An industry report is calling for a refresh of the 2016 aged care roadmap and a phased approach to transformation with changing funding arrangements along the way to drive change and stimulate reform, investment and sustainability.
The report, A model for transformation and governance, from aged care advisors Grant Thornton also highlights the tensions over whether a free-market model is the right approach.
It is informed by discussions and differing views of aged care provider executives who took part in a workshop in March and subsequent consultations.
The report, which continues Grant Thornton’s perspectives report released in September last year, says there is an opportunity to design a flexible system while providing assurance to providers to invest in services that will provide quality outcomes.
Lead author Darrell Price said the reports reflect the diversity and sometimes contradictory experiences of aged care providers.
“The overarching message we heard through this process is that the aged care system in Australia requires structural reform to address the issues experienced by both consumers and providers,” Mr Price told Australia Ageing Agenda.
“While there were different opinions as to how we do this, it revealed a number of fundamental questions,” said Mr Price, Grant Thornton’s national health and aged care leader.
A key one was whether aged care services could be more effectively delivered in a free market or in a social enterprise with more support and oversight from government, he said.
“At the moment we seem to have a hybrid where the industry has enjoyed the benefits of external capital in the development of new facilities, while the government restricts supply through bed licence and pricing.
“Competitive tension is created around these constraints. The providers we spoke with have very different experiences around some of these tensions; symptoms of deeper structural issues which we attempt to unpack in our Transformation Report,” Mr Price said.
However, there was some agreement even within disagreement, he said.
“The model for transformation in our report raised many concerns, however what was agreed is that the status quo is unacceptable and will not serve consumers or providers in the future.”
2nd report explores funding options
Grant Thornton has also published a companion report exploring options to improve the sector’s funding model, some of which are dependent on policy but others providers can use independently.
Based on the workshops and consultation with the sector and tax specialists, the report Funding and stimulus to support the aged care sector identifies six stimulus domains, including employment, investment and government.
Mr Price said there was no one way to ensure long-term sustainable funding and that a mix would be needed.
He said taxation and superannuation mechanisms were explored to provide economic stimulus to address common problems including:
- Could the current zone offset be amended to attract and retain workers in rural, remote and very remote locations?
- How can we encourage prospective retirees to put more aside for their accommodation and care needs that arise as they approach the end of their lives?
- What mechanisms would raise sufficient government revenue to fund the increasing cost of aged care?
- What role would changes in GST or an aged care levy have?
“A combination of initiatives across different phases of the required transformation – which may include ones we haven’t covered in our report – may be more palatable and provide the flexibility required through transformation phases and into business as usual,” Mr Price said.
Right time for change
There’s also consensu now is a good time to have these conversations and change the way the sector is funded and supported.
“The Prime Minister has said that everything is up for review and on the table. Some of the options we’ve put forward could and should certainly be considered as part of the larger reform discussion,” Mr Price said.
Both of these reports have been submitted to the Royal Commission into Aged Care.
Mr Price hopes the royal commission considers the structural issues including the design principles covered in the reports.
“Without a clear view of how the industry is to function, simplistic reforms are likely to fail. Consideration needs to be given to whether it will be more effective as a free market, the ‘responsible capitalist democracy model’ described by John Braithwaite or something else.
“Whatever the final solution, finding a balance between the social, economic, and health outcomes required to support older Australians to age well, will be difficult.”
Increased community expectations with added regulatory and government oversight increasre complexity, which is a risk that will need to be managed throughout the transformation process, Mr Price said.
The post-COVID environment might make it more achievable.
“The federal, state and territory treasurers will be reviewing and consolidating funding agreements to ensure consistency and return on investment,” Mr Pice said.
“On top of that, it is hoped that Australians have a greater appreciation of just how vital our aged care providers are in safeguarding our older Australians.”
Access the reports here.