Most aged care facilities operating efficiently

Just over one in 10 aged care homes meet the best of three quality levels in Australia’s current system and they are most likely to be small-sized or government-owned, University of Queensland research has found.

According to the research conducted for the aged care royal commission, it would cost around $621 million a year to improve all aged care homes to the best level if they operated efficiently, which most currently are.

And the sector would need $3.2 billion a year for all homes to improve quality and operate with a small-sized home model, the paper released on Thursday shows.

The UQ researchers used five years of detailed financial data, a comprehensive set of care quality indicators for aged care homes, and a measure of relative care needs developed by the University of Wollongong to estimate the efficient cost of delivering residential aged care.

They found the average total cost efficiency of aged care homes is 88 per cent, which is more efficient than health care sectors, said Associate Professor Tracy Comans, who co-authored the commission’s ninth research paper.

“The main finding is that facilities are operating on some pretty slim margins so they are quite efficient.

“If we want to them to improve quality, we are going to need to focus on incentivising quality by somehow paying them more,” Associate Professor Comans told Australian Ageing Agenda.

For the research, facilities were clustered into three quality levels based on seven quality indicators, with 11 per cent of homes in the best group, 78 per cent in the middle and another 11 per cent in the worst group.

The best quality homes (Q1) met all accreditation standards, had lower use of four high-risk medicines (sedatives, antipsychotics, opioids and antibiotics), lower issues and complaints and a higher customer experience rating.

Conversely the poorer quality homes (Q3) had lower customer experience ratings, failed to comply with accreditation standards more often, and received a higher number of complaints and issues.

Quality associated with size, ownership type

Associate Professor Comans, UQ’s NHMRC Boosting Dementia Research Leadership Fellow, said they found a lack of quality indicators to access and that findings could have been more robust if there was a wider variety available.

“But with the ones we had, we were able to identify some high and low quality providers and some interesting associations between size and ownership type. The smaller facilities did seem to score better, and the government facilities too,” she said.

The best quality group contained 41 per cent of homes with 1-15 beds, 17 per cent of homes with 31-60 beds and 5 per cent of homes with 61-120 beds. It also contained 24 per cent of Government-owned homes, 13 per cent of not-for-profit homes and 4 per cent of for-profit homes.

In the worst quality group, for-profit providers represented a higher proportion of facilities than their relative importance in the sector, the research found.

Associate Professor Comans said there may be a number of reasons for the differences according to type including that government-owned facilities can spend more than not-for-profit- and privately-run facilities because they have extra revenue from the state government.

“They are not constrained by the revenue provided by the Federal Government. Given we have these difference, we did still find some for-profits in our high quality group so I think there is still a place for different providers but whether we have the mix right at the moment is unknown,” she said.

If Australia wants to shift to smaller models because they are preferred, then it will require quite a large investment in both running costs and new infrastructure to shift to those smaller models, Associate Professor Comans said.

Royal commissioners Tony Pagone and Lynelle Briggs said the research suggests that higher funding is needed for residential aged care to meet basic standards, and even more funding for reform to achieve high-quality care in Australia.

“Australians expect that all are entitled to the best quality level of care in aged care homes. Additional funding will be needed to enable providers to meet those expectations consistently,” Mr Pagone and Ms Briggs said in a statement.

Incentivising quality needs more than just money

The message for residential aged care providers is that despite the difficult environment all homes are all operating in, some are providing better quality, said Associate Professor Comans.

“Even with those constraints there are some providers who are doing it a bit better than others so I think there are some learnings there. And hopefully moving forward incentivising providers to provide high quality care would be useful to drive that quality.”

She suggested incentivising facilities to exceed the standards rather than just punishing providers for not meeting them because currently there was no incentive to do better than just pass.

“You wouldn’t spend any money trying to get higher over the bar because you are squeezed for funds anyway. If we want a better quality system we do need to pay for it and we need to incentivise it the right way because just providing more money is not going to lead to better care. It may just get creamed off in profits.

“You need to think carefully about how you would design that system if you want to incentivise quality,” Associate Professor Comans said.

Also released on Thursday, the technical paper developed by the University of Wollongong shows the mapping of the Aged Care Funding Instrument (ACFI) to the Australian National Aged Care Classification (AN‐ACC) and a case mix-adjusted indicator for residential aged care facilities.

Access Research Paper 9 – The cost of residential aged care and Research Paper 10 – Technical mapping between ACFI and AN‑ACC here.

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