage increases year on year (approximately 3% in a reasonable economic environment) and paying down debt and depreciation allocations for building refurbishment (4%), noting that 2% or 2.5% are really not appropriate for the continual refurbishment of a building in today’s care environment. If the provider is leasing the facility then likely 6% to 7% of the 10% “profit” mentioned will be in lease costs. The final 3% is for continuous improvement activities. All this really only covers the basics.
And amidst all of this discussion about waiting lists, demand, long term viability and sustainability, matters around quality are ever present. One recent major failing, such as Oakden in Adelaide back in April 2017, is an example of how to not provide residential care. Research shows a high correlation between lack of staff and poor quality of care – both in perceived and real outcomes. To implement a minimum staff ratio will cost more in terms of staff.
Training and developing all staff to a level now required by the higher acuity of our residents costs more. Having more home care packages, and more packages appropriately allocated according to the care needs of the recipient, will cost more. Both the construction of, and the funding of places for more residential aged care recipients, will cost more.
That is, cost more to both government and consumers.
Back in the late 1990s, providers were able to charge residents (consumers) between 85% and 87.5% of the combined value of the pension and an accommodation supplement for the daily residential aged care fees. I have shown over many years the growing gap between the increase in funding for residential aged care versus things like health insurance approved premium increases, wage increases and the like. In the 2016 federal budget a further $1.2 billion was taken out of the residential aged care funding mix so that ‘funding outcomes better align with contemporary care practices and do not encourage distortions in claiming behaviour and care delivery’. Sadly, with the exception of a five year period in the mid 2000s, aged care loses every time.
I know what will be said in response and can almost hear the commentary in my ears as I write “That’s all well and good Wayne, but if we increase funding to aged care, then it will have to come from somewhere else.”
I say, fine, just do it!
It is said that a measure of any society is how they treat their most vulnerable people. By definition, any person who is an approved care recipient of a government legislated/regulated human service has some measure of vulnerability. We, the people, have deemed it so and have elected others to act on our behalf to facilitate the appropriate support for the elderly people in our society.
I simply keep asking the questions “Are we doing this well enough, and are we allocating the right level of resources?”
If the answer to either of those questions is anywhere near a resounding “No!”, then let’s work together to get it right. Let’s have some frank and honest conversations about the order of need. If we don’t move quickly to ensure the sustainability and confidence in our aged are sectors, we may not be able to avoid vulnerable elders missing out completely on care that will enable them to remain at home in their own community. This is about whether Australia has the capacity and concern enough to care for its vulnerable people.
Is it just me, or are people missing the obvious?