Aged care – an understated community asset

Aged care – an understated community asset

It might come as something of a surprise for some people to know that the aged care sector in Australia is a $10 billion dollar industry, or at least it has been until recently. That is the amount the Australian Government paid for residential care subsidies and supplements in 2014-15 to people receiving aged care services under the Aged Care Funding Instrument (ACFI), the tool used by residential aged care providers to determine base funding for aged care residents.

The aged care system in Australia provides a range of care options to meet the varying care needs of individuals who need aged care services. The two mainstream care options available in Australia for older people requiring care are residential aged care and community-based aged care.

The residential aged care sector provides care within a supported accommodation setting for frail aged people who are no longer able to take care of themselves in their own home. Community-based care is provided under two main programs – the first is an entry-level style of care for older people who need some assistance with daily living in order to live independently at home; the second provides more complex, coordinated and personalised care at home.

In addition, there are several other flexible care programs available to older people who may have other requirements or meet varying levels of care; these include Transition Care, Multi-Purpose Care and Veteran’s Home Care Programs.

In the 2013-14 year, 270,559 people aged 65 and over (7.8 per cent of the Australian population) received residential aged care services at some point in that year. The services they accessed were provided by three types of service providers, Not-for-profit (63 per cent), For-profit (30 per cent) and State and Local government (7 per cent). In addition, 83,481 people aged 65 and over (2.4 per cent of the Australian population) received home-based care services at some point in time over the 2013-14 financial year.

Two out of every three people in permanent residential aged care at 30 June 2014 (69 per cent) were women and the average age for women in aged care was 85.8 compared to 81.6 for men.

In September 2014, the aged care workforce was estimated to number some 3.1 per cent of the Australian workforce (as PAYG employees), with 90 per cent of those working in both the residential and community sectors being female. They were predominantly employed on a part-time basis with 27.2 per cent of those workers aged 55 years or older compared to that figure being 17.2 per cent of the overall workforce being aged 55+.

So here’s where it gets interesting, not to mention challenging, for the aged care sector when we start looking into the future of the seniors set in Australia. By 2025, there will be a 50 per cent increase in the number of Australians aged over 65, with more than one million Australians requiring access to some sort of aged care services.

So you’d think that might have rung some alarm bells in the depths of the treasury? Think again – rather than being front-of-mind on the national agenda over the last few years, aged care seems to be slipping down the national order of business – almost reaching ‘other business’ status. And the 4.6 million Australian baby-boomer voters are watching as the major political parties are allowing aged care as an issue to slip off the national risk register.

Far from being front and centre of the last federal election campaign, the aged care sector as a whole had to take the lead in the aged care debate when the Federal Government announced a range of funding cuts to aged care in the 2016 budget. In fact, the current government has slashed $3.1 billion from aged care spending in the last two years alone. The majority of the cuts were made to the ACFI, while others were achieved through means testing and changes to the pension, while services to people living with dementia were also affected.

Further changes to the way aged care is funded come into effect from February 2017 with the abolition of the current Aged Care Approvals Round – which is the way aged care places have been allocated and funded in the community for some years now. The new system is designed to ‘shake-up’ the industry and transition from a highly regulated system to one that responds to the evolving needs of our increasingly ageing population over the coming decades – part of the consumer-directed-care paradigm.

A significant focus of the changes to funding is being directed at keeping older people in their own homes for longer and the changes to the funding model are aimed at giving older Australians greater flexibility and choice to manage their individual preferences in accessing government-subsidised home care and support services as they age in place.

Key to the success of this new system will be adapting to the evolving needs of the baby-boomer generation which means providers will need to adjust the way they do business to meet the expectations of the evolving market. A key word here is ‘innovation’ and advances in new technologies and systems will be critical to the overall success in responding to the funding changes that lay ahead.

However, one of the key criteria that cannot be overlooked in this evolving service delivery model is that many older people become increasingly reliant on others and less independent as they age. It is incumbent on aged care sector as a whole, including service providers, funders and advisory services to ensure that older consumers don’t become part of the invisible equation as the sector adapts around them – even worse, adapts ‘without’ them!

Mind you having said that, baby-boomers have a pretty solid track record in being vocal and changing things wherever they go to make it work for them – perhaps the shake-up that’s coming is one the government hasn’t foreseen in the ‘shake-enomics’ crystal ball just yet.

For further insights into our understanding, experience and capability in the aged care sector, please contact Campaign Capital.

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