Myriad social and economic issues in rural and remote areas are combining to seriously challenge aged care service provision, which providers say needs to be reflected in better policy.

Residential and community aged care providers are struggling to deliver services outside metropolitan areas, and government moves towards individualised funding has compounded long-standing challenges, peak bodies have told the Aged Care Financing Authority (ACFA) review of the financial performance of rural and remote providers.

ACFA is next month due to give the Federal Government its analysis on the financial performance of rural and remote providers, after its first report into the factors influencing providers’ financial performance in May recommended a more detailed study into rural and remote issues.

In submissions to the review, provider peaks have highlighted the unique circumstances facing rural and remote providers – such as increased costs, reduced revenue opportunities, and workforce and ICT issues.

Rural realities: ‘choice’ and CDC

While the driving principle behind the government’s reforms in aged care was increased choice for consumers, Leading Age Services Australia (LASA) said the reality in rural and remote areas was often limited choice.

“To assist people to age in place, services need to be available, responsive, appropriate and sensitive to people’s needs, however this is not without significant challenges for both government and providers, perhaps even more so in rural and remote areas,” it said.

Furthermore, the end of cross-subsidisation under the reforms hindered providers from covering the additional travel costs for more remote home care package recipients, ACFA has been told.

“Service providers frequently argue that travel costs can add up to 20 per cent to the cost of care to pay for fuel and the additional time taken for staff to travel to distant clients. Under CDC, this cost must be met within the overall budget allocated to each individual care recipient and disadvantages those care recipients who live further away from the provider and town,” LASA Victoria said in its submission.

With home care package funding to be allocated to consumers from February 2017, the Victorian Healthcare Association (VHA), which represents government providers of aged services, recommended that ACFA “closely monitor” the impacts of this shift on the availability of home care in rural communities.

VHA also recommended that “consideration be given to alternate funding models – such as block funding or grants – to support infrastructure and operational costs in areas where there is not sufficient demand for package providers to meet the required economies of scale.”

Viability supplement

Several peaks were critical of the viability supplement, which is the Federal Government’s primary mechanism for financially supporting rural and remote providers.

“The viability supplement needs to be reviewed to ensure it matches the real costs of providing services in rural areas,” said VHA.

Aged & Community Services Australia (ACSA) said there was “little evidence” to suggest that the supplement was an effective offset against the increased costs associated with service provision in these areas.

Last October, in a special report on the challenges facing rural and remote service provision, leading aged care providers told Australian Ageing Agenda that the 20 per cent increase to the viability supplement in the 2014 federal budget was welcome, but that it “came off a low base.”

Small scale

Elsewhere, discussing the economic challenges facing rural and remote providers, many stakeholders told ACFA that size was a key factor, given services in these areas are typically smaller than their metropolitan counterparts and therefore unable to benefit from economies of scale.

ACSA cited Australian Institute of Health and Welfare data that 47 per cent of services in remote locations and 76 per cent in very remote locations had 20 beds or fewer, compared to 1.4 per cent of services in major cities.

Less financial means

On the revenue side, aged care recipients in rural and remote areas generally had less financial means, with reduced ability to pay refundable accommodation deposits (RADs) leading to a smaller pool of funds for providers, ACSA said.

LASA similarly noted that many rural and remote towns had a low socio-economic profile, while “far lower median house prices” challenged access to funds for new residents.

Providing localised evidence of this, LASA Victoria told ACFA that, in 2014, some 60,066 sales occurred with a mean sale price of $711,999 in metropolitan Melbourne, compared to 23,005 sales with a mean sale price of $331,213 in regional Victoria.

Greater expenses

While RADs were generally lower in rural and remote areas, the cost of refurbishment and new development was typically 10 to 25 per cent higher, ACSA said.

But construction costs were just one of many expenses rural and remote providers paid more for, several submissions said.

“There are many reasons for higher costs in delivering aged care services in rural and remote areas compared to metropolitan and regional areas, including lack of competition among suppliers of goods and services, availability of medical and allied health services, and higher freight and travel charges,” said ACSA.

Utilities such as gas, water and electricity were far more expensive in rural and remote areas, LASA noted. “This is one reason why those services operating in rural and remote areas will have a lower than average EBITDA than other areas.”

LASA also commented that staffing and related costs were higher for rural and remote providers, including higher wages to attract staff, additional recruitment costs, relocation costs and increased training and professional development costs.

ICT: potential aid but hindered by infrastructure

Technology could help address a number of the issues facing rural and remote providers, ACSA said, but there were key infrastructure barriers to this. These included a lack of access to reliable high speed broadband at reasonable cost, poor mobile phone coverage and the need for satellite phones for mobile workers, and the cost of software solutions being “prohibitive” for small providers.

LASA similarly noted the inconsistent ICT infrastructure in rural and remote areas. “Unreliable services can have an impact on the amount of time it takes to complete documentation, which therefore has a flow on effect to staff availability, as well as impacts on access to telehealth support or clinical evidence based information,” it said.

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2 Comments

  1. It is good that aging has gone back under the auspices of Health, especially for Rural & Remote areas, as the solution is not just around ageing but health, primary health, mental health, housing etc. We need to integrate and all work together to the benefit of all our people in the Bush.

  2. I agree something needs to be done. Caring for clients on properties out of town certainly uses their valuable resources in travel time and kilometres limiting amount of services providers can actually offer. It is unfair that as rural people who need service on low care or even high care packages are disadvantaged

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