Rudd announces aged care reforms

The Prime Minister’s pre-COAG announcement on aged care today acknowledges some of the big issues raised by the aged care sector but can it deliver the ‘big fix’ that commentators say is needed?

Aged care leaders have welcomed aspects of Prime Minister, Kevin Rudd’s announcement this morning concerning aged care but warn that the measures fall short of addressing the fundamental underlying problems threatening the long-term sustainability of the sector.

The announcement sees the Commonwealth taking full responsibility for the provision and regulation of all aged and community services and includes a range of measures totalling $739 million.  This figure includes funding to support the cost of about 5,000 new aged care beds, including $300 million in zero real interest rate loans to providers to create 2,500 aged care places and $120 million specifically to fund 286 sub-acute care beds in rural areas.

It also includes incentives worth $96 million for GPs to provide services in aged care facilities.  A further $263 million will be spent to improve access to aged care services.

A good start

CEO of Aged and Community Services Australia (ACSA), Greg Mundy, said that while the range of initiatives announced by the Prime Minister are a good starting point, they do not address the fundamental underlying problems hampering the provision of quality services in community and residential care.

“Funding must meet the real costs of providing care and services. Currently the subsidies fall well short of the mark. The Conditional Adjustment Payment should be reinstated as a way of making sure annual funding more closely matches the cost of providing the care older people need.”

He said he expected in the immediate short term that the Government would use the Federal Budget as a means to address the crippling financial concerns of the aged care sector.

However, Mundy said the Prime Minister’s first announcement of the morning- that all aged care services would be taken over by the Commonwealth – was significant because it clears the way for further reforms.

“The Commonwealth takeover of all services is one of our five big, strategic objectives because it is the key to further reforms.  It’s too difficult trying to agree on major issues when you are dealing with the Commonwealth and all the individual States and their separate interests,” he said.

Unrealistic calculations

Aged Care Association of Australia’s CEO, Rod Young, agreed that the handing over of state-run Home and Community Care (HACC) services to the Commonwealth was an excellent initiative with additional funding for GPs also welcome.

However, Mr Young questioned some of the calculations used by the government in budgeting the package.  Pointing to the $300 million in zero real interest loans to build 2,500 new places, he said the government’s calculations were based on an estimated cost of $120,000 per place.

“In the last (Aged Care Approvals) Rounds, the lowest figure I heard was $120,000 and there were concerns being expressed about whether that provider would be able to make it. But in one instance, for a provider in a remote location, it was as much as $300,000,” said Young.

“The average cost is closer to $200,000 now but the costs of building in remote rural locations can be much higher than that.”

Zero interest loans not the solution

Catholic Health Australia’s (CHA) CEO, Martin Laverty has also expressed concern that the announced measures in themselves will not address the shortage of aged care places, saying that without fundamental regulatory reform there will be a growing shortfall in the number of beds available for older Australians who need care.

“Even with new beds, the underlying issues that prevent aged care operators from growing remain in place.  Zero-interest loans are not the solution: unless there is fundamental regulatory reform, any new facilities built with those loans will start losing money the minute the new bed is occupied by a resident.”

“The aged care funding mechanisms created by the Howard Government are out of date and inflexible; the Rudd Government should abandon them. Until they are fixed, every high care bed operates at a loss of $13 every day,” Mr Laverty said.

CHA says it is looking forward to hearing the terms of reference for the Productivity Commission inquiry into aged care, which the Prime Minister has said will be released at next week’s COAG meeting.  ACSA and ACAA likewise eagerly await the outcomes of next Monday 19 April.

 “I don’t think this [reform package] will necessarily give us what we want.  We still need to see the productivity commission announcement but we are certainly hopeful that all spheres of government will be able to reach agreement for direction for the future,” said Rod Young.

“We don’t expect them [State Premiers at next week’s COAG meeting] to sign off all the arrangements there; but at macro level we hope they can get to the  point of agreeing what the big picture will look like and then the components can be filled in over the coming months.


 

Tags: aged-care-places, commonwealth-government-takeover, funding, greg-mundy, martin-laverty, prime-minister, rod-young, rudd,

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