The Australian Aged Care industry caters for Australians aged 65 and over (and Indigenous Australians aged 50 and over) who can no longer live without support in their own home. Care is provided in people’s homes and in residential aged care facilities by a wide variety of providers.
The industry provides services to over 1.3 million Australians and generates annual revenues totalling around $22 billion. The sector makes a significant contribution to the Australian economy, representing 1 per cent of Gross Domestic Product (GDP) (Grove, 2016).
Care activities provided under the Aged Care Act 1997 consists of community care, home care, and residential care. Following is a brief outline of each type of care:
- Commonwealth Home Support Program (CHSP) provides entry-level home help for older people. CHSP services may be provided at home or in the community. Clients pay a contribution towards the cost of services with the balance of cost being met via a government contract with the provider of care services.
- Home Care Packages (HCP) programme providesforolder people requiring a greater level of assist to remain at home. HCPs assist people to stay at home rather than entering residential aged care. There are four levels, ranging from Level 1 (supporting people with basic care needs) to Level 4 (supporting people with high care needs).
- Residential aged care is provided in aged care homes on a permanent basis. It is for people who require greater care than can be provided at home. Residential care is funded by both the Australian Government and contributions from residents.
The aged care system is continuing to undergo reform so that it more effectively and efficiently supports older people to live in their homes and communities for as long as possible.
These reforms are as a direct result of the:
- The Federal Government’s Living Longer, Living Better Reform Package released in 2012;
- The recommendations of the Tune report of the Legislated Review of Aged Care 2017;
- The Carnell/Patterson Review of National Aged Care Quality Regulatory Processes 2017; and
- The introduction of the new Single Aged Care Quality Framework in July 2018.
It is interesting to note that these reforms predate the Federal Government’s announcement of the Royal Commission into Aged Care Quality and Safety.
Moving funding to a market-based system is not new. In the last decade, similar reforms have been introduced in the United Kingdom and New Zealand. The impact of the reforms on the competitive landscape was significant – over 50 percent of UK market share shifted from the not-for-profit to the for-profit segment, with New Zealand providers reporting losses of up to 30 percent of their existing clients to other providers including new entrants (KPMG, 2016).
With the move in Australia to a market-based system in 2017, it is most likely that similar changes will occur in Australia. Currently, the community care market has over 1,200 providers across Australia. It is dominated by not-for-profits with most providers operating within limited geographical footprints.
The 2011 Productivity Commission’s Caring for Older Australians report estimated that by 2050, over 3.5 million older Australians will access aged care services each year, with around 80 percent of services delivered in the community.
In addition, there is a significant push by the Federal Government to focus on having older Australians stay at home longer. This has already commenced, with the number of residential aged care providers already declining, as they exit the sector due to the change in funding (Coredata, 2017).
While most providers operate only one type of aged care service, some operate two or all three types. Chart 1.1 shows the number of providers providing only one type, two types and all three types of services (ACFA, 2018).
Chart 1.1 Number of providers, by service type, 2016–17(ACFA, 2018 pp.33)
Of total providers:
- 7 per cent provide all three types of services (6 per cent in 2015–16).
- 17 per cent provide two service types (16 per cent in 2015–16).
- 76 per cent of providers provide one type of service only (78 per cent in 2015–16).
There is a high degree of specialisation in service types offered (although 2016–17 shows a slight increase over 2015–16). The Aged Care Financial Agency (ACFA), in their 2018 report suspects there may be more occurrences of providers providing more than one service than reported here.
Uniting Care Queensland is a significantly large multi-faceted organisation within the Queensland environment. Employing approx. 17,000 staff across four private hospitals, an aged care business in BlueCare, a provider with 47 residential facilities, 39 retirement villages and providing 3.3 million community care visits in 2017 as outlined in their 2018 Annual report.
Uniting Care is a full circle provider whereby aging clients can be accommodated by the organisation from entry to high care needs. This provides greater client retention opportunities for Uniting Care, however places pressure on the organisation to maintain service levels to ensure retention is achieved.
Uniting Care is a great proponent of a blended business model, factoring in the varying funding models that underpin the organisation and external business venues that create additional non-externally funded revenue.
OzCare is a business of the Catholic Church in Queensland. The organisation is a large integrated organisation within the regional Queensland environment. They employ approx. 3,300 staff across a retirement village, 11 residential facilities and providing care to 21,160 clients under both CHSP and HCP programmes in 2017 as outlined in their 2018 Annual report.
OzCare is predominantly focused on regional support as a fully integrated provider supporting clients from entry level home care to high level residential care. This provides greater client attraction and retention opportunities, however places pressure on the organisation to maintain service levels to ensure retention is achieved.
OzCare utilises a blended business model, factoring in the varying funding models that underpin the organisation.
Anglicare Southern Queensland is a large multi-faceted aged care/NDIS provider within the Queensland environment. Employing approx. 2,800 staff across 8 residential facilities and providing 1.3 million community care visits in 2017 as outlined in their 2018 Annual report.
Anglicare is a provider where an aging client can be accommodated by the organisation from entry to high care needs.
Anglicare is a great proponent of an activity-based business model, factoring in the funding models that underpin the organisation.
Through a combination of programs either ceasing or consolidating and the Government’s failure to adequately budget for an ageing population, more than $3.1 billion has or will be cut from aged care funding starting in 2018-19 (Deloitte, 2016).
Care costs have increased significantly and continue to grow at a faster rate than indexation.
Providers are in a continual cycle of operational and strategic review due to reactionary policy changes. This directly impacts on their capacity to undertake appropriate strategic forecasting, especially as operational detail lags policy announcements.
The Federal Government’s commitment to a consumer-driven aged care system is reflected in recent reforms to funding arrangements. By example, in response to consumer preferences, government has moved towards a consumer directed care (CDC) model to Home Care Packages, shifting funding allocations from service providers to clients. This requires a provider to transfer client package balances to a gaining provider as opposed to retaining unspent funds. This places a greater financial management burden on providers with no means of recovering the cost.
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Combined with this shift towards CDC is now a growing emphasis on ‘user pays’ payment structures particularly in residential care. The introduction of means-testing in residential care implies clients who meet income thresholds will be required to contribute more towards their aged care (KordaMentha, 2014). However, increasing consumer contributions do not affect revenue for service providers since they are offset by lower government payments (Deloitte, 2016).
CDC is “a way of delivering services that allows clients to have greater control over their own lives by allowing them to make choices about the types of care and services they access and the delivery of those services, including who will deliver the services and when” (COTA, 2018).
The benefits of CDC are well documented, both in terms of reduced cost (compared to residential accommodation) and consumer flexibility, choice and control. The expected cost benefits are a major attraction for Government. Ageing baby boomers ensure a demand for flexibility and choice in the parameters of care and a willingness to break away from the traditional ‘aged care’ model. (ACFA, 2018)
As the Productivity Commission noted (Productivity Commission, 2015), the increasing number of clients who are preferring to ‘age in place’ also has important implications for the future of the aged care sector, as more Australians take control of decision-making relating to their care. Many Australians are choosing to remain at home on a home care package before entering residential accommodation at an older age, meaning residential providers are increasingly accommodating clients with higher care needs.
Aged care providers that are unable to meet increasingly personalised, specialised and complex care in a more client driven market may not be viable in the future. The delivery of such services can be costly given the scale and scope of aged care packages. To provide these services in an efficient manner, aged care providers will access new technologies in their client care and management operations.
The industry can use technology to facilitate the labour-intensive components of service provision, and to deliver aged care services in a more efficient fashion. The Aged Care Financing Authority (2018) has promoted reforms to remove barriers to the adoption of cost-effective technologies. New technologies will be used to improve patient management practices and monitor clients in a less intrusive manner.
Assistive technologies support independent living, privacy and safety, as well as help to relieve workforce pressures and family anxiety (LASA, 2015).
The use of technology in aged care services will become increasingly important as the sector moves towards a more market-based system.
Providers have been overly criticised in the media for not being accountable in the past. Ironically, the sector responds to the accountability demands and framework set up by the Federal Government.
Accreditation and quality compliance is an accepted core business activity for the industry and should provide public recognition of achievement to peer developed standards that build on the safe provision of quality care and services.
The impending change being brought by the Single Aged Care Quality Framework (SACQF) in July 2019, is that of performance measurement via demonstrable outcomes.
The new standards, replace the four previous sets of aged care standards, and are centred on ensuring appropriate quality and safety standards are met in all service settings.
These pending changes will significantly impact smaller in-home care providers who do not or have, or not required complex systems to measure demonstrable outcomes for clients or robust governance or financial reporting frameworks.
The major difficulty for these smaller providers is how to measure outcomes, in other words what has been achieved by the service: its effectiveness.
As the aged care sector grows and the services provided continue to change, the skills required of the workforce will also evolve.
Of the reported 434,443 people working in aged care in 2016, 60 per cent were in residential care.
The remainder of the workforce were in home support and home care. Chart 1.2 shows the composition of the aged care workforce as reported in 2016 (ACFA, 2018).
Chart 1.2 Aged care workforce composition, 2016 (ACFA, 2018 pp.37)
Residential, home and community care providers continue to struggle to access appropriately skilled and available staff. All providers need support, funding and new initiatives to adequately fulfil current and future staffing needs.
As reported by Leading Aged Services Australia (LASA, 2016), three quarters of residential facilities and half of the community outlets report skills shortages in one or more occupations. It is anticipated that the increasing demand for nursing and allied health professionals in the age services industry will be further exacerbated by increased competition for staff with the staged introduction and upscaling of the National Disability Insurance Scheme (NDIS).
Pressure will be increased by the recent budget announcement that the Government plans to cut 15% of the Aged Care Workforce (Development) Fund, which may jeopardise innovation and put quality at risk (LASA, 2015).
Care for the aged mirrors healthcare in some respects. The familiar principles of medical ethics – respect for autonomy, acting for the good of the patient, avoiding harm and treating like people alike, also apply to aged care.
However, there are some differences. The above principals have developed around the treatment of individual patients, where, the focus of respect for autonomy is on the capacity individual patients to make decisions about their own care. There are times when family members may be involved in those decisions, but the ethical focus has been on the individual patient (Thompson, 2016).
The complexity of aged care is around competing obligations that can arise from the discovery of elder abuse or neglect, not only issues in the provision of aged care, but in the conduct and decision-making of family members and even guardians. This brings with it a mandated reporting framework that must be followed by aged care workers who are an advocate for the patient.
This complexity merits careful attention to the development of a compassionate, holistic and realistic account of the competing ethical obligations of healthcare workers in aged care (Thompson, 2016).
The industry continues to deal with the ethical dilemma related to the demands of maintaining a balanced budget with the ever-increasing needs in client care. As a direct result of the introduction of CDC and Government reductions in funding, providers face ethical dilemmas when they feel forced to abandon their vision of ideal care to budget realities.
Prior to the introduction of CDC in February 2017, providers were able to “redistribute” funding from clients underutilising allocated funding levels to those in genuine need of increased care. With the introduction of CDC, funding is tied to the client and cannot be redistributed thus creating a surplus in some instances and a deficit for others.
- Aged Care Financing Authority, (2015). Funding and Financing of the Aged Care Sector. 3rd Ed. Canberra. Australian Government. pp: 68.
- Aged Care Financing Authority, (2018). Funding and Financing of the Aged Care Sector. 6th Ed. Canberra: Australian Government. pp. 33-37.
- Coredata, (2017). Aged Care White Paper. Sydney: Coredata. pp. 22-23.
- Council on the Aging, (2018). Consumer Directed Care. (Online) Available at: https://www.cota.org.au/information/aged-care-for-providers/home-care-today-providers/consumer-directed-care/ (Accessed 24 November 2018).
- Deloitte Access Economics, (2016). Australia’s Aged Care Sector: economic contributions and future directions. Sydney: Deloitte Access Economics. pp. 12-13.
- Grove, A. (2016). Aged Care: A Quick Guide. (Online) Available at:
- https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1617/Quick_Guides/Aged_Care_a_quick_guide (Accessed 24 November 2018).
- KordaMentha, (2014). Residential aged care industry-consolidation and convergence. Melbourne: KordaMentha. pp.16
- KPMG, (2016). Consumer Directed Care reforms: Navigating the competitive aged care landscape, KPMG Insights, viewed 24 November 2018, https://home.kpmg.com/au/en/home/insights/2016/05/consumer-directed-care-reform-competitive-aged-care-landscape.html
- Leading Aged Services Australia (LASA), (2015). The Commonwealth Home Support Programme, Submission to DSS. Canberra. Leading Aged Services Australia: pp. 13
- Leading Aged Services Australia (LASA), (2016). Workforce, Policy Statement. No 16. Canberra. Leading Aged Services Australia: pp. 41
- Productivity Commission Inquiry Report, (2011). Caring for Older Australians, Vol 2. (53). Canberra. Australian Government: pp. 338-339
- Productivity Commission Report, (2015). Government Services, Chap 13. Canberra. Australian Government: pp. 13.11- 13.13
- Thompson, C. (2016). Ethics and Aged Care. (Online) Available at: https://www.hospitalhealth.com.au/content/aged-allied-health/article/ethics-and-aged-care-863992681#ixzz5ZRlSDQDT (Accessed 10 December 2018).
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