Broaden sample size of costing studies, says report

That’s one of the recommendations contained in an independent costing study.

Future costing studies of aged care homes should be expanded to increase the data received from residents, according to a report.

That’s one of the 12 recommendations contained in an independent costing study conducted on behalf of the Independent Health and Aged Care Pricing Authority.

The findings of the study – which crunched financial data and direct care time data from 118 aged care facilities across the country from January to November 2023 – will be used to inform IHACPA’s residential aged care pricing advice to the government for AN-ACC for the 2024-25 financial year.

Other recommendations in the 102-page report from Scyne Advisory call for IHACPA to:

  • seek to expand the sample size through future costing studies to increase the extent of data captured for permanent and respite residents
  • aim to enable a flexible approach to engaging with specialised populations such as respite, Indigenous and homeless residents as well as residents living with dementia
  • continue to investigate the allocation of indirect care time
  • undertake a targeted study of the cost of delivering aged care services to new residents.

Regarding data quality, the authors recommend IHACPA:

  • work with the Department of Health and Aged Care to review and modify the Quarterly Financial Report template and processes
  • should develop costing standards tailored to the residential aged care sector.

Asked if the authority would act on the recommendations, a IHACPA spokesperson told Australian Ageing Agenda: “IHACPA’s expanded role in providing independent aged care costing and pricing advice aims to ensure that Australian Government aged care funding is directly informed by the actual costs of delivering care. To support this, IHACPA will undertake regular costing studies, consider other available cost and activity data such as the Aged Care Financial Report and Quarterly Financial Report data, and seek input from stakeholders through annual public consultation and advisory committees.”

Over the course of the study, time data was captured for 4,598 residents, with more than 136,000 resident days observed and approximately 3 million interactions captured between residents and staff, equating to over 7 million direct care minutes.

Source: 2023 Residential Aged Care Costing Study

Analysis of the direct care time data showed on average:

  • 20 interactions with staff per resident per day
  • 2.5 minutes of direct care per interaction
  • 52 direct care minutes per day per resident
  • 163 indirect care minutes per resident per day.  

As the report’s authors note, the care minutes are not comparable to the mandated care minute targets as additional staff roles were included in the calculations. Also, all data collection for the costing study was completed prior to the introduction of mandated care minute targets in October 2023.

The report also shows that during the period the average daily cost across all participating permanent residents was $352. This was comprised of $230 (65 per cent) in direct care labour, $10 (3 per cent) in direct care non-labour, $63 (18 per cent) in hotel costs and $48 (14 per cent) in accommodation costs.

The average daily costs varied by AN-ACC class, ranging from $259 for class 2 up to $396 for class 13, with higher direct care cost being the largest contributing factor to the $136 difference.

The average daily cost per participating respite residents was $377. This was comprised of $267 (71 per cent) in direct care labour, $8 (2 per cent) in direct care non-labour, $59 (16 per cent) in hotel costs and $43 (11 per cent) in accommodation costs.

Tom Symondson

Responding to the report’s findings, Tom Symondson – chief executive officer of the Aged & Community Care Providers Association – told AAA: “We welcome the report, as it’s critical the government’s funding for the aged care sector is evidence-based, and reflects the true costs incurred by aged care providers.”

He added: “We look forward to continuing our work with IHACPA and the government to ensure providers are appropriately funded to deliver quality aged care services, regardless of care needs or location. We also want to ensure that this funding supports the ongoing financial sustainability of the aged care sector, so that older Australians can get timely access to the high-quality care they deserve both now and into the future.”

The costing study report concludes with the authors saying: “It is important that the costing maturity of the aged care sector continues to grow to increase the accuracy of reported data and reduce the data collection impost on IHACPA. IHACPA should define a desired future state of funding within the aged care sector and develop an aged care costing roadmap on the steps required to reach it.”

This story was revised on 9 February 2024

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Tags: AN-ACC, cost of care, IHACPA, Independent Health and Aged Care Pricing Authority,

2 thoughts on “Broaden sample size of costing studies, says report

  1. The study did not conclude providers are undersubsidised ANACC by $100/day. The study evaluated the cost of delivering all aspects of residential aged care.

    ANACC is the government’s payment towards care costs. There are other funding abject which need to be addressed:
    1. The basic daily fee is less than the cost to deliver hotel services.
    2. The accommodation supplement is vastly inferior to income from accommodation payments $62 vs $120 day.

    Providers are waiting for the Aged Care Pricing Taskforce outcomes.

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