Sector embraces further reform, but wants discussion

Aged service providers and consumer representatives have broadly supported the Federal Government’s agenda for the next stage of aged care reform, but they have called for strong protections for vulnerable seniors, particularly in rural and remote areas, and constructive engagement with the sector to flesh out the details.

In a speech to the Committee for Economic Development of Australia (CEDA) on Tuesday, Assistant Minister for Social Services Mitch Fifield made his strongest statements to date in support of some of the more ambitious reforms put forward by the Productivity Commission’s 2011 inquiry – including easing government rationing of places in residential care, and moving to a cashed out model in home care.

Senator Fifield also flagged a move to a single community care system, consolidating the home support and home care programs. Significantly, he indicated some of the reforms could be implemented before the five-year review, slated for 2017.

Sector reaction

The majority of stakeholders Australian Ageing Agenda spoke to welcomed the sentator’s speech, but some noted that his remarks were at such a high level that their implementation in practice was unclear and open to interpretation. Indeed there was some debate about the meaning of certain elements of his speech. Almost all stakeholders commented on the need for robust industry engagement as the reforms are developed and implemented.

Sue Macri, former associate commissioner at the Productivity Commission and aged care consultant, said she was pleased to see the government returning to the PC recommendations in the next stage of reform. “I’m delighted that the report is as relevant today as it was when it was first released three years ago.”

Ms Macri said freeing up the market was necessary to meet unmet demand and improve competition and consumer choice.

In addition to the benefits for choice and access, a deregulated system would also improve efficiencies and ensure services were appropriate to a person’s needs. “One of the biggest problems in the current system is that people hang on to a care package even if they don’t require it because once they exit the system, it is too hard to get back in on a capped needs basis,” she said.

And as individualised funding and budget holding featured more prominently in the new system, Ms Macri said strong protections against financial abuse of older Australians would need to be front and centre in sector discussions. “There is going to need to be some very specific guidelines or regulations around how the money is spent and what it is spent on,” she said.

While the changes were essential, they required amendments to the Aged Care Act which would take time and consumers and providers should not expect immediate results, said Ms Macri.

Aged and Community Services Australia CEO Adjunct Professor John Kelly said he welcomed the comments on freeing up government control over supply in residential aged care but the implications for regional and rural markets would need to be addressed.

“The rationing of beds by location does not match the needs of our older Australians. However, any move to a new market system must consider and protect the needs of older Australians in regional and rural markets, which are often difficult to service areas,” he told Australian Ageing Agenda.

“There are many strands to the argument for allowing consumers greater choice, but there are also practical implications, especially in rural and regional markets, where there may be only one provider of community services, creating a distorted market for CDC,” he said.

Helping Hand CEO Ian Hardy also welcomed the phased introduction of a deregulated aged care market, which he said would be more responsive to consumer preferences. “A reliance on market behaviour will actually tell us what consumers want,” he told AAA.

However, Mr Hardy said the additional costs of operating in rural and remote areas and in some metropolitan areas would need to be considered by government. “Over time we may need to see some equalising of the concessional support that is provided to ensure socioeconomic disadvantage does not skew the market.”

Recognising government budgetary restrictions, Mr Hardy said the first stage of deregulation would likely involve greater freedom to determine the geographic location of beds rather than simply uncapping the quantity of supply.

He also supported the foreshadowed changes in home care and said that providing the funding entitlement directly to the consumer was an important objective in consumer directed care.

Patrick Reid, CEO of Leading Age Services Australia (LASA) said his organisation was supportive of measures that freed up supply and improved access, but he said the issue was around transitional arrangements, noting the “different capabilities within the provider base.”

Mr Reid noted that Senator Fifield had previously spoken about the need to “bed down” the current suite of aged care reforms before moving to more ambitious measures.

“I don’t think we need to wait until 2017; he mentioned the review, I think that would be two years of lost opportunity if they were to wait until then. Also, to be frank, there’s another election cycle in the middle of that, I don’t want to get caught up in the political football.”

Mr Reid said the government didn’t necessarily “need to be brave”, it just needed to involve providers, consumers and the other stakeholders in the process. “He has alluded to that through the Aged Care Sector Committee and we should get a result… I don’t think anyone has a problem with what he has mentioned, as long as the other mechanisms are freed up so we have a true market-based system.”

Chief executive of Council on the Ageing Australia (COTA) Ian Yates said he welcomed the future directions for the aged care sector set out by senator Fifield’s speech, noting his remarks were consistent with government election policy to move to greater implementation of the PC’s recommendations, which had strong COTA and NACA support.

Mr Yates said the most important step was to place full control over package care resources with the consumer. “Current CDC arrangements are a half-way house that create unnecessary complications that giving consumers full control will resolve. This principle also needs to be extended to residential care – give the bed licences to the consumers and let providers attract them with good facilities and services,” he told AAA.

Bringing home care packages and the Commonwealth Home Support Program into a consolidated program had also been recommended by NACA and was a very welcome direction, Mr Yates said.

“We also welcome the foreshadowed limited movement on freeing up the supply side in residential care. COTA’s position remains that recommended by the PC that supply side constraints should be lifted and the only requirement for access to either a funds package or a bed licence in the hands of the consumer is assessed need through a government mandated assessment system.”

Mr Yates said the inclusion in My Aged Care of consumer driven quality indicators was a key promise in Living Longer Living Better, which had “slipped back in priority and scheduling.” He welcomed the senator’s commitment to quality ratings and to discussing a broader quality reporting role for My Aged Care.

“We would also note that the main other missing piece for the PC jigsaw is now enabling people who want to, to access their home equity to help pay for aged care needs. This did not get up in the LLLB package but remains on consumer agendas in both aged care and retirement incomes. There is room for markets to play a role but government involvement is also essential to make such a system viable for financial services providers.”

Paul Sadler, CEO of Presbyterian Aged Care, said the government’s commitment to merging home care and home support into a single system would be a significant milestone for the sector and would achieve a key plank of the NACA vision.

However, he said the sector would need to be cautious about a blanket approach to individualised funding in a single home care system. “We do need to increase the amount of individualised funding, but there will also be a continued role for block funding,” he told AAA. “Some service types don’t really lend themselves to individualised funding.”

Mr Sadler said in a system where service rationing was removed, the assessment process and the level of funding available to consumers become the primary mechanisms for controlling service demand and government costs. “How that is constructed and managed is where the discussion needs to take place,” he said.

Mr Sadler said the Federal Government needed to begin a process of constructive engagement with the sector in order to flesh out the detail of the government’s plans.

“While broadly I’d welcome the minister’s statements, they are still at such a high level that they could mean almost anything in practice at the moment. We need to see an engagement with the sector on what they might mean and, hopefully, if we do that collaboratively, we will come up with a new generation approach to aged care that moves well beyond the Living Longer Living Better reforms.”

Bruce Bailey, director of accounting firm RSM Bird Cameron, said the senator’s comments were broadly consistent with the recommendations of the PC’s 2011 inquiry, and the direction set in the subsequent Living Longer Living Better reforms.

If properly managed these measures would move aged care from a regulatory-based to a customer focussed environment, he said. However, he cautioned that while the market works well in major population centres it may not be as effective in other areas, such as regional and country areas.

Asked what he would like to see from government in terms of moving towards implementing these changes, Mr Bailey said that policy uncertainty was the great inhibitor to market action.

Mr Bailey said that while the Federal Government had articulated its rationale for cancelling the payroll tax, it was clear that state governments were not going to give the money back. “To have such a significant change occur in one switch, rather than in lock step with the states, was a big risk to the industry… I would have thought a more helpful approach to the industry would have been to step it down over three years,” he said.

Mr Bailey pointed to the recent ACFA report which showed about 30 to 35 per cent of providers were not making significant returns and many “in that group will clearly struggle to react quickly” to the loss of such funding.

The process of simplification and reduction of red tape had already commenced and to see that continue would be positive. However, with the development of new residential aged care projects taking up to seven years to complete, simplifying the ACAR process would help reduce that long lead time, he added.

Bupa aged care managing director Louis Dudley said Bupa was always supportive of measures that increased flexibility and choice for consumers. “In an aged care market where there are increasing options and significant decisions for elderly people and their families to make, it will be even more important for the government and the aged care industry to work together to ensure that the people who need care services are protected and assisted in making what is a major life decision,” he said.

Mr Dudley said vulnerable older people and their needs should be “kept at the centre” of any reforms in residential aged care.

“Any reforms must ensure that elderly people and their families are provided with the support they need, and that there are appropriate mechanisms in place to ensure they are protected from unintended consequences that negatively impact quality care,” he said. “To do this, it is vital the government, carers, families and consumers continue to work together to ensure that reforms are designed and implemented carefully.”

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