ACAR reform: consumer choice, but challenges ahead for providers

The proposed model of reform of the Aged Care Approvals Round will be transformative, say aged care industry experts.

First-round consultation findings on replacing ACAR – which involved providers competing for bed licenses – with a consumer-centred approach were released this week in a document entitled Places to people — embedding choice in residential aged care.  

The report’s findings will guide the eventual design and implementation of a new residential aged care system, one that removes bed licences and improves choice and control for older Australians to make informed decisions on their aged care services.

“It will increase competition in residential aged care delivery.”

Speaking to Australian Ageing Agenda, principal consultant at Australian Strategic Services Michael Goldsworthy said the new system will embed “full choice and control” into the residential aged care sector.

“It creates the opportunity for a greater range of service options and pathways for customers and it will increase competition in residential aged care delivery in any given area, as organisations will no longer need permission to provide services in a region from the Australian Government by way of bed licences.”

But the task ahead for providers will be demanding, said Mr Goldsworthy. “Such transformational journeys can pose a significant challenge as they require boards and leaders to undertake three areas of work — working in the business, working on the business and transforming the business.”

“It is important to understand such significant changes.”

Aaron Goldsworthy — senior consultant at Australian Strategic Services — told AAA, moving forward, providers will need to understand the bigger picture of aged care.  

“Whilst with any change there is a need to understand the detail and account for it operationally, it is also important to understand such significant changes, their impacts and implications and how they are part of the trajectory of the bigger picture.”

With the customer-driven competitive market model expected to deliver efficiency, effectiveness, quality and innovation, there are three questions providers should be asking, said Mr Goldsworthy.

“Firstly, do we currently meet or exceed customer expectations and requirements, how do we measure this and what are we doing with the data we collect from measurement? Secondly, are our current residential aged care operations efficient, effective and financially sustainable in the short-to-medium term? And thirdly, what do the ACAR and other reforms mean for our current and future services, business, financial and capital models?”

“The move towards consumer choice is a further step toward a single aged care system.”

Also speaking to AAA, senior partner at StewartBrown Grant Corderoy said: “StewartBrown supports the removal of the Aged Care Approvals Round, which will include the allocation of places residing with consumers who then have choice of where to receive residential aged care services and which approved provider will provide these services.”

He added: “The move towards consumer choice is similar to the Home Care Packages program design and is a further step toward having a single aged care system as recommended by the royal commission. We feel the consultation outcomes paper released by the Department of Health and Aged Care is balanced, comprehensive and provides a good explanation of this reform.”

“This type of change will challenge the current system and the government’s thinking.”

Director at Research Analytics Mark Sheldon-Stemm disagreed, describing the 34-page consultation paper as “thin on detail”. However, Mr Sheldon-Stemm told AAA there were positives contained in the document such as “the distinction between metro and regional, rural and remote — the recognition of different markets is important.”

Mr Sheldon-Stemm also highlighted missing elements to the report, including: “The transparency providers will need to disclose. Like home care, transparency around funding and how it is used will be required. This will probably be tied back into the minutes of care per day,” he said.

There is no mention, either, of where residential care can be provided, said Mr Sheldon-Stemm. “The paper appears to assume traditional residential aged care settings will continue to be used while markets will dictate high-level care should be available no matter where the person resides.”

He added: “This type of change where high-level care is supplied will no doubt challenge the current system and the government’s thinking.”

“The removal of ACAR does not directly provide more choice or places.”

While the report suggests consumers will have more choice under the new system, managing director of aged care consultancy firm Pride Living Group Bruce Bailey is sceptical that will be the case.

He told AAA: “The removal of ACAR does not directly provide more choice or places. Choice is about having supply that matches or exceeds demand, that is, vacant places. The reality is — and I’ve seen data supporting this — that it takes four-and-a-half years from the time a provider decides to create places for them to become available for occupancy. Typically, a provider would have the land at this point. If land has to be acquired, then the time frame could be longer.”

While Pride Living agrees that ACAR was not achieving “any positive outcome” for consumers, Mr Bailey told AAA: “In our opinion, simply removing ACAR will not achieve any significant new supply within the next five years. Allowing that over time new supply may emerge, it is highly unlikely it will be new supply as the first impact of new supply is to put pressure on providers who have not maintained the currency of their stock.”

Although consumers will benefit by having access to higher quality stock — which will be associated with higher cost for accommodation — Mr Bailey said: “The risk is that supported residents who are unable to afford the higher cost facilities will be consigned to lower quality stock.”

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