Initial findings on ACAR reform released

Aged care providers will need to lift their game and innovate in order to compete in a reformed aged care system, says a government report.

Aged care providers will need to lift their game and innovate in order to compete in a reformed residential aged care system, says a government report.

That was just one of the first-round consultation findings on replacing the Aged Care Approvals Round – which involved providers competing for bed licenses – with a consumer-centred approach contained in a document released this week.

Entitled Places to people – embedding choice in residential aged care and distributed Monday by the Department of Health and 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.

Source: Department of Health and Aged Care

Various reviews into aged care – including the Tune review and the royal commission – found that ACAR needed to be abolished and that a new system should be adopted.

As a consequence, from 1 July 2024, a more competitive, person-centred model will be introduced with residential aged care places allocated directly to older Australians – a system originally embraced by the Morrison Government in 2018.

With consumers free to shop around for a facility that meets their demands, “residential aged care providers will need to lift the quality of their services and innovate to attract residents,” say the authors of the 34-page report.

“An opportunity to improve quality of care.”

In its first round of consultation held late last year, the department released a discussion paper directed towards providers, peak bodies, aged care assessment teams, and other organisations. Older Australians, their families and carers were also invited to provide feedback.

A number of virtual workshops were also held that attracted broad representation across the aged care sector including major, mid-sized, and small independent providers.

The findings of the first round of consultation form the basis of the second round of discussions on ACAR reform

The report’s authors note there was “broad acknowledgement that the removal of ACAR will likely lead to increased choice in metropolitan areas” where there is a larger pool of providers.

However, it was also acknowledged “that competition will not exist universally across Australia,” meaning choice could be limited in remote, rural and regional areas of the country.

Thin markets would therefore need targeted action, “including additional supports to maintain a diverse range of providers and to help people from diverse needs to access care.”

Overall, say the report’s authors, “many providers view the reform as an opportunity to improve quality of care and accommodation offerings across the sector.” However, it was noted that change will take time as older facilities are redeveloped or refurbished and new services are constructed.

Survey results

An online survey seeking public comment on the details of the ACAR reforms was also activated. Respondents included providers, peak bodies, researchers and seniors.

Source: Department of Health and Aged Care

Among its results:

  • 54 per cent said provider business models would be more sustainable
  • 49 per cent indicated that the change would lead to better choice
  • 48 per cent said it would lead to greater access
  • 48 per cent said it would improve quality of service
  • 43 per cent said it would lead to increased innovation.

Provider viability

With places no longer allocated through ACAR, stakeholders voiced concerns over uncertainty of occupancy. However, participants of the consultative process expected providers to increase their focus on marketing and brand reputation to maintain occupancy rates for profitability and sustainability.

And while it was accepted that discontinuing ACAR will impact the value of bed licences, “the overall view from stakeholders was that this would not impact solvency or liquidity, and that the benefits of removing ACAR would outweigh any short-term impact on provider balance sheets.”

Transitional arrangements

The final round of ACAR offers took place August last year. However a, transition strategy is now in place until June 2024 allowing providers to apply for places before the new system starts.

The transition strategy includes a “bed-ready” process to support providers who are positioned to deliver additional residential care but do not have a sufficient allocation of places. “This will support some providers to expand their service footprint immediately and will also support providers wishing to bring new developments online during the transitional period,” say the report’s authors.

Also featuring in the transition strategy, is an “intention-to-develop” process that allows providers to progress residential aged care developments in the absence of ACAR.

Next steps

Further consultation will be sought with sector stakeholders and older Australians throughout the rest of the year. The second round of consultation will focus specifically on the issues and concerns detailed in the first report.

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Tags: acar, consultation, Department of Health and Aged Care, featured, findings, reform,

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