If you think you’ll ever need aged care in Australia, make sure that you need the ‘correct’ level of care. You will find yourself in a centralised system of bed allocation and the federal government will penalise you if you need ‘ordinary high care’ (basically, a nursing home bed), as against ‘low care’ in a hostel, or even ‘extra service high care’.
On 11 February this year, the federal government finally responded to the report from the Residential Aged Care Review, which I headed, and which submitted its recommendations in April 2004. The government’s response was meant to bring to an end a very drawn-out and sometimes contentious debate over the three years since submission of the report, but major structural issues have still not been addressed.
The gross failure, and cause of continuing uncertainty and instability in aged care matters, has been the unwillingness of government to approve use of accommodation bonds in ordinary high care. The accommodation bond is a type of loan provided by those residents with sufficient assets to be able to afford it. The money is used by care providers to build new aged care facilities.
By shutting off this vital source of funding for the development of facilities, the government has penalised the provision of ordinary high care facilities against other categories of residential care, such as low care and extra service high care, where accommodation bonds may be collected from residents.
The government has tried to remedy this discrimination by introducing a new set of prices for both care and accommodation subsidies. Yet, these measures are insufficient to compensate for the inability to access accommodation bonds.
Moreover, these proposals had repercussions for the funding of low-care activities to the point where measures had to be introduced in the May Budget to offset some of the ‘unintended impacts’ of the new policy. That there were ‘unintended impacts’ tells us much about the lack of thought and understanding directed to the analyses of aged-care matters. The consequences of these ill-conceived efforts merely highlighted the failure to address key strategic issues.
Two major changes came in the February announcement. First a commitment to a strategic shift in aged care with a greater emphasis on domiciliary care, meaning care in the home. This will be extended to those with substantial care needs including cases associated with dementias and Alzheimer’s. Their success will depend on the home facilities and location of the person needing care.
The second important change was the switch to a new basis for funding care. The government said it wanted to simplify procedures, as recommended by the Aged Care Review. However, the four year implementation period means the old and new systems will run in parallel, making operations anything but simple.
Existing arrangements reinforce a centrally-planned system limiting the say of both providers of aged care facilities and users of those facilities. The political and administrative leadership determines the number of beds allocated each year. Boards and management of aged care facilities are dependent on these allocations before any investment decision can be taken. Users of services and their families have few choices, if any, in seeking a place in a residential facility.
The choice for the government is simple: maintain the current rigidity, which has done nothing to foster efficiency and quality in aged care, or implement a new regime offering flexibility to providers of aged care services and choice to users.
The boards and managers of aged care facilities should be permitted to make their own investment decisions based on their perceptions of need and their ability to compete effectively to attract residents. Centralised government quotas have no place in such a system. Official bed allocations should be abandoned.
Under a freer system, users of services would enjoy real choice. Their need for aged care support would still require approval by Aged Care Assessment Teams. Given access to aged care subsidies, it would be for them and their families to negotiate with providers and choose the facility which best suits their needs.
Until the steps outlined above are taken, aged care will remain stranded in the doldrums of myopic policies.
Professor Warren Hogan headed the Review of Pricing Arrangements for Residential Aged Care. He has written a paper on aged care for The Centre for Independent Studies.
Home > Commentary > Opinion > Myopic Strategy Hinders Aged Care
Myopic Strategy Hinders Aged Care
If you think you’ll ever need aged care in Australia, make sure that you need the ‘correct’ level of care. You will find yourself in a centralised system of bed allocation and the federal government will penalise you if you need ‘ordinary high care’ (basically, a nursing home bed), as against ‘low care’ in a hostel, or even ‘extra service high care’.
On 11 February this year, the federal government finally responded to the report from the Residential Aged Care Review, which I headed, and which submitted its recommendations in April 2004. The government’s response was meant to bring to an end a very drawn-out and sometimes contentious debate over the three years since submission of the report, but major structural issues have still not been addressed.
The gross failure, and cause of continuing uncertainty and instability in aged care matters, has been the unwillingness of government to approve use of accommodation bonds in ordinary high care. The accommodation bond is a type of loan provided by those residents with sufficient assets to be able to afford it. The money is used by care providers to build new aged care facilities.
By shutting off this vital source of funding for the development of facilities, the government has penalised the provision of ordinary high care facilities against other categories of residential care, such as low care and extra service high care, where accommodation bonds may be collected from residents.
The government has tried to remedy this discrimination by introducing a new set of prices for both care and accommodation subsidies. Yet, these measures are insufficient to compensate for the inability to access accommodation bonds.
Moreover, these proposals had repercussions for the funding of low-care activities to the point where measures had to be introduced in the May Budget to offset some of the ‘unintended impacts’ of the new policy. That there were ‘unintended impacts’ tells us much about the lack of thought and understanding directed to the analyses of aged-care matters. The consequences of these ill-conceived efforts merely highlighted the failure to address key strategic issues.
Two major changes came in the February announcement. First a commitment to a strategic shift in aged care with a greater emphasis on domiciliary care, meaning care in the home. This will be extended to those with substantial care needs including cases associated with dementias and Alzheimer’s. Their success will depend on the home facilities and location of the person needing care.
The second important change was the switch to a new basis for funding care. The government said it wanted to simplify procedures, as recommended by the Aged Care Review. However, the four year implementation period means the old and new systems will run in parallel, making operations anything but simple.
Existing arrangements reinforce a centrally-planned system limiting the say of both providers of aged care facilities and users of those facilities. The political and administrative leadership determines the number of beds allocated each year. Boards and management of aged care facilities are dependent on these allocations before any investment decision can be taken. Users of services and their families have few choices, if any, in seeking a place in a residential facility.
The choice for the government is simple: maintain the current rigidity, which has done nothing to foster efficiency and quality in aged care, or implement a new regime offering flexibility to providers of aged care services and choice to users.
The boards and managers of aged care facilities should be permitted to make their own investment decisions based on their perceptions of need and their ability to compete effectively to attract residents. Centralised government quotas have no place in such a system. Official bed allocations should be abandoned.
Under a freer system, users of services would enjoy real choice. Their need for aged care support would still require approval by Aged Care Assessment Teams. Given access to aged care subsidies, it would be for them and their families to negotiate with providers and choose the facility which best suits their needs.
Until the steps outlined above are taken, aged care will remain stranded in the doldrums of myopic policies.
Professor Warren Hogan headed the Review of Pricing Arrangements for Residential Aged Care. He has written a paper on aged care for The Centre for Independent Studies.
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