Aged care year in review

From the dementia supplement debacle to the department’s computer glitches, and red tape cuts finally getting underway to current and future reforms on the horizon – Australian Ageing Agendapresents our top picks for the high and low points of 2014.

The low points:

1. A taxing issue

In a nasty surprise for some providers, May’s Federal Budget included the cancellation of the aged care payroll tax supplement effectively taking $652 million out of the sector over four years. The tax, charged on for-profit providers by state governments, is refunded by the Commonwealth in the interests of ‘competitive neutrality’. Peak bodies and the Opposition criticised the government for cancelling the supplement, which had been recommended by the Commission of Audit, without consultation. The Federal Government tried to pass the issue onto the states, but as state governments told AAA, they aren’t having a bar of it.

2. Dementia supplement debacle

The government’s decision to cease the Dementia and Severe Behaviours Supplement on 31 July following a ten-fold blow out in government expenditure drew sharp criticism from some industry and consumer lobbies. Industry peaks criticised the timing and lack of consultation surrounding the announcement and said ongoing services to residents with severe dementia were put at risk. The Living Longer Living Better initiative consumed its four-year allocated budget of $52 million in less than 12 months of operation, blowing out to $110 million in the 2013-2014 financial year. Two months after the government’s dementia forum, uncertainty remains over the nature and timeline for a replacement scheme.

3. Computer says no

In what proved a major headache for providers and peak bodies, unexpected glitches with the Department of Human Services’ new aged care payment system for home care providers resulted in delays with processing of some payments and reconciliation of claims. There were also widespread and prolonged delays with income and asset assessments. In addition to delays, AAA sighted incorrect assessments that had been returned to seniors. LASA reported 80 per cent of its members had received information of an incorrect income and asset assessment, while ACSA also sharply criticised the administrative bungles.

4. ICT hopes unrealised

The sector’s hopes of getting government to support the implementation of ICT across all aged care services were high in March when the Aged Care Industry IT Council (ACIITC) launched its first-ever ICT Vision. But by mid-year council representative Rod Young was calling on the sector to campaign for a single client record rather being burdened with a My Aged Care record in addition to the personal controlled electronic health record (PCEHR). Disappointment marked the mood at year-end for a sector feeling left out, and led to LASA CEO Patrick Reid calling on the health minister to “take steps to urgently fund aged care providers to integrate their systems with the PCEHR,” just as GPs, and hospitals had been supported.

5. The problem with ACAR

In late May when Senator Fifield announced the opening of the Aged Care Approvals Round (ACAR), he said government recognised that many older Australians wished to remain in their home for as long as possible. However, when he revealed the round’s outcome in December, he announced the expected number of home care allocations – 6,653 — but an additional 1,866 residential places to total 11,196 allocations. While there were celebrations and disappointments among providers, a massive demand for places — 17 home care places and two residential places were sought for each place available – and various issues of over-supply and under-supply of places were highlighted and followed by more calls for ACAR reform.

The high points:

1. One snip at a time

The Federal Government’s oft-cited promise to reduce red tape in the sector got off to a good start early in the year with the March repeal of Commonwealth aged care building certification requirements, which duplicated state and territory legislation. There wasn’t much more red tape reduction in the following months, which led to increased frustration among stakeholders. But in what could provide the future roadmap for aged care regulation, a group of 10 providers entered into a partnership with the Federal Government, the South Australian Innovation Hub Trial, where they will focus on innovation and quality care in return for less administrative burden.

2. Budget win

In a hotly anticipated move the Federal Government returned the $1.5 billion from the previous government’s Workforce Compact back into the general aged care funding pool in the May budget to the praise of aged care providers. The reallocation funded a 2.4 per cent increase in the basic care subsidy over five years from 1 July and a $54 million boost to rural and remote providers through a 20 per cent increase in the Viability Supplement. Aged care providers said the decision ensured a fairer distribution of the funding to all providers. However COTA said the redirected money “would do nothing for the development of the aged care workforce.”

3. A new era begins

The most significant sector reform in a generation kicked off on 1 July, with key Living Longer Living Better measures implemented. Despite a few hurdles – some providers were unable to charge an accommodation payment to new residents because they hadn’t published pricing information on the My Aged Care website – the new era was universally welcomed. In addition to new price transparency, the distinction between high and low care was removed, and a means-tested care fee for residential aged care based on both income and assets was introduced. The reforms also brought more home care packages, greater choice for residents in how they pay for accommodation and services and a new income-based means test for home care.

4. Beyond “bedding down”

In November the government moved away from its mantra of the need to “bed down the current suite of reforms” to voicing its support for moving towards the more ambitious proposals put forward by the PC in 2011. Senator Mitch Fifield announced support for freeing up control over supply in residential care, moving to cashed-out model of home care, and adopting a single community care system. He flagged the possibility of moving to a consumer-led market ahead of the five year review of the aged care reforms in 2017. Providers and consumers broadly supported the new agenda for the next stage of aged care reform, but called for constructive engagement with the sector.

5. Investment appetite builds

Investment activity in the aged care industry peaked in 2014 with the acceleration of the sector’s consolidation trend and aged care’s strong debut on the Australian Securities Exchange (ASX). Major private providers – Japara, Regis and Estia Health – outlined their significant expansion plans through both new developments and acquisitions in their pitch to sharemarket investors. Japara was the first provider to publicly list in April, followed by Regis in October and Estia in December. Financial experts said industry activity was increasing faster than the pre-GFC period and the positive financial impact of the 1 July reforms was stimulating strong investor appetite and sector growth.