CHA proposes freer aged care market

In an industry blueprint, the Catholic peak body has called for greater choice underpinned by increased consumer contributions and a robust government-funded safety net.

Amid predictions of unallocated licences in the current Aged Care Approvals Round (ACAR), Catholic Health Australia (CHA) has issued a blueprint calling for less government control.

The head of CHA, Martin Laverty said existing regulations were placing a cap on potential funding streams for providers, limiting opportunities for growth at a time of increasing need.

“There is some serious doubt as to whether the [2008-09 ACAR] is going to be taken up and the reasons are two-fold,” said Mr Laverty.

“Our members are under pressure because of the inadequacy of operational funding from the Commonwealth, which does not match the real costs of care.”

“The second issue is that the actual capital cost of providing new beds. A new facility now costs about $180,000-$200,000 per bed and in some parts of Perth and Sydney, it is even upwards of $300,000.”

“In those circumstances, the viability of committing yourself to building under the government’s current funding model is questionable.”

In response to these conditions, the blueprint calls for a relaxation of regulations to enable consumers to contribute more to the cost of care, while stressing the need for a rigorous safety net to continue supporting those who are unable to pay.

The report’s emphasis on deregulation and greater flexibility echoes similar findings in recent reports from the Productivity Commission and Grant Thornton.

Part of CHA’s proposals involves removing the distinction between high and low care residential services, allowing all consumers to pay bonds.

“There is currently $6.5 billion under management from the payment of bonds in low care and it is expected that by the end of the year, there will be about $6.75 billion,” Mr Laverty said.

“Given the current economic situation, that says something. If so many people are currently paying bonds, it proves that the system is working and the sky has not fallen in, as some people said it would when the system was first proposed in 1997.

“With 11 years’ experience, it should be quite easy to remove the distinction between high and low care and allow all consumers to pay bonds on a voluntary basis.”

Another component of the proposal is to remove the cap on daily accommodation charges and allow providers to publish ‘bed rental’ rates.

“At the moment, the daily accommodation charge that providers can get from residents is capped at $26.88 but the actual cost can be in excess of $55 per day,” Mr Laverty said. “That is unsustainable.

“We say that should be freed up and aged care providers should be able to publish daily bed charges to enable consumers to benefit from greater transparency and choice.”

Mr Laverty added that the Commonwealth contributions for concessional residents should be increased to match the costs of care too.

As well as looking at direct funding issues, the blueprint proposes a uniform national ACAT system to overcome existing anomalies.

“We have had experiences where a person has been assessed by an ACAT as being high care but when they arrived at a facility they were assessed using the ACFI as being low care.”

“We have several examples of this happening so we are saying there is a real need for a new, national system where the Commonwealth administers the ACATs.”

As part of a long term strategy, the paper suggests that superannuation contributions should be increased to 15 per cent and that health funds should consider private long term insurance options.

It also mentions a place for consumer-directed care models, such as vouchers and managed purchasing.

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