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Funding instability hurting sector: peaks

There are growing calls for government to deliver a sustainable funding system following the release of the review into the Aged Care Funding Instrument, while the minister says he’ll now begin consultations.

The Commonwealth is coming under increasing pressure to take action on how its funds care in the residential aged care sector after its own review called for wholesale changes.

The extensive report by the University of Wollongong, commissioned by the Department of Health after a series of budget blow-outs in the Aged Care Funding Instrument, recommends adopting a new model for funding care in residential facilities.

The experts say a new “blended funding” model, recognising fixed and variable costs and incorporating an activity-based funding model akin to the hospital system, could be up and running in two years.

After the report’s release on Wednesday, Labor urged to government to take action given the review found that ACFI is “no longer fit for purpose” and does not reflect the drivers of cost in residential care.

“[The review] also shows that the government is already behind the eight-ball when it comes to understanding the actual cost of care for older Australians,” said Labor’s Catherine King, referring to the review’s call for a cost of care study.

Despite the sector repeatedly calling for an independent cost of care study, neither Labor nor the Liberal party has ever committed to one.

Ms King said that given the review’s recommendations were complex and long-term “the government must provide detail about how it will work with the sector and consumers on future steps.”

Aged care provider peaks this week reiterated their calls for a simple and stable funding model.

Leading Age Services Australia chief Sean Rooney said the lack of funding certainty was stifling aged care investment at a time when the sector needed to expand services to care for an ageing population.

“The aged care sector needs a sustainable funding strategy to ensure Australia has an accessible, affordable, quality aged care system.”

Mr Rooney said it was critical that the Aged Care Legislated Review currently underway considered the findings of the ACFI report.

Aged and Community Services Australia CEO Pat Sparrow said the ACFI report focused on the current funding envelope for residential care but it was critical that development of a new funding model considered what government currently subsidises.

“When it is clear what the government pays for, there can be a more sensible discussion on user pays issues and options, including equity release. This is important as the population ages and demand for services increases,” she said.

Both ACSA and LASA said they welcomed the opportunity to consult with the government over the residential sector’s funding model.

Consultations throughout the year

Australian Ageing Agenda yesterday sought comment from Minister for Aged Care Ken Wyatt as to whether he accepted the review’s recommendations to adopt the new funding model, and when he expected to conclude his consultations and make a final decision.

A spokesperson for Minister Wyatt said: “No decision has been taken by government on the reform options recommended by the University of Wollongong.”

Now the review’s report is available online the minister will begin consultation on the options for reform, she said.

The Aged Care Sector Committee will be the “main forum” for this consultation and “broader consultation with the sector will occur as required.”

“This consultation will be ongoing throughout 2017 and could include fora such as the National Aged Care Alliance and provider roundtables,” the spokesperson said.

Related AAA coverage: Review recommends new funding model for residential care

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