Aged care under strain, says report

Financial losses, workforce pressures and an ageing population will create an unsustainable industry.

If unaddressed, financial losses, workforce pressures and an ageing population will create an unsustainable aged care system, says a new report.  

Released by the University of Technology Sydney’s Ageing Research Collaborative, the discussion paper notes that the current aged care system is under great stress and that the situation is worsening.

Commissioned by peak body the Aged & Community Care Providers Association with the support of the Council on the Ageing Australia and National Seniors Australia, it’s hoped that the document’s release will spark an urgent conversation, the report’s co-author Dr Nicole Sutton told Australian Ageing Agenda. “We would like the paper to promote a frank, national policy debate on the sustainability of the aged care sector.”

The consequences of inaction are substantial, she said. “Senior Australians will bear the brunt of a failing aged care sector and the taxpayers will be demanding a limit on government expenditure.”

In the absence of reform, “many providers and aged care workers will leave the sector, and there will be added pressure on both the level and quality of care,” Dr Sutton added.

Presently, subsidised aged care services cost taxpayers $27 billion a year and account for 1.2 per cent of gross domestic product. As the population ages, and demand for services increase, that cost will double to 2.1 per cent of GDP by 2060, according to the Aged Care Financing Authority’s 2021 funding report.

With 60 per cent of aged care providers operating at a loss, and earnings falling 44 per cent in the three years to 2019-2020, the sector is set to crack under immense financial strain, said Dr Sutton. “The discussion needs to start with broad recognition that the government’s budget is under great stress and that the situation isn’t likely to get much better over the next 40 years.”

“More funding by itself is not the answer.”

But the challenges facing the industry are not just limited to budgetary burdens, said Dr Sutton. “More funding by itself is not the answer.”

ACCPA interim CEO Paul Sadler agrees. “Funding fixes like the $18 billion in the 2021 budget, while welcome, are not enough to address chronic workforce shortages and implement better standards that can be sustainable as costs increase and needs change.”

Meanwhile, COTA CEO Ian Yates said: “Short-term, band-aid solutions to aged care financing haven’t worked in the past and won’t work in the future.”

The 84-page report – entitled Sustainability of the Aged Care Sector – explores a range of strategic approaches to improve the industry’s capacity to deliver safe, high-quality services to older Australians at an affordable cost.

Dr Nicole Sutton

“The first step is to invest in improving the health and wellbeing of Australia’s seniors so that the demand for subsidised aged care services is reduced,” Dr Sutton told AAA.

Then there are ways to ensure the services are more effective and are delivered more efficiently, she added. “Such as by investing in skilling the workforce and engaging them actively in improving the level of care. There is also a need to discuss whether consumers who have higher income and wealth can afford to pay higher contributions.”

Remodelling the sector

The authors suggest a system redesign that includes:

  • defragmenting the sector by developing a coherent program of graduated services
  • supporting more consumer choice and control and promoting provider competition
  • increasing the availability of services that facilitate reablement
  • improving regulatory oversight.

The advantages of introducing an aged care levy are also discussed.

“One of the perceived benefits of a levy would be the public perception that funds to be raised were earmarked and set aside for use for aged care,” write the authors. “Politically, it may be easier to gain public acceptance for increased taxation if it is explicitly designated for aged care and is seen to be secure from changes in political priorities over time.”

Technology, too, can play an important part in delivering “more tailored and efficient services that satisfy older peoples’ needs while alleviating future cost pressures,” add the authors.

“In essence, the subsidised aged care services will only become more sustainable through a multilayered strategic response from the government, sector stakeholders and consumers,” said Dr Sutton. “This should be the focus for the national debate.”

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Tags: Dr Nicole Sutton, featured, sustainability, university of technology sydney,

2 thoughts on “Aged care under strain, says report

  1. It’s the same old rhetoric from ACCPA that we have heard from LASA and it continues to mislead the public when it says things like $18 billion in the 21 budget went to “aged care”. When people think of the royal commission and “aged care” they mostly think nursing homes. The public has been lead to believe, because it wants to believe, that the $18 billion went to nursing homes and that they are rolling around in the loot.
    Nothing could be further from the truth and all these associations have chronically failed in the one single over riding issue which is that nursing homes are running at a loss and they have done nothing to alleviate the issue. Just for the record, nursing homes got less than $1 billion in the form of a $10 per resident per day subsidy.
    There’s nothing new in these stories, the Labor government knows that the liberals cut $2 billion from nursing home funding in 2015, introduced new taxes, blocked CPI etc and no surprise that the sector is failing.
    Politicians and associations like aacpa should hang their heads in shame!
    I really don’t know why businesses would waste money joining associations only to be neglected and watch them achieve nothing.

  2. “The first step is to invest in improving the health and wellbeing of Australia’s seniors so that the demand for subsidised aged care services is reduced,”
    Well – I have been trying to raise the value and importance of counselling through posts on a few platforms. Counselling and counsellors get ignored.
    Good mental health is critical to living a reasonably good life at any age + stage, and in any home setting.
    We need a range of MH professionals, including Counsellors, to support older adults’ wellbeing, whether as reablement or generalist support.
    Counsellors already work in the ‘care space’ on the Carer Gateway. We are already making some difference to older carers, and carers who are ageing, and carers who have their own anxiety, disability, etc. We have dementia-specific counsellors but we do not have generalist or specific aged care counsellors.
    I will continue to advocate for skilled and specialist Counsellors in Aged Care in any home setting. I believe the introduction will, as the author suggests
    *support more consumer choice and control and promoting provider competition
    *increase the availability of services that facilitate reablement

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