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.

Darrell Price

“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.

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2 Comments

  1. There always seems to be a cost contribution model, underpinning tax or other financial impactor raised. Why is it that the aged are increasingly charged contributions for care at less adequate levels than those under the NDIS who have no means testing or financial contribution. This is an inequitable system that needs to be considered going forward. When considering financial modelling please consider all people requiring care and support across all programs and design a workable, sustainable system. I have no problem with contribution provided it is based on equity for all

  2. Once again the industry has gone into a huddle and come up with their solutions which conceive of the the aged care market as something which ‘stakeholders’ control and use to sell services to ‘consumers’. In aged care these are the most vulnerable and most easily exploited in our society. The Royal Commission has also been engaging with this huddle of ‘stakeholders’, who all have a personal interest, in restructuring the system without really changing it.

    The Royal Commission have forgotten about the many ‘citizens’ that came to them and told them about their experiences, and the advocates who have been examining and drawing attention to the problems for years. These citizens only interest is in the welfare of their vulnerable fellow citizens and in having a society of which we can all be proud. They are no longer consulted.

    Neither the industry nor the Royal Commission is talking to them about the sort of structure they want.

    Traditionally responsibility for the vulnerable has been the responsibility of citizens – every one of us and our communities. Its part of our heritage. It has been driven by our values, our empathy and our altruism. These are not the values of the marketplace.

    Free market ideology has since its inception had a deep distrust of the community. The freedom it claimed since its inception was from the community that once controlled its excesses.

    Governments and industry who embraced these belief have since the 1990s pushed community aside and tried to manage the way it thinks and behaves. A past chair of the governments Aged Care Sector Committee let this slip in an unguarded moment saying “government is concerned about a public backlash from people who believe that aged care should be a community service and not motivated by profit”. That is why they are talking behind closed doors and not to us.

    The argument is that aged care is and has always been a community responsibility. Anyone who provides care is providing it on our behalf. They are our agents and responsible to us as a community. Free markets and government have taken that away from us and we can no longer hold our agents to account. They must give that back to us.

    Aged Care does need restructuring but that aged care roadmap and the ideas behind it are dead and buried. That system has lost trust and credibility. It is beyond repair. Both industry and the Royal Commission need to start talking and working with the community. After years of neglect community has come together during the bushfires and the COVID-19 pandemic. It is deeply disillusioned with government and industry. It wants a new normal.

    Both industry and Royal Commission should be talking to us – not about what you want to offer us but about how you can help us in providing our aged care service. You will need to work together with us so that we have a system where we work with you in providing that service but can dispense with those who do not embrace our values and fail us. That is what makes the market work for citizens.

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