This Aged Care System Is Getting A Bit Old


"This is a good first step," says Greg Mundy, CEO of Aged and Community Services Australia. "It’s an acknowledgement of the significance of aged care." Rod Young, CEO of the Aged Care Association, agrees: "We support the proposal of a single-level jurisdiction".

Both Mundy and Young say that the Federal Government’s plan, announced yesterday, to assume control of aged care services should help to integrate programs that fall under different jurisdictions. Young points to the current "fragmentation" of responsibilities among federal, state, and local government instruments.

Centralisation, they argue, will help to streamline an industry whose various programs can be confusing and indistinct for both providers and users. Aged care is awash in a sea of bureaucratic acronyms, including HACC (Home and Community Care), CACP (Community Aged Care Packages), EACH (Extended Aged Care at Home), and EACHD (Extended Aged Care at Home Dementia).

These programs cater to different levels of care in a range of contexts, depending on whether clients live in their own home, live in residential homes, or require hospitalisation. Mundy hopes that Commonwealth control of these services will bring about an improved "interface" between them.

Older Australians are a diverse population requiring a huge range of resources. The Australian Institute of Health and Welfare reported that in 2004 Australians over 65 made up 53 per cent of people in hospital on any one night. They use the services of GPs more than any other demographic (an average of 8.5 visits a year in 2005-6). Aged care therefore places a unique pressure on the medical system. That pressure will only worsen as the population ages.

The population is not only ageing, it’s also changing demographically, insofar as it is becoming culturally and linguistically more diverse. This requires a new set of services and skills. Last year, the trade magazine Australian Ageing Agenda ran an article about the specific needs of dementia patients born overseas, who often revert to their first language with the onset of mental illness.

Among the current system’s faults, insiders say, is the method for assessing entry into aged care. Holly Stewart, Manager of Rozelle Neighbourhood Centre told that "assessment of entry can be tricky and deceiving. People are being squeezed out of eligibility for some services."

In January 2010, the Aged Care Industry Council (ACIC) tabled a budget submission (pdf) to the Federal Government which addressed this issue of entry assessment directly. It found that the Rudd Government’s Aged Care Funding Instrument, which assesses aged care payments according to people’s level of need, "significantly reduced the amount of funding paid to support some people with low care needs".

The aged care service industry is overburdened, underfunded, and struggling to adapt to the rising pressures brought about by increasing numbers of older people. Catholic Health Australia National Director Martin Laverty warns that "without fundamental regulatory reform there will be a growing shortfall in the number of beds available for older Australians who need care."

This concern is shared by the ACIC. Last year, the ACIC argued that the "new industrial relations system will significantly increase costs (in wages and system complexity) to service providers in some places … and will place even greater pressures on services. Providers will be forced to further reduce services to frail older people to absorb these costs." And as Greg Mundy concedes, the Federal Government’s aged care announcement this week "doesn’t address the fundamental economics of aged care".

The ACIC’s budget submission last year highlights five areas in need of reform. It’s clear that not all of these recommendations were met by Rudd’s announcement yesterday.

Firstly, it recommends a change in the Government’s current method for indexing "the real costs of care". It argues that the Government’s "new industrial relations system will significantly increase costs (in wages and system complexity) to service providers in some places … and will place even greater pressures on services. Providers will be forced to further reduce services to frail older people to absorb these costs."

Martin Laverty echoes these sentiments, claiming that "the aged care funding mechanisms created by the Howard Government are out of date and inflexible. The Rudd Government should abandon them. Until they are fixed, every high care bed operates at a loss of $13 every day."

A second area for reform is the capital-raising system for aged care. The ACIC says that the current system, which combines government funding and user contributions, "is proving totally inadequate for the expansion and maintenance of aged care beds".

The ACIC found major discrepancies between findings of the 2004 Hogan Report initiated by the Howard government and the actual costs of aged care. For instance, the Hogan Report indicates that the cost of building an aged care bed is somewhere between $81,000 and $92,000. The ACIC argues that the real figures as of 2007 ranged between $152,000 and $215,000. As the cost of care skyrockets, there is a need to find a long-term means of sustaining the system.

Thirdly, the ACIC advises that services require an immediate injection of funds. It quotes alarming statistics indicating that higher costs are forcing services to reduce their standards. The 2008 Australian Institute of Health and Welfare report, for example, notes that of the 1 million older Australians requiring some form of care in their own homes, over 50,000 claimed that their needs aren’t being met at all. Over the last five years, Community Aged Care Packages have reduced their hours of care per individual from an average of seven hours a week to five. Among the ACIC’s recommendations is a 20 per cent increase in funds to the Home and Community Care programme alone.

Fourthly, the ACIC observes the need for continual training and retention levels of nurses working in the aged care sector. Nurses are in short supply everywhere. The ACIC argues that there should be a committed effort to entice nurses to their sector from the very beginning, noting that "a positive clinical placement is what encourages undergraduates to consider a career in aged care". It endorses a model called Teaching Nursing Homes, which incorporates aged care service providers more directly into clinical training programmes for student nurses.

Finally, the ACIC argues for the creation of an electronic health system whereby an individual client’s prescriptions and history of accessing different aged care services are kept on a single record. The ACIC notes that proliferating prescriptions — 560 million prescriptions per annum in residential aged care homes, with each resident taking an average of nine medications — have resulted in "excessive paperwork" for medical staff. A readily referrable e-health record, Rod Young insists, would cut down delays in the administration of prescription and medication, making the process "almost instantaneous".

So while there is general praise for the move to centralise regulation of aged care services at the top, industry heads are still waiting to see a long-term reform of the system.

And in the meantime, service providers are hoping that the proposed federal takeover doesn’t mask the need for an increase in funds — and that it doesn’t result in a loss of services. As Holly Stewart puts it, "We need to simplify our assessments of aged care entry and access, not our understanding of ageing".

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