Recent data from Australia’s aged-care sector shows a sector in transition as major reforms from 2013 are implemented and the sector deals with steadily expanding community needs.

Aged care has had a big five years. In August 2011, the Productivity Commission released a landmark report recommending major changes to Australia’s aged care system and its funding, and the Gillard government responded a few months later with a big package of changes. Those reforms focused on dramatically increasing in-home care services (Home Care) to keep people out of more expensive and disruptive residential care as long as possible; more funding and workforce investment; and establishing a central online portal for aged-care services.

Unusually, the Tony Abbott-led opposition at the time elected not to play politics with the reforms, and quietly backed them, taking a potentially politically toxic debate off the table. But since then, there have been concerns about the level of care and high profits generated by for-profit aged-care providers as well as (contrarily) warnings of insufficient funding in the sector.

And all the while, Australia’s population is steadily ageing, increasing the demand on the sector. The residential care workforce has grown by nearly 17% since 2011, more than twice as fast as the overall workforce, and now employs over 200,000 Australians. And the rising demand for aged care funding prompted first the Gillard government, then the current government, to curb future growth in funding by tightening up eligibility and oversight of the Aged Care Funding Instrument, by which patient needs are assessed and funding allocated. Between December last year and May, the government cut future growth in aged-care funding by $1.7 billion over four years.

[Aged care: govt hands Labor an instrument of war]

Labor, however, declined the opportunity to campaign on the issue, and banked the coming savings, with critics again suggesting for-profit aged-care providers were taking the taxpayer for a ride. And as commentator Michael Pascoe noted, under the current funding model, providers don’t have any incentive to improve the physical condition of clients — in fact, they get paid more for more complex needs.

The Australian Institute of Health and Welfare released some detailed data in October on the sector for 2014-15 and, while it doesn’t help solve many of these issues, it gives us an insight how the sector is changing. The sector cost all levels of government $16 billion, and around 72% of the total number of aged-care places (~273,000) are residential, with the remainder Home Care. Since 2010, residential care places have grown by around 7% but Home Care places have have grown 43%, reflecting the policy focus on keeping people out of residential care for as long as possible.

The sector has also been undergoing restructuring: the number of facilities with more than 60 patients has grown from 23% in 2002 to 52% of facilities now. But despite concerns about rapacious privateers ripping off the government, the private sector component of the industry has remained at 31% of all facilities since 2011, while non-profit providers have remained at 59% — with religious institutions (26%) or charitable bodies (17%) making up most of those.

Government provides around 10% of facilities, but they tend to be in regional or rural areas. For-profit providers do tend to operate larger facilities (while governments are more likely to run smaller facilities, reflecting their location) but even the biggest facilities, with 60-plus patients, are split between for-profit and not-for-profit providers.

Home Care services, however, tend to be much smaller: three-quarters of providers have less than 40 places and more than half have less than 20. The sector is dominated by non-profits, with the private sector only providing 10% of places, barely more than governments — perhaps suggesting not just that the Home Care sector is still establishing itself, but that there are fewer opportunities for private providers to generate the kind of returns residential care can provide — and all the more reason for governments to focus on keeping people out of residential care longer.

And over time, there’s been a greater growth in respite care than permanent care when it comes to residential places, which complements the focus on keeping people out of permanent care as long as possible. In 2002, 52% of admissions in residential care were permanent. In 2015, permanent admissions had fallen to 48.7%.

It was 2010-11 when respite care first overtook permanent care. But the data also illustrates the point made by Pascoe and the fears within government about the need to better oversee the funding mechanism. In 2012, 22.5% of aged-care residents had an Aged Care Funding Instrument rating of high across all three categories; in 2015, that had reached 27%.

And as with everywhere else in Australian society, there’s a significant gap for indigenous aged-care patients. Indigenous people entering residential care are on average over ten years younger than non-indigenous people (the gap is around eleven years for indigenous women and over twelve for indigenous men, who enter residential care on average at 69.5 years of age). There are also far fewer indigenous people in residential care — they make up less than 1% of residents while forming 3% of the overall population, although there are some separate Aboriginal aged-care programs. And twenty-five per cent of Aboriginal people in residential aged care are under 65.

[Profits rise, quality called into question in aged-care industry]

In one area, however, the report confirms some good news. The phenomenon of young people suffering from disabilities caused by accidents or progressive diseases having to be cared for in aged care facilities is slowly — too slowly — disappearing. As the AIHW notes, in 2005, there were over a thousand people under 50 in residential aged-care facilities. In 2015, it was around 570.

However, it’s a somewhat different story for people between 51-65. A Senate committee report last year noted that while under-50s in aged-care facilities were falling, 51-65-year-olds were increasing. The report suggests the number has increased slightly since 2012, but not noticeably given population increase. A COAG initiative from the Howard era, the Younger People with Disability in Residential Aged Care program, had a substantial impact on removing under-50s from aged-care facilities, but little impact on the middle-aged. The issue is now part of the National Disability Insurance Scheme.

Peter Fray

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