New funding model needed to rescue ailing home care
A new report says the gloomy future for residential and in-home aged care can be solved. But you will not like the solution.
Key Points
- Report finds Home Care Packages (HCP) money could be going to waste.
- Aged care providers have been operating at a loss for five consecutive years.
- Calls for additional reforms, including increased user pay.
Why aren’t home care recipients spending their allocated Home Care Package funds? It is a question that needs more study, but a new report highlights the problem.
The latest Aged Care Financial Performance Survey report shows an increase in unspent funds to an average of $11,693 for every home care recipient.
“That money is, in a sense, going to waste,” Grant Corderoy, senior partner at an accountancy firm, and report author Stewart Brown, told Community Care Review (CCR).
The quarterly survey provides financial performance information to the aged care sector at the aged care home or in-home programme level.
The survey processed data from 76,770 home care packages accessed during the first three months of the 2022-23 financial year.
Residential aged care operators claim loss
The StewartBrown report said the three months ending September 2022 continue to highlight the declining financial sustainability of the sector. Residential aged care now remains in a critical financial sustainability position for many providers.
The average operating result for residential aged care homes was is an operating loss of $21.29 per bed day. This represents a $7,092 per bed per annum loss, extrapolated by the residential sector loss of more than $345 million in the last three months.
The alarming statistic is that 70 per cent of aged care homes operated at a loss.
They found the home care sector was continuing to experience a significantly declining financial performance while exhibiting significant operating issues.
Among the issues, home care recipients receive more funding than they require.
The government has shown a commitment to remodelling the current home care program. However, the report states that more change, such as an alternate home care funding model, is needed.
"Funding reform is needed so that consumers are getting funded to the level they need, rather than becoming over-funded,” Mr Corderoy said.
“That will allow funding for other consumers who do not have access to [home care] packages.”
The shortage of staff is the biggest home care issue. That, combined with a complicated regulatory environment, are the main reasons for the sector’s declining financial performance.
Staff shortages not only impact the delivery of quality of care but they also affect a provider’s bottom line, Mr Corderoy told CCR.
“They have to pay agency fees, which is a higher cost, or significantly more overtime.”
The report says the financial return, based on investment and combined with business risk in providing in-home essential services, is inadequate and becoming worse.
While the report is optimistic the government reforms will be effective, they will take years to implement and take effect. In the meantime, it recommends more government action and money in the short term.
“After more than five successive years of significant aggregate operating losses in the residential aged care sector, structural funding reforms are essential.
“To avoid closure of homes and reduced service delivery, especially in regional locations, a funding sustainability package also needs to be considered in the short term to ensure current viability and allow for the necessary funding reforms to be properly implemented.”
The key recommendation is that the aged care consumer should pay more for the services they receive. In other words, higher co-contributions by residents and care recipients are necessary.
Mr Corderoy agrees, especially from “those consumers that can afford to pay.”
Other recommendations include:
- Funding to increase staff remuneration, on-costs, and benefits.
- Subsidy funding, including indexation that directly correlates to direct costs of care (particularly staff).
- Regulated consumer contribution for Home Care and Commonwealth Home Support Program based on the ability to pay.
- Deregulation of residential Basic Daily Fee.
- Structural enhancement of residential Accommodation Pricing model.
- Increased capital grants for rebuilding and refurbishment.
- Alternate Home Care funding model.
For further reading: StewartBrown
