WA crisis talks over aged care funding cuts

WA nonprofit providers held a public protest and crisis meeting about the government’s decision to cut back funding by altering the Aged Care Funding Instrument, made at the end of the 2011-12 financial year.

Above: Dr Penny Flett, CEO of Brightwater Care, at an ACSWA crisis meeting over aged care funding cuts in Perth (image: Aged and Community Services Western Australia).

By Stephen Easton

Leaders of about 80 Western Australian not-for-profit aged care providers met today for “crisis talks” in Perth and staged a public protest over the federal government’s decision to adjust the Age Care Funding Instrument, which they say will cut $500 million from residential aged care funding.

The group of Aged and Community Services Western Australia (ACSWA) members who attended the protest are also outraged at the governnment’s decison not to apply the 1.6 per cent COPO indexation to residential care subsidies at the turn of the financial year, particularly as the state’s booming economy continues to drive strong inflation.

[UPDATED 9 August] The Minister for Ageing, Mark Butler, has previously described the idea of a $500 million cut to residential aged care funding as “sheer fiction” in an article written for AAA, and asserted that residential aged care funding had grown in recent years and would continue to. 

Residential aged care funding increases every year as the number of residents increases, along with the fraility of the average resident. Many in the industry believe funding has been barely sufficient for many years and that the ACFI changes represent a net cut to their funding.

ACSWA chief Stephen Kobelke said the event – called Bound to Fail – was intended to “send a clear message to Canberra”.

“The funding cuts were announced seven days before the start of the new financial year and there is no indexation, which will have serious impacts on all [residential aged care] budgets,” Mr Kobelke said.

“And in Western Australia, where there’s already an environment where providers are deeply concerned about their operational ability, any cut to their funding will have a major impact on what they will do in future.”

Mr Kobelke dismissed the Department of Health and Ageing’s argument that the ACFI changes were necessary to bring funding outlays back to where its bureaucrats had projected they should be.

“If you look back to 2007-08 when the ACFI came in, prior to that, 70 per cent of providers were losing money; the old system wasn’t working,” he said.

“What ACFI has done is brought it back on track to provide some sort of funding level that allows providers to get back on track; it’s not like it’s been a windfall.”

Mr Kobelke said financial estimates from some members showed funding for some individual residents of aged care homes would decrease by around $14,000 per year, and in some cases by as much as $24,000 over a year.

“Not every resident is having their funding cut, but many are, and the cuts we’re seeing are really huge in a lot of cases,” he added. “And how can we not have indexation this year? Especially over here [in WA], with a roaring economy and increased costs?”

The ACSWA chief said there had been discussion of downsizing among the providers at the meeting, some of whom had traveled hundreds of kilometres to join the protest.

“One of our major concerns here is about rural and remote providers who don’t have any buffer, like some of the larger providers do,” he said. “But everybody in the industry is impacted.”

West Australian aged care providers largely stopped building new residential care beds several years ago as building costs in WA – among the highest in Australia – mean few can afford to do so. 

This has left the state short of over 3,300 aged care beds and with WA hospitals picking up the slack, the WA Liberal government’s Health Minister, Kim Hames, is not happy about the situation

Above, L-R: Brightwater Care CEO Dr Penny Flett, Amaroo Care Services CEO David Fenwick and Narrogin Cottage Homes CEO Julie Christensen take questions at the ACSWA media conference in Perth, which they described as “the most expensive city in Australia to operate aged care facilities”.

Dr Penny Flett, the CEO of Brightwater Care, a former Western Australian of the Year and the first chair of the Aged Care Standards and Accreditation Agency, addressed the unusual meeting in Burswood, Perth, along with leaders of several other aged care organisations.

“It takes a lot for me join in this sort of activity but it’s a measure of the seriousness with which I view this situation,” Dr Flett said. 

“Part of the issue is that we’re expected run our organisations like any other entity in the business world, but when we can’t put up our prices and what we charge is regulated by government, we are therefore dependent on government for subsidies, which are pegged at the same level across the nation, regardless of state or local differences.

“And then, to have seven days’ notice of a very serious reduction in funding? That beggars belief.”

Dr Flett said the industry understood that the ageing population was putting pressure on government budgets, but she believed the unexpected growth in ACFI outlays that has now been cut back was generally appropriate, due to the constantly increasing.care needs of people moving into aged care facilties.

“…for the government to treat the provders in this one-sided manner makes me very concerned,” she said.

“They actually need us as much as we need them, and we should be sitting down together to sovle the problems that are facing us. There’s no point in having a boxing match and slugging it out; we need to face this all together.”

Dr Flett stressed that the group she addressed this morning was not simply an industry group posturing because a decison had not gone its way, and that Western Australian providers were genuinely at a crisis point.

The special crisis meeting of ACSWA agreed on five resolutions:

  • To urge the federal government to reverse their funding cuts decision and undertake an independent and comprehensive cost-of-care study to establish pricing for quality care and accommodation.
  • To call on the federal government to reverse their decision not to provide annual indexation for 2012/13 to cover wage rises and general operating increases, including utility costs.
  • To urge the federal government to provide emergency assistance to the Western Australian regional, rural and remote service providers, who are operating on cost-neutral budgets. 
  • To call on the federal government to urgently address the shortage of 3368 residential aged care beds in Western Australia.
  • To strongly recommends the federal government bring forward many of the initiatives of their Living Longer, Living Better reform package not scheduled to be introduced until mid 2014. We need action and certainty now.
Tags: acfi, acswa, funding, reform,

19 thoughts on “WA crisis talks over aged care funding cuts

  1. Aged Care is about as sexy as a wet incontinence pad but it will effect more and more Australians as our population ages and many YOUNG people will also seek care in Aged Care Facilities. If you think Nursing Homes are full of seniors think again. Many people under 50 under such facilities because they are unable to care for themselves full time (eg brain damage,brain injury, MS etc.) Can you imagine life in a place that is like God’s Waiting Room when you maybe mentally alive although trapped in a disabled body? Aged Care facilities are unable to run successfully because they DO NOT HAVE ANY MONEY to do so. If the Government does not change its funding policy maybe to a user pay model how can these facilities pay their bills, pay accredited staff, attract the best nurses in the industry let alone care for and main buildings and facilities etc.

  2. There is no doubt that the changes to ACFI funding will impact on some areas of care and service across the country. The amount of the reduction will be absorbed by providers , however that will come at a cost. With After tax surplus around $18 to $23.00 per resident, there is little room to maintain and grow services. In Adelaide we have just closed the Living better Living longer conference, and regrettably the outcome has given no significant hope of real change. if particular note was the absence of any serious discussion on the need to take the labour force to a new level. The level of training and knowledge of our personal care workers is appalling. it is a sad inditement on our industry that we allow the lowest paid and most poorly trained staff look after our elderly and not so elderly residents

  3. When is a funding cut not a funding cut? When Minister Butler and his technocrats say so and describe the $480 Million expenditure reduction as an adjustment to trend. By modifying the ACFI tool so that the resident assessment scores were lower, the Dept of Health & Ageing will not have to pay as much for the care being delivered to the frail aged resident admitted or reassessed after 1st July. In fact, they hope to claw back some $480 Million. But be not mistaken, this is not a funding cut, it’s an expenditure reduction to return to trend before ACFI. Meanwhile, the acuity, the dependency of the residents coming into care is much higher and their needs more complex therefore care costs are greater than they were 2-3 years ago. Furthermore, this year aged care providers were informed that there will be no COPO indexation at all to help offset EBA wage increases of 3.5%, electricity, gas, water of 6 – 9%, food of 4.6%, continance pads of 3.5% etc because this too was seen as a smart way of clawing back expenditure to pre-ACFI trend levels. Apparently Treasurer, Wayne Swan has told Minister Mark Butler that he has to stop the spending and stay within budget. Maybe after a few Aged Care Facilities close their doors over the next 12 months, as unintended consequences of poor decision making, they will return to trend a little faster.
    Little wonder that there has not been any new places built or older facilities renewed in WA over the past 3-4 years, little wonder that ACAR bed licenses have been dismally undersubscribed and 2000 provisional bed licenses have been handed back in WA during the same period. There has been nothing to give providers any confidence to build. The Federal Gov’t has done stuff-all to address this problem over the last 5 years and quite clearly LLLB offers little prospect, particularly as it is so far away. Smoke & mirrors again.

  4. Yes, a funding cut is not a funding cut when the Minister says so and explains it as a necessary adjustment to reduce expenditure by $500M so they can return to a pre-ACFI growth trend when 40% of Australia’s nursing homes were financially operating in the red. Talk about smoke & mirrors, this is classic. To hold back on the COPO indexation for any government funded service is paramount to industrial sabotage when the providers cannot absorb the rising costs that they have no control over. There is a real risk of a number of bed closures because staff reductions will not be acceptable. Shame, shame on the Gillard Government.

  5. It’s a sad day when the government rejects providers claims that this funding claw back will hurt not only operations, but some of the most vulnerable people in society. Clearly, these cuts are not only placing WA at risk, but also care and support in other parts of the country. Government needs to pay attention to providers and reverse these clawbacks.

  6. My organisation is going to be impacted by a 5.6% reduction in its real operating income as a result of this lack of thought and foresight by a Government that clearly does not listen, and simply does not understand Aged Care. This Living Longer: Living Better reform is a con, it is nonsense, it lacks substance, it is ill-considered and quite frankly is a massive smack in the face to all Aged Care providers. Good on you ACSWA fro taking up this fight on behalf of all Western Australian providers of Aged Care.

  7. To the Minister for Ageing, you showed so much promise, someone who understood our industry, expectations were raised, but how disappointing your decision making has been, to the point you have lost your credibility. Listening to the voices of the bureaucrats has done you no favours. Your insistence that this funding cut isn’t a funding cut is ludicrous. Call it what you like, it remains a real funding cut and is penny pinching from Australia’s most vulnerable. One day, you might be old and frail? Well done to ACSWA for taking up the defence.

  8. A desire to return to trend is not a reason to threaten the level of care afforded our elderly and the viability and sustainability of their care providers. The timing and short notice of the Government’s decisions, including the decision not to provide 2012/2013 indexation demonstrates Government’s lack of understanding and care.

  9. I have heard nothing from Government to allay my fears that these funding cuts and the failure to provide indexation in 2012/2013 present a significant threat to the capacity of my Ex-Service Organisation to care for aged veterans and members of the general community.

  10. To endorse increasing costs to providers on the one hand and to deny any increase on the other is nothing short of industrial sabotage. If such reckless behaviour was that of another government party this current government would be up in arms over such reckless damage. Claims by our Federal Government that its funding to residential aged care is returning to previous funding trends cunningly suggests that the previous trends were responsible and correct. Sorry Mr Butler and Ms Gillard, we’re not that gullible. Ask anyone trying to balance the books within aged care and you will get the same response that funding for our society’s most vulnerable senior members is insufficient for sustainability. The demands for residential aged care will not reduce while more community care packages are offered. The few hours of assistance per week available to seniors in their own homes will invaribly decrease the senior population’s quality of living and place an unnecessary burden on the hospital system. Under the current Federal funding arrangements the future health, happiness and safety of seniors in their final years is a bleak prospect. The Federal Government’s current regard for senior Australians is an embarrassment and a disgrace. Unfortunately the general public will never fully understand this issue as its only when they become directly involved with a parent that they see the needs.

  11. If I had not been at the coalface trying to work out how I can continue to provide a commodore type service to our most vulnerable and pioneers on a now mini minor budget, I would have been at the Rally yesterday.How can I continue to provide the same care on less money. Even GP’s are suggesting I pay a retainer so they can visit their elders, the system is in a mess and the real cut in funding is what it is.Please Minister you seemed a messiah to Aged Care but you have been hoodwinked by the bureaucrats, I challenge you to “tread your own path” and be the Minister for Action.
    We are bleeding and need you to stop the hemorrhaging. The ACFI was working and now you have changed it to stop us being paid for how we care for our elders.I hope you have a change of heart and reinstates the real cuts.

  12. Bill Gates once said “your most unhappy customers are your greatest source of learning”, I wonder if the Minister is currently listening to his aged care customers? His product is not perhaps selling as well as he had hoped.

  13. All West Australians should be outraged by this decision. It will have a major impact on thousands of elderly people in WA’s aged care homes, in addition to their families and our hospital system – which will be impacted by high care and dementia residents having nowhere to go.

    It is incredibly disappointing that there has been no proper industry consultation, no proper thought and no understanding of the extent of the impact of this decision on not-for-profit aged care providers.

    In WA’s extremely high cost and stretched operating environment, these cuts are very wrong.

  14. How does the Government spin no annual indexation for providers into increased funding. Every rural and remote provider depends on indexation to partly cover annual increases in wages, utility costs and general operating costs. Many are now under pressure. No wonder the bush is battling to keep their aged care services sustainable for their local community.

  15. When will the Gillard government start supporting and funding aged care?! Our entire community is suffering from the elderly, to their families to their carers. My 91 year old grandmother is in care and her carers and my family simply cannot keep up with her needs and the needs of thousands of others due to lack of funding to support carers and treatment.

  16. Clearly, the Minister is out of touch, so is the PM. They have done very little to improve the plight of the elderly whether it is through the provision of aged care or the payment of the aged pension. WA Labor MPs need to start looking for other jobs because they have largely remained silent on the aged care challenges facing West Australians. Aged care is something that is down the road for most of us, including our elected representatives and even the Canberrian bureaucrats who come up with these policies. None of them have actually worked or managed a nursing home so they have got no idea.

  17. Congratulations Western Australia for such a public and well constructed demonstration of support for the industry and our aged. Where are the other States? Please don’t refer to our carers as un-qualified or un-trained. Every provider that I know of provides quality orientation and initial and ongoing training for their care staff despite inadequate funding and have very skilled, caring and passionate employees, all be it under-paid. If we didn’t we wouldn’t be accredited. We have had refundable accommodation bonds (entry contributions) is residential care for many years without issue – just not high care. Residnets and their families have never quibbled about paying. All part of the service. User choice. High bonds are very much an extreme exception. Not only will we have more regulation, there will be a negative impact on capital income. More in-home care. From a risk management perspective this is very problematic. As a long term provider of community care, the majority of clients are living in less than acceptable accommodation particularly when they have significant care needs. This has a direct impact on injury risk and therefore service quality. Monday’s conference, Minister Butler was and is very condescending when addressing providers. He insinuates that providers don’t have the capacity for efficient and quality service provision. This is far from the case. We have had to have been very innovative over many years to continue to meet community expectations, we just don’t promote our achievements. Martin Laverty quoted figures as low as 5 cents per hour as a result of the LLLB wages compact. Lee Thomas trumpeted the wages compact as a success for the low paid. Whatever the actual outcome we are taking cents per hour and certainly not dollars per hour, and at what real cost? I am yet to see any positive outcome of all the consultations, PC, Caring for Older Australians and LLLB. If we stall long enough we may have an alternate government – but what is their position? Do they have one? Previous commentators to AAA have mentioned the emovative arguments and comments. Let’s mention an emotion – passion. We work in aged care because of the passion we have for our aged whether we are CEOs, carers or cleaners.

  18. I am very new to the aged care sector but prior to joining I read the Productivity Commissions report along with several providers and industry groups submissions to the PC review.
    Imagine my surprise to start my new role and discover a Federal Govt’s response to the PC review called Living Longer, Living Better that seems to completely ignore several of the major PC findings and recommendations and to top it off, a major exercise in bureaucratic money spin , that states that a cut to funding(incl no CPI indexation at all this financial year) is not a cut to funding – if it wasn’t going to have a significant impact on our aged I might get a good laugh aka “Yes Minister”.
    Come on Minister start listening to providers not Mr Humphrey, if we don’t keep doing what we do, there is no-one else doing it.

  19. Who else is going pay the $billions for all those labour party do gooders bringing in refugees (both legal and boat people). ??

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