Aged care under strain, says report

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.

“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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