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Researchers warn of two-tier aged care


A two-tiered system in residential aged care is emerging with significant consequences for consumer choice, according to Australian researchers who have called for a public debate on the preferred industry ownership structure.

Residential aged care data analysed over the 10 years to 2012 shows a geographic split in the service provision between rural and remote Australia and the major cities.

While larger, for-profit services have dominated growth in the major cities, smaller, often government-operated facilities have increased their presence in outer regional and remote areas.

The researchers, Richard Baldwin, Lyn Chenoweth and Marie dela Rama from the University of Technology, Sydney, said aged care consumers may see a reduction in their capacity to choose between provider types and facility sizes if these trends continued.

“Aged consumers outside of major cities will continue to have very limited choice if they want to choose a for-profit provider and those living in remote and very remote locations will be increasingly dependent on state government service providers,” they said.

The growth of larger, for-profit services could also impact on the quality of life for those residents who would prefer a smaller, more intimate not-for-profit service, they said.

“Should these trends continue we may see the emergence of a two-tiered system in Australian aged care based on economic and geographical factors, whereby there is one sector operating in major cities and inner regional locations and a different sector operating in outer regional and remote locations,” the researchers wrote in a paper published in the Australian Journal of Public Administration last week.

Public debate missing on ownership mix

The researchers also called for community debate on the growth in the proportion of aged care beds operated by for-profit providers in light of international evidence showing that not-for-profits deliver higher quality care.

The authors said the impact of different types of aged care ownership on financial performance and resident outcomes had been the subject of “robust and growing” research for over two decades, mainly from the US but also Canada, England, Israel and Italy.

While there are limitations in the overseas literature, the UTS researchers said there have been “continuing and consistent findings” to suggest that residents in not-for-profit facilities have better outcomes than those in for-profit facilities.

However the extent to which these findings apply in Australia is unclear, due to a lack of local evidence.

The UTS study said there is an important public debate to be had about the preferred structure of Australia’s aged care industry including the relative mix and distribution of for-profit and not for-profit aged care providers.

“In view of the limited available evidence in Australia, policies that will significantly change the structure of the aged care industry should be approached with caution least a different structure, which may be difficult to reverse, results in less-desirable outcomes,” the authors wrote in the paper Residential Aged Care Policy in Australia – Are We Learning from Evidence?.

“Successive Australian Governments have remained silent on their preferences for the future shape of the industry and there had been little community debate on what is preferred.

“There is clearly a need to obtain more evidence on the impact structural change will have on the quality of care and the performance of the industry. There is also a clear need for wider community debate on the future shape of the residential aged care industry in Australia.”

The authors called for the routine collection of data on outcomes to inform government policy and local research into the structural features that are most likely to achieve better outcomes for residents.

While countries such as the US, UK and New Zealand have aged care systems where large for-profit providers dominate the residential care market, some experts predict Australia is unlikely to go down that path.

As Australian Ageing Agenda reported last year Cam Ansell, director of Ansell Strategic, said he believed Australia would continue to have a strong not-for-profit sector and an ongoing role for small and niche providers, despite a trend towards larger services.

According to the analysis of government data, in 2003, not for-profit providers operated 62 per cent of all services, state and local governments 12 per cent, and for-profit providers 26 per cent. By 2012, the proportion of not-for-profit providers had declined to 60 per cent and government services to 10 per cent, but for profit providers had increased to 30 per cent.

Publicly listed companies are the fastest growing ownership type.

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3 Responses to Researchers warn of two-tier aged care

  1. Angela February 13, 2015 at 11:35 am #

    When will we get it? Outsourcing essential services to private enterprise does NOT necessarily mean a better quality of service – or better value for money. It means that somebody is creaming off the funds in order to make money. Sadly, they are penny pinching on some of the most fundamental of services e.g. food.

  2. Lucy Morris February 13, 2015 at 3:06 pm #

    This is a critical piece of research and one that opens up a much needed area for community discussion. The current policy settings by the past and current governments is leaning very clearly to a hands-off approach to service provision. The sentiment of the current government is unequivocal in ensuring service provision is delivered via a competitive marketplace; irrespective of who delivers or how. Concern looms large for consumers without capacity or access to choice and who will not be able to use services is significant and the experience is real, we just need to think about those is regional and rural Australia, along with those with other barriers to inclusion; and, in the meantime, community benefit providers are being pushed out of existence because of the costs of operating in a commercial competitive space. There is no commitment to community development or benefit and the sole focus on consumer directed care ignores the need for the community to flourish at its peril and our civil society is diminished as a result. I am not so sanguine as Cam Ansell that the community sector will continue to flourish in the aged care sector. I think it is already struggling and a blind eye is being turned because of the need to save money and the golden dream of consumers directing their needs is, in reality only part of the picture.

    This is a debate we’ve being trying to have for a long time in the community sector and I welcome the research as this might provide a starting point for all of us to think about what we want for the future of Australia’s aged care services, for our elderly, and for our civil society more broadly.

  3. Col February 18, 2015 at 10:26 am #

    If, as indicated in the article, this research is based on the period to 2102, then it is totally irrelevant.

    The Living Longer Living Better reforms introduced in July 2014 hav dramatically changed the attractiveness of the industry encouraging new investment in both urban and regional settings. I live in a regional city which, up until now, has been predominsantly serviced by the public sector. Following LLLB, investment from both private and not-for-profit groups will result in a 50%+ increase in available residential aged care places over the next 18 months.

    Why, in 2015, are you feeding us 2012 research for an industry that has significantly changed in the meantime?

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