Shaky Foundation: Where is residential care today? 

I have been tracking various residential aged care data and some interesting comparison figures for two decades now since the Aged Care Act came into being in 1997.Please allow me to say right upfront – collecting relevant and appropriate data from indices can be difficult and not always truly comparable.

The data represented below is purely to make us think, and perhaps identify for providers at least, why it seems to have become so much more difficult to maintain a high quality residential aged care service today to people with more pressing multiple morbidities than ever before.

Clearly, by comparison, our funding foundation has worsened over the past twenty or so years.

Residential Aged Care Comparators:

Some description of the various indices follows:

  • COPO/CAP – COPO or Commonwealth Own Purposes Outlays is an index used by the Australian Government to provide some level of maximum ideal lid on the amount of expenditure in residential aged care.  More recently changed to COPE, or Commonwealth Own Purposes Expenditure, the index would have fallen even further behind, say, average weekly earnings, if not for the CAP (Conditional Adjustment Payments) payments made through the 2000s of 1.75{325a31833073d9460f7a78bcb516ce0c388f4161360d4b20624508c43d55a27c} additional payment for each of five successive years.
  • CPI – Consumer Price Index is a well known guide to general increases in costs but, in my view, falls short in human service sectors of industry where the dominant element of organisational expenditure is for staff salaries and related costs.  As one can see from the cumulative effect shown below, COPO/CAP and CPI have maintained a strong sense of parity over the past twenty years.
  • Wage Price Index – as reported by the ABS as the Ordinary time hourly rates of pay excluding bonuses;  Australia;  Private;  Health care and social assistance.  My concern is how realistic is this index when Average Weekly Earnings measured across the whole of the nation seems so significantly higher.  People don’t so much mind the difference in pay levels, they just don’t accept the inequity of the rate variation.
  • AWE – Average Weekly Earnings is, in my view, a more preferable starting point for determining the lack of parity between various indices.  In today’s funding reality it is always going to be difficult for a provider to be making returns that enable their longevity/survival in the sector if they significantly exceed 60{325a31833073d9460f7a78bcb516ce0c388f4161360d4b20624508c43d55a27c} of overall costs being workforce related.  The sector gets it that most of its employees will not earn the average wage across the nation.  But what causes within organisations some of the greatest disharmony is the lack of equity/fairness when increases are discussed.  The sector has been unable to pass on salary and wage increases at the same level as WAE increases over time because the regulator also controls the purse strings.  The gap is simply huge.  Does that have an effect on where the sector is finding itself today in terms of lack of perceived quality, the growing number of complaints, inadequately trained staff, deskilling of professional staff.  Of course!
  • Health Insurance Premiums – Each year the Federal Minister for Health, the same senior Minister that heads up the Aged Care Department, approves an annual premium increase for health insurance funds across the nation.  This increase legitimises the increase in your annual health insurance premium – should you choose to take out health insurance.  Whilst I will never say that health insurance cover is a luxury, it seems to be extremely inequitable that quality of life services to our most frail and vulnerable elderly Australians is so disdainfully regarded as not being afforded a similar level of reasonable increase in cover for services provided. I will leave the determination up to you as to how you view this increasing gap in annual increases.

In my view, this seems to have been part of a longer term strategy to contain the Australian Government’s expenditure and growing exposure to the cost impact of an ageing Australia.  I get all of that.

The issue surely is not so much that Australia as a society is ageing, but rather what is the reasonable cost of care and service provision for frail elderly Australians, particularly when compared with other groups of our great nation.  There needs to be a broader view taken on these matters, not just reduce aged care funding.

How about major reviews of superannuation and retirement incomes, long term care financing, housing, and better controlling for age related health care expenditure and services?

Let’s sure up the foundations so that we can build a better system on stable ground.

Great to be chatting with you again – cheers,


4 Replies to “Shaky Foundation: Where is residential care today? ”

    1. Hello Don – sorry, I completely missed this. My apologies. Yes, I believe some form of acuity payment is being considered, but you are correct – a DRG type system makes absolute sense to me. TAke care Don – cheers!

    1. Hi Richard – my apologies, I completely missed this … I guess you are right but I will not let it simply go through to the keeper. Regards!

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