Aged Care Australia

Important information on the future challenges facing aged care in our nation from the Australian Nursing Homes and Extended Care Association (ANHECA).

Aged Care in Australia will face increased demand in the near future. More than ever, there is a need for political and industry bipartisanship to achieve long term objectives for the nation’s ageing population. The 2004-05 Federal Budget threw a lifeline to the Aged Care sector in Australia.
However, the battle is by no means won. There are numerous ongoing concerns for aged care providers which will worsen as pressure on the sector increases. ANHECA will continue its work with relevant government and industry bodies to build a secure and sustainable future for the aged care sector to ensure the best possible standards in facilities and care are achieved. Crucial for the future of the industry are:

1. Up-to-date research into the cost of care and the demand for services.
2. The removal of unwarranted burdens to operations, particularly in the areas of capital raising, unnecessary red tape, accreditation, complaints resolution and taxation.
3. Appropriate funding and capital raising potential to enable the aged care sector to pay competitive wages and therefore attract high end nursing staff to the sector. In 2011, baby boomers of the world will begin to reach 65 years of age. By making certain assumptions about future fertility, mortality and migration in Australia, a clear profile of an ageing population emerges. According to the Australian Bureau of Statistics, in 2002 the proportion of the population 65 and over was around 13 per cent. By 2051, this is projected to rise to 27 per cent. Look forward another 50 years, and 6.1 million Australians will be over 65 (29 per cent of the population). This is virtually the entire population of NSW today. However, the greatest growth is projected in the population aged 85 years or over. This age bracket is expected to expand from 1 per cent of the total population in 2002 to between 6 and 9 per cent by 2051. This is the age group of greatest consequence as it is this group which will need the Government’s support in the areas of housing, health and disability services.

In 2051: NSW and Victoria can both anticipate a fivefold increase in the size of the over-85-years age group. By 2051 this will be approximately 871 600 Australians; Queensland, Western Australia, the ACT and NT, the age group is projected to expand to over seven times its current size – a total of 563 000 Australians; there will be over four times the number of South Australians aged 85 or over, as in 2002; and 31 900 Tasmanians will be 85 or over, compared to 7500 in 2002. Across Australia this age group is projected to be over five times larger in 2051 than in 2002 – approximately 1.6 million Australians may need aged care of some description.

Implications for the nation’s aged care system
The implications of an ageing population for the nation are broad. The burden will be largely borne by the health, welfare and of course, aged care sectors. It is not only the increase in the number of persons requiring aged care services in the future, which will have ramifications for the aged care sector, but also social changes such as changing family structures. With shifting work patterns, higher divorce rates, smaller families and a higher level of geographical scattering of families, ‘informal’ care is likely to become less viable for a growing number of people. Greater demand for aged care facilities is inevitable.
In June 2002, 29.5 per cent of people aged 85 or over (the age bracket of the majority of aged care residents) were in residential care or receiving an aged care package or service. A further 121 000 Australians aged 85 and over received a HACC service each year. It is inevitable, that as the number of Australians in this age bracket increases, the demand for residential and community aged care services will also increase. A growing preference for at-home care will place additional pressure on the community care sector. However, for a large number of older Australians, at-home care is not a realistic option. Admission to nursing homes generally occurs as a result of falls, dementia, incontinence and discharge from an acute episode in hospital. About 5 per cent of people 65 years and over and 20 per cent of 80+ year olds suffer some form of dementia. As a consequence of the growing number of aged Australians, the number of dementia sufferers is projected to increase significantly.
By mid century, over 580 000 Australians (2.3% of the population) will have dementia. The demand for dementia services will increase respectively. It is imperative that industry and governments continue to work together to prepare for the significant increase in demand on aged care services in 2011 (and beyond) and put in place long term solutions to cope with the population change. This will take time. Appropriate steps are needed now. Solutions must be long term.

The story so far
The Aged Care Act 1997 imposed significant structural change on the aged care sector. Considerable reforms were implemented in the areas of funding and quality assurance. Providers were given more responsibility to raise capital, and residents with higher income and assets were required to contribute more to the cost of their care and accommodation. The industry welcomed many of the reforms, however there was overall agreement from the outset that the Act restricts operations in key areas – to the extent that provision of care may be compromised.
Since its introduction, the industry has gone to considerable lengths to highlight to Government some of the deficiencies within the Act, and to campaign for the changes the sector considers necessary to ensure long term financial viability and quality care. In response, as part of the 2001- 02 Federal Budget, the Government announced the establishment of the Review of Pricing Arrangements in Residential Care, headed by Professor Warren Hogan. The main task of the review was to “examine the longer term prospects of residential aged care services with particular respect to future arrangements for private and public funding, performance improvement in the industry and longer term financing”. The review was conducted with four key principles for the sector in mind: quality of care; equity of access; efficiency and sustainability. The industry continued to explain to Government that extra support was needed if operators were to continue to provide the standard of care that the community and Government expected.

A key feature of the 2004-05 Federal Government Budget was a $2.2 billion (over five years) package for the sector aimed at increasing efficiencies in the short term and helping to ensure long term sustainability. The package was partly based on Hogan’s findings and coincided with the release of his report. The budget package was welcomed by the sector, but it is only the first step to long term sustainability. Three significant initiatives were included in the Federal Government Budget package:

1. An immediate cash injection of $3500 per resident ($513.3 million) to assist operators meet improved safety and building standards for certification by 2008, with a focus on fire safety requirements.
2. A Conditional Adjustment Payment (CAP) in addition to COPO indexation amounting to a 1.75% increase for the financial year 2004-05, and increasing annually by 1.75% to a total increase of 7% by 2007-08 (approximately $2000 per resident per year).
3. An increase in the maximum rate of the concessional resident supplement from $13.48 per day to $16.25 per day.
5. Review of Pricing Arrangements in Residential Aged Care – Final Report, WP Hogan, Commonwealth of Australia, 2004.

These (and other) Government commitments to aged care have been broadly and publicly applauded by the industry. However, in reality, they still fall short of requirements and the recommendations made by Hogan. Of the $2.2 billion package, $3500 per resident was distributed immediately to providers – a total of $513.3 million in the final days of 2003-04. While the cash injection was certainly welcomed, as a one off it is not enough to resurrect the industry. Forward estimates allocate only $262 million to the industry for the 2004-05 year. The total additional operational funding to providers amounts to less than a 2 per cent increase, which does not even approach the recent and pending wages cost increases.
From the revised budget allocations, providers are also expected to meet 2008 building certification standards for aged care residences, imposed by the Federal Government in 1997. These standards specify that: existing facilities can have an average of no more than two beds per room with a maximum of four beds in any room; and new facilities must average no more than 1.5 beds per room with a maximum of two beds in any room. Unfortunately, when the Government set the certification standards, no provision was made for the increased operating costs associated with reducing the number of residents per room. Meeting the certification standards will place further strain on operators. Virtually all the budget allocations come with extra red tape and extra cost involved for providers.

CONTACT
Australian Nursing Homes and
Extended Care Association (ANHECA)
Level 1, 25 Napier Close, Deakin ACT 2600
Phone: (02) 6285 2615 Fax: (02) 6281 5277
Email: office@anheca.com.au
www.anheca.com.au