ACFI changes are not welcome

Key sector spokespeople are speaking up. They are not happy with the recently announced changes to ACFI and hint at a soon-to-be launched media campaign to tackle the funding issue.

Above: CEO of ACAA, Rod Young

By Yasmin Noone

A major slab of the aged care sector is up in arms over the Gillard government’s recent decision to slash aged care funding from 1 July, with those who once supported the Living Longer. Living Better reforms now vocally opposing the funding changes announced last week.

With only 10 days for the dust to settle on the federal government’s recent funding cut announcement, the Department of Health and Ageing (DoHA) told the sector on Thursday it would introduce three key changes to the Aged Care Funding Instrument (ACFI), effective day one of the 2012/13 financial year.

Two of the three changes target price gouging and rorting in the sector, which has led to “unprecedented increases in claiming levels”. The third is a savings component that will come from a one-off reduction to the subsidy across all care levels.

And while the government advocated that the changes will help to return the future rate of growth in care subsidies per resident, in real terms, to historical trend levels, the sector has since begged to differ.

The Aged and Community Care (ACCV) State Congress in Melbourne last week sounded mumblings of discontent over the changes as audience members and presenters alike worried about what impact the new measures would have on the viability of the sector.

CEO of Aged Care Association Australia (ACAA), Rod Young, tackled the tough topic in his last aged care-conference presentation before officially retiring from the role on 1 July.

Mr Young explained that, as understood in the 2012/13 federal budget measures announced, the government would redirect around $50 million from the ACFI in the next financial year.

On top of this monetary loss, Mr Young said, there was a “second hidden component” in the budget which means the sector could lose a total of around $500 million in funding because of new ACFI changes: “That’s half a billion”.

“On the 29th of May, the department sat down with us and gave us the [financial] modelling,” Mr Young said to an audience of ACCV delegates on day two of the conference.

“[The department explained] what they had to do to get that component of savings. Then we gave that modelling to providers to look at.”

Mr Young said numerous providers then did financial modelling of their own but their figures did not match those put forward by the government.

“As you’d appreciate, that started causing a great deal of anxiety [among providers].”

“We apologise that we haven’t been able to convey what’s been going on but it was only the week before last that we had the truth.”

“…It’s not just the $50 million [that was mentioned] in the Living Longer. Living Better package.”

ACCV’s acting CEO, Kate Hough, also contends that modeling by providers consistently shows that changes to the ACFI will lead to a substantial reduction in subsidy income– a cut of between five and 10 per cent for every provider – and warned that the funding changes would leave many residents worse off.

“As a result of this new model, residents with exactly the same care needs in the same facility could be entitled to different levels of funding,” Ms Hough said.

“How will government explain to families of the frail and aged that their mum or dad will get less care than someone with the same needs, just because they entered an aged care service after 1 July 2012?”

The Minister for Mental Health and Ageing, Mark Butler, told AAA last Thursday the changes are necessary to address the blow-out cost of ACFI since its introduction in 2008, which was over the government’s budget estimates. But, the minister said the government has not reduced overall funding per resident.

“The department still argues that we are wrong,” Mr Young said.

“…But at this point in time, it looks clearly to us that they are wrong.”

Speaking at the ACCV conference about a career in aged care spanning 12 years, Mr Young said he could not believe that ACFI was still a live issue in 2012.

“I’m really frustrated that I am here today, still talking about ACFI reductions.”

Mr Young also alluded to a Leading Age Services Australia (LASA) campaign that will soon be launched to get the government to compromise on or reverse the recently announced ACFI changes.

More commentary and complaints

New national peak body, LASA, is strongly opposed to any reductions to the residential care funding tool which until now has better matched care needs to funding.

LASA CEO, Gerard Mansour, said the “unilateral decision by the government will force every aged care provider to review whether the current level of care services can be maintained for all new residents”.

He said the National Aged Care Alliance sponsor group requested a commitment from the government to delay the funding changes by a month, so providers could adjust to the new system and the government could explain the reasons for the discrepancy between the promises of its recent aged care package and the reality for providers.

However, Mr Mansour said, this request was ignored.  “Changes of this magnitude will force aged care providers to consider drastic measures in order to ensure business viability,” he warned.

UnitingCare Australia has also expressed concern that the changes will be made at the expense of staff wages and services. 

“Anticipated funding to meet essential increases in staff wages applying from 1 July 2012 will no longer be available,” the organisation said in a media statement, released the day after the Minister announced ACFI modifications

“If the anticipated loss is not offset by other measures, staff numbers will be reduced and care will be affected.

“We are especially concerned about the impact of changes on disadvantaged older people who need specialised services, including older people with mental health conditions, older indigenous people, older people who have been homeless, and people from culturally and linguistically diverse backgrounds.

“Services in regional and remote communities will also be particularly vulnerable to the changes.

“While the government is confident the impact of the new arrangements is manageable, modelling from our network suggests all services face cuts. UnitingCare Australia understands the proposed changes will be made in an effort to restrain growth. But this must not be done at the expense of appropriate care.”

The organisation stated it also has “good reason to believe” the government will consider options for mitigating the negative impacts of the funding changes.

“The government’s commitment to monitor closely the impact of the changes and to respond quickly to the evidence is welcome.”

Tags: accv, acfi, doha, lasa, living-longer-living-better, mark-butler, provider, reform, rod-young, savings, unitingcare,

5 thoughts on “ACFI changes are not welcome

  1. How typical of the aged care senior leadership and managements. Chocolates to boiled lollies in less than 3 months about time the management and decision makers took a good hard look at themselves. if its not the Government’s fault, it’s the workforce and unions who are responsible or else their clients have unreasonable expectations or the Productivity Commission got it wrong

    Stop blaming others and start running your organizations properly. Stop pretending you are not for profits acting only out of a desire to do good things with a mortgage on compassion and care.

    Your clients workers and the general public deserve better you are in the business of providing care accommodation and support how about doing it rather than bleating about how hard it is

  2. Shame, shame Minister. Any remaining sense of achievement you may have thought you and the Gillard Govt had has now disappeared down the toilet. You are not short-changing aged care providers as much as you have once again abandoned Australia’s frail aged.

    Perhaps aged care providers might consider closing down and reopening to accommodate illegal refugees or boat people. Now there’s an area that seems to be well funded and there is no sign that the Federal Govt is cutting back in any way?

  3. The aged care industry needs to look beyond the reduction in subsidies (1 July 2012) but also look at providers cash flow problems for July 2014 onwards, with the elimination of the Retention Bond and how to fund the annual premium for insuring an Accommodation Bond (averaging 2% or $6000 per annum)

  4. AGAIN the frail aged in the community get the short straw. When will it become an honour to care for these people during their final years? Maybe THEN it will be appropriately funded and the workers ON THE FLOOR will have some of the incredible stress they experience, alleviated. I’d “chop from the top”…politicians, managers…get out there & DO THE WORK….guarantee you wouldn’t last 24 hours.

  5. Staff working in the Aged Care sector are very concerned about the changes to ACFI.We look after frail elderly residents who deserve a fair go .Lets see a world class system in place.Providers need to be accountable for where taxpayers money is being spent .It really is time for the politicians to remember that staff working in Aged Care want to be have Wage parity then we may be able to hang on to staff.

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