The final report of the Aged Care Taskforce is on the right track to improve the sector, but there needs to be more clarity to make sure it’s viable for the future, experts say.

Released in mid-March, the final report of the Aged Care Taskforce provides a comprehensive strategy with recommendations to help support a more sustainable, fair and innovative sector. Included were recommendations about changes to the funding model and ways to make the sector more equitable and transparent.

The cost of aged care

The aged care sector is growing exponentially. In 2021–22, the government spent $24.8 billion on aged care services for around 1.2 million people. In the next 40 years, the population of people over the age of 80 years is expected to be around 3.5 million.

However, the sector isn’t profitable. The report highlighted that 69% of residential aged care providers made an operating loss in 2021–22. “While this is an expected low point for the sector, and performance has begun to improve, providers remain constrained in where they can earn revenue, particularly for accommodation and everyday living expenses,” the report stated.

Many of these issues are due to structural problems and rigid pricing structures.

“Unless the aged care sector’s financial viability improves, it will be difficult to attract investment, either as debt or equity. Improved financial viability is necessary to deliver improvements in service, quality and to address service gaps,” the report stated.

According to retired palliative medicine specialist Dr Will Cairns, consistencies in pricing could help drive investment.

“A more efficient system would be one that worked out what the fee would be from the nursing agency providing it, and what the standard would be, and would set the wages and the profit margin. And that would give an incentive to drive profit from efficiency rather than from how much you can charge.

“What’s happening in other parts of health are that private equity and venture capital are investing in health because they reckon they can make higher profit margins,” he said.

Future-proofing the aged care sector - Featured Image
The aged care sector is growing exponentially as the population of people over the age of 80 increases (belushi / Shutterstock).

Changes to the funding

Currently, government funding pays around 75% of the cost of residential aged care funding, and around 95% of home care funding. One of the recommendations from the Royal Commission into Aged Care was that an aged care levy of 1% should be introduced. However, the Taskforce didn’t agree.

“There are substantial intergenerational equity issues in asking the working age population, which is becoming proportionally smaller to pay for these services,” the report said.

Instead, they suggested those with means should make a larger contribution to the cost of their aged care.

The Taskforce recommended clinical services should be primarily paid for by the government. Personal care tasks such as showering and dressing were deemed essential for maintaining independence but may necessitate a copayment. Expenses related to everyday living, such as food and utilities, as well as accommodation costs, should become the individual’s responsibility.

According to Craig Gear, CEO of the Older Persons Advocacy Network (OPAN), many older people with means know they need to contribute more.

“People have told us that as long as what they’re paying for is transparent … and what they’re purchasing and contributing to is of high quality … they understand they need to contribute more,” he told InSight+.

The Taskforce recommended there be a strong safety net for people with low means to meet their aged care costs. Mr Gear is concerned about what that might mean.

“We’d like to see more detail on the safety net, and making sure that we don’t have a two-class system of aged care,” he said.

“It’s not just being on the pension, there are people who might have some super, or some assets, that may still be low means.

“An example of that we have heard is about older women who may not have had the same superannuation opportunities as men to build up that wealth. There will need to be some nuance and consideration around that safety net so it still maintains equity,” he explained.

Improvements to consistency and transparency

Issues with transparency, consistency and complexity were highlighted as needing to be changed, particularly for home care pricing.

“Prices across the programs are inconsistent and inefficient due to variable price setting arrangements. This undermines the predictability and sustainability of funding and can cause confusion when comparing packages with other participants,” the report stated.

Mr Gear agreed, saying inconsistencies with the current home care package pricing model make it difficult for consumers.

“We’ve heard from people that the current means testing, particularly in home care, isn’t consistently applied. An example of that is one person might be with one provider that might be being charged co-contributions but another provider waives that. So, from an equity point of view, it doesn’t sit right with us,” he said.

Although participants could change providers, these lower fee options may not be available in every location.

“Contributions charged to people of particular means or conditions should be applied equally,” Mr Gear said.

Aged care workforce issues

The report noted workforce issues were central to improving the aged care system.

“Despite these being out of scope, the Taskforce notes further work needs to be done on workforce attraction and retention issues and their impact on quality care outcomes, and identifying workforce initiatives that would improve quality outcomes across the sector,” they wrote.

Days after the report was released, the Fair Work Commission announced substantial wage rise of up to 28% in aged care.

Dr Cairns remains unsure if it will solve the workforce issues.

“It doesn’t change the number of people available to do the work. Certainly, it may be that higher pay will increase the attractiveness of the work, but that remains to be seen. As there’s an overall nursing shortage, it may attract people from another area of health care, and, as a consequence, that will then become less effective,” he said.

However, Mr Gear said it’s a good start to getting the right people into aged care.

“Older people tell us that their connection with the right staff with the right skills is really important. Those staff need to be person-centred. How to attract people to this sector, which is a really wonderful sector to work in? You’ve got to pay people well and you’ve got to value them,” he concluded.

What are the goals of aged care?

Even if the funding changes, Dr Cairns highlighted that the report doesn’t define the goals of aged care. In particular, it doesn’t examine what it would cost to provide “best practice care” to a deteriorating population.

“It doesn’t really say what aged care is, what its goals are. It just talks about providing services.

“The real challenges in the longer term are going to be how do you fund so called ‘best practice care’ across the full spectrum of health care when you have a shrinking taxpayer base, and an ageing population with high dependency ratios? Those are the real issues. I think that it requires people to be very clear about what’s possible. That requires a certain candour,” he said.

Subscribe to the free InSight+ weekly newsletter here. It is available to all readers, not just registered medical practitioners.

4 thoughts on “Future-proofing the aged care sector

  1. Anonymous says:

    Thanks Will Cairns, I support your views 100%. Our culture of death and grief avoidance does a lot of harm. My partner’s difficult experience with dying (two months in hospital and two months in a nursing home), taught me that we all need to plan for loss of independence, dying and death long before the terminal diagnosis.

    While lots of people are writing about this in books, journals and on the web very little information seems to reach the general population. Some fliers and notices in the health and aged care systems might help open this door but who will make it happen?

  2. Anonymous says:

    My husband is in residential aged care aged 71. His needs are high care. He worked hard till he was no longer able to. He looked after his body. His neuro degenerative disorder is nobody’s fault
    I am 66 years old. While caring for him at home for several years with his increasing needs, I was trying to work as well (and pay tax!) and survive, it has taken a major toll on my own well-being The level 3 Home care package was inadequate, what we really needed was 24/7 care. We didn’t fully use our own co contribution, and got zero direct benefit from the government funding
    Being showered and dressed in resi care is not a lifestyle choice. Nor are good nutritious meals! His life expectancy could be years. We self fund private physio to maintain optimal mobility Centrelink assess my assets and income in conjunction with his. His assets and super income stream alone barely cover costs in the existing structure. I paid the RAD with my savings. I still have super in accumulation mode as I am still working I also have some assets as a buffer, in case I get to one day retire and possibly even live to older age. I am anxious that my own older age care needs are being overlooked in this proposed restructure, as my assets will become depleted in continuing to fund my husbands care
    Please could the needs of self funded younger aged care residents and their spouses be considered. We are not all couples in the late 80s with squillions of savings and very little time to spend it

  3. Joachim Sturmberg says:

    If you think aged care is a money problem, you will get a money solution. It’s as simple as that – whatever is the focus determines the solution. So, don’t hold your breath that we either get a better aged care system, or that it will be economically more sustainable.

    Any organisational system arises from understanding its purpose. The system builds up from there – what are the care needs, and what does it take to meet those needs. That in turn determines the number and skills composition of the workforce, and the type and amount of resources required. And only thereafter comes the question about funding (and for that matter regulation, but that’s another sole-destroying issue responsible for stifling adaptive care, poor morale, and staff attrition).

    As Alan Kohler just stated, the government has all the money required to deliver any amount of services, it’s called MMT, but that seems politically too scary (though the Morrison government used it “as if there is no tomorrow” during Covid).

    Our research group not only has shown what the systemic failing of the nursing home system are, but also how to go about addressing them in a systemic and sustainable way and (forthcoming). It simply will require a change in mind frame – people before money.

  4. Will Cairns says:

    As a retired specialist in palliative medicine, I inevitably bring that perspective to my understanding of aged care.

    In this article I was quoted on the lack of any description of the goals for the system of aged care in the Report of the Aged Care Taskforce. I had not mentioned that a word search of the Report does address several goals for the participants in aged care relating to their personal and financial choices. Additionally, I would also like draw attention to the fact that the Report includes no words related to death (“dead”, “dying”, “death”, “die”), one “palliative” (in a sentence with “may need” and “specialist”), no “deteriorates”, and five “declines” (only one of which is related to patient health, with the other four related to numbers in data). There are three uses of the word “frailty”, with one related to expected and significant frailty and the challenge of planning and costing. There are two examples of the word dementia. There is no mention of advance care planning or advance care directives.

    I do not disagree with the findings of the report, but it is incomplete. What I find most disappointing is the failure to address the reality that aged care is “care at the end of life” . Everyone who enters the aged care system is doing so because they are experiencing consequences of the process aging that will eventually and inexorably end their life, if they don’t die of something else first.

    That does not mean that aged care as “care at the end of life” is only palliative care (any more than paediatrics as “care at the beginning of life” is only neonatology). Many people are able to live well in old age for many years with support from aged care services. However, as they are providing care at the end of life, aged care services should incorporate support and preparation for, and seamless transition to, palliative care as an integral and explicit part of aged care that always ends with death.

    The Report from the Aged Care Taskforce does not acknowledge that a big part of aged care is looking after people as they are approaching their death and then dying. This failure simply helps to perpetuate the taboo against talking about death that causes such harm within our community. There would be very few experienced palliative care workers who have not had dying patients say to them something like “you are the first person who has talked to me about what is happening to me, my death”. They are so relieved that their thoughts and feelings are being validated and that they are being allowed and supported to prepare themselves and their family for this most normal of events.

Leave a Reply

Your email address will not be published. Required fields are marked *