Before your start, please advise your consent to publish response
1. We would like your permission to publish your online survey responses to the discussion paper. Please indicate your publishing preference:
Please select one item
(Required)
Ticked
Publish response (include both my name and organisation's name)
Publish response, but keep my name private (include my organisation's name)
Publish response anonymously (remove both my name and organisation's name)
Do not publish response
Before you start, please tell us about yourself
2. What is your name?
Name
(Required)
Michael Kresner
4. What is your organisation’s name?
Organisation
(Required)
Advantaged Care
5. What stakeholder category do you most identify with?
Please select all that apply
(Required)
Consumer
Carer or other consumer representative
Consumer advocacy organisation
Consumer peak body
Carer peak body
Ticked
Approved provider of residential aged care
Approved provider of flexible aged care
Approved provider of home care
Aged care provider peak body
Provider of private aged care or seniors accommodation
Aged Care Assessment Team/Service
Aged care worker
Health professional
Workforce association or union
Primary Health Network
State and territory government
Local council
Commonwealth agency
Lender or investor/financier
Other
Please select one item
not-for-profit
Ticked
for-profit
government
Please select one item
operating a single aged care home only
Ticked
operating 2 to 6 aged care homes
operating 7 to 19 aged care homes
operating 20 or more aged care homes
Please select one item
specialising in servicing particular consumer group/s
Ticked
providing generalist services
Please select one item
Ticked
mostly offering single rooms with ensuites
mostly offering single rooms with shared bathrooms
mostly offering shared rooms with an ensuite
mostly offering shared rooms with common bathroom
mostly offering ‘other’ room type
6. Where does your organisation operate (if applicable)? Otherwise, where do you live?
Please select all that apply
(Required)
Ticked
New South Wales
Australian Capital Territory
Victoria
Queensland
South Australia
Western Australia
Northern Territory
Tasmania
All states and territories in Australia
Please select all that apply
(Required)
In a remote area
In a rural area
In a regional area
Ticked
In a metropolitan area or major city
Current arrangements
7. What works well under the current residential aged care allocation and places management model for consumers and/or providers?
Strengths of current arrangements for consumers
A single approval process for consumers, once they have been assessed they have access to care, as opposed to the 2 steps of national prioritisation queue, assessed for eligibility but then have to await availability.
Current occupancy rates mean they do have choice.
Current occupancy rates mean they do have choice.
Strengths of current arrangements for providers
Certainty of ability to access clients once investment is made (still have to compete to attract them).
knowing that clients
knowing that clients
8. Are there other issue/s with the current model for the allocation and management of places for residential aged care that have not been covered in this paper?
Other issues with current arrangements for providers
• ACAR is perceived as a ‘lucky dip’ rather than transparent process.
Agree – the process for assessing applications changes every year, the criteria for assessing applications is not transparent, is based on the answering of constant changing iterations of similar but different questions, and changing stated or unstated agendas, driven by politics of some form or another.
Assessment criteria needs:
• to be transparent and consistent from year to year.
• Should place priority on an organisations track record in the following areas:
1. Providing quality and compliant care
2. Past delivery of new bed places in a timely fashion
3. Demonstrated capacity to deliver these bed places
4. Demonstration of readiness and commitment to a project
- a scoring scale should be weighted against each of these criteria, for instance in relation to item 4. a construction certificate (or other appropriate approvals to commence construction works) would be the best testament to resource and financial commitment to delivering a project and achieve the highest score, a development approval on land or should be the next score down, going down to option access to a site being the lowest.
This type weighting and requirement coupled with regular ACAR rounds, say quarterly, will reduce the appetite to apply on a contingency basis and progress projects that are more seriously committed too and where resources have been expended and the likelihood of timely delivery is higher.
• Some providers who apply to ‘crowd out’ local competition or to sell places later.
Disagree – the process is very inefficient and high risk in terms of project delivery. With only one allocation per 12 – 18 months, some projects get delayed for years on end, even when the provider has made real financial and resource commitments as outlined above. That being the case providers are applying on a contingency basis to have options to grow their organisations and move forwards should the commerciality subsequently stack up, and the commerciality often changes through the investment decision horizon of a project time frames.
In the most part, except for in very thin markets (rural and remote) crowding out local competition is not possible, and with occupancy sitting at average percentages in the low 90’s and returns continually depleting, the reality is provider will only commit to progressing projects that make financial sense.
If project progression was at the core of the assessment criteria, then the opportunity for crowding out would not be an issue, and would mean allocations were made in accordance with organisations demonstrated current capacity of delivery.
• ACAR is disadvantageous to smaller providers.
Only to the extent that the informal criteria for allocation keep changing (the goal posts of allocation) and is not transparent.
• Underperforming providers are still able to fill vacant beds, as supply is constrained.
Disagree - Occupancy has been dropping on average 1% per year 7 or 8 years, due to the rapid increase in home care service provision is having a profound impact on the usage patterns and occupancy of residential aged care.
This has been compounded by increased supply and competition in the market place.
With average occupancy in the low 90’s, and the viability of a fixed cost business model not being much below this, there is nowhere for under performing providers to hide.
• There is minimal pressure for existing providers to innovate or be responsive to consumers with ACFA noting that 18 per cent of rooms are still ‘ward style’ despite typical consumer preferences to the contrary.
Disagree, the real deterrent for addressing the upgrading of stock to meet underlying consumers demands in terms of providing single rooms to consumers is that the ever increasing capital costs of providing this model and the ongoing lowering of operating return and risk associated with the capex associated for many providers at this point in time.
The higher accommodation supplement also gave a lifeline dressing up older substandard stock, however with current competition and occupancy rates and low returns in the industry this will not be enough to keep these facilities viable in the longer term, and many are now closing or being transacted upon.
Should the returns match the capex and risks, the additional 10% allocated places (vs. the true demand post home care re-balance) will drive outdated stock out of the market.
• Providers cannot easily build or expand into other areas, due to locational controls.
Agree a more market driven approach would be to do the following:
• Do a study and make clear the impact of home care on the need for residential care service provision, formulate new ratios for home care and residential service provision. These ratios should be based on the relevant average usage age for each service type, for instance 85 for residential care and 75 for homecare (or whatever the relevant age may be), places should then be made available on this basis.
• Make publically available an ongoing register by suburb across Australia of all active, offline and allocated places so that providers can easily track on a suburb by suburb basis current and future planned provision to a location, to help providers more clearly understand demand needs.
• Provide suburb by suburb growth projections for the next 15 years according these cohorts and the suburb ratios against these.
• Remove restrictions on allocation by location and do so by state, as part of the assessment for beds, let providers make decision if they believe there is market opportunity in any given market and be allocated competitively in accordance with the transparent performance based criteria (as mentioned above). If the commerciality of a project makes sense, and information is freely available and in real time this will deliver competition and drive innovation.
• Provide safety guards for rural remote and other special interest providers where efficient markets are not sustainable.
• Many allocated places are not operational and therefore unavailable to consumers.
The reasons for this have been described above, that being the case declining occupancy levels suggest that this is not causing an issue for consumer access to residential care at this stage.
• The bigger issue is weather capital costs are justified by the operating returns of the industry in order to drive the longer term investment needed in the industry as the needs ramp up towards the baby boomers need for residential care.
Agree – the process for assessing applications changes every year, the criteria for assessing applications is not transparent, is based on the answering of constant changing iterations of similar but different questions, and changing stated or unstated agendas, driven by politics of some form or another.
Assessment criteria needs:
• to be transparent and consistent from year to year.
• Should place priority on an organisations track record in the following areas:
1. Providing quality and compliant care
2. Past delivery of new bed places in a timely fashion
3. Demonstrated capacity to deliver these bed places
4. Demonstration of readiness and commitment to a project
- a scoring scale should be weighted against each of these criteria, for instance in relation to item 4. a construction certificate (or other appropriate approvals to commence construction works) would be the best testament to resource and financial commitment to delivering a project and achieve the highest score, a development approval on land or should be the next score down, going down to option access to a site being the lowest.
This type weighting and requirement coupled with regular ACAR rounds, say quarterly, will reduce the appetite to apply on a contingency basis and progress projects that are more seriously committed too and where resources have been expended and the likelihood of timely delivery is higher.
• Some providers who apply to ‘crowd out’ local competition or to sell places later.
Disagree – the process is very inefficient and high risk in terms of project delivery. With only one allocation per 12 – 18 months, some projects get delayed for years on end, even when the provider has made real financial and resource commitments as outlined above. That being the case providers are applying on a contingency basis to have options to grow their organisations and move forwards should the commerciality subsequently stack up, and the commerciality often changes through the investment decision horizon of a project time frames.
In the most part, except for in very thin markets (rural and remote) crowding out local competition is not possible, and with occupancy sitting at average percentages in the low 90’s and returns continually depleting, the reality is provider will only commit to progressing projects that make financial sense.
If project progression was at the core of the assessment criteria, then the opportunity for crowding out would not be an issue, and would mean allocations were made in accordance with organisations demonstrated current capacity of delivery.
• ACAR is disadvantageous to smaller providers.
Only to the extent that the informal criteria for allocation keep changing (the goal posts of allocation) and is not transparent.
• Underperforming providers are still able to fill vacant beds, as supply is constrained.
Disagree - Occupancy has been dropping on average 1% per year 7 or 8 years, due to the rapid increase in home care service provision is having a profound impact on the usage patterns and occupancy of residential aged care.
This has been compounded by increased supply and competition in the market place.
With average occupancy in the low 90’s, and the viability of a fixed cost business model not being much below this, there is nowhere for under performing providers to hide.
• There is minimal pressure for existing providers to innovate or be responsive to consumers with ACFA noting that 18 per cent of rooms are still ‘ward style’ despite typical consumer preferences to the contrary.
Disagree, the real deterrent for addressing the upgrading of stock to meet underlying consumers demands in terms of providing single rooms to consumers is that the ever increasing capital costs of providing this model and the ongoing lowering of operating return and risk associated with the capex associated for many providers at this point in time.
The higher accommodation supplement also gave a lifeline dressing up older substandard stock, however with current competition and occupancy rates and low returns in the industry this will not be enough to keep these facilities viable in the longer term, and many are now closing or being transacted upon.
Should the returns match the capex and risks, the additional 10% allocated places (vs. the true demand post home care re-balance) will drive outdated stock out of the market.
• Providers cannot easily build or expand into other areas, due to locational controls.
Agree a more market driven approach would be to do the following:
• Do a study and make clear the impact of home care on the need for residential care service provision, formulate new ratios for home care and residential service provision. These ratios should be based on the relevant average usage age for each service type, for instance 85 for residential care and 75 for homecare (or whatever the relevant age may be), places should then be made available on this basis.
• Make publically available an ongoing register by suburb across Australia of all active, offline and allocated places so that providers can easily track on a suburb by suburb basis current and future planned provision to a location, to help providers more clearly understand demand needs.
• Provide suburb by suburb growth projections for the next 15 years according these cohorts and the suburb ratios against these.
• Remove restrictions on allocation by location and do so by state, as part of the assessment for beds, let providers make decision if they believe there is market opportunity in any given market and be allocated competitively in accordance with the transparent performance based criteria (as mentioned above). If the commerciality of a project makes sense, and information is freely available and in real time this will deliver competition and drive innovation.
• Provide safety guards for rural remote and other special interest providers where efficient markets are not sustainable.
• Many allocated places are not operational and therefore unavailable to consumers.
The reasons for this have been described above, that being the case declining occupancy levels suggest that this is not causing an issue for consumer access to residential care at this stage.
• The bigger issue is weather capital costs are justified by the operating returns of the industry in order to drive the longer term investment needed in the industry as the needs ramp up towards the baby boomers need for residential care.
Are these problems occurring at national level, or only in certain areas (e.g. rural, regional and remote areas) or for particular consumer groups?
National - System wide
Design principles for alternative allocation models
9. Are the proposed design principles appropriate?
Please select one item
Ticked
Yes
No
Please elaborate on your response
The following comment in relation to Extra Services:
1. Existing extra service status needs to be protected as that is the basis on which these business models work. and retrospective change to the business model is unfair.
2. The additional services model does not seem to work.
3. Extra Serives should be opened up in terms of ACAR applications going forwards.
The most competitive market would be to remove liscences and remove the national prioritisation queue all togeather, and let an efficient market meet the demand.
1. Existing extra service status needs to be protected as that is the basis on which these business models work. and retrospective change to the business model is unfair.
2. The additional services model does not seem to work.
3. Extra Serives should be opened up in terms of ACAR applications going forwards.
The most competitive market would be to remove liscences and remove the national prioritisation queue all togeather, and let an efficient market meet the demand.
10. Are there any other principles that you consider should be included?
Please select one item
Ticked
Yes
No
Model 1: Improve the ACAR and places management - Overall model
11. What are your views on the suggested improvements proposed under this model?
Views on model 1
• Reduce locational controls on the distribution of residential aged care places;
- agree
• Reduce the number of non-operational residential aged care places to maximise the availability of places to consumers; and/or
– agree, however this should be addressed in system design and objective milestones in allocation principles.
A re-balancing of the ratio of places, in accordance with needs to people at in appropriate aged groups as discussed above would assist,
Priority of Assessment for allocation on real project delivery milestones (open and transparent scoring matrix in assessment) rather than focus delay time frames post allocation would assist in this.
• Improve the administration of ACAR and places management process.
- Yes as discussed above and regular intervals – such as four monthly.
Forms do not need to a palabra of subjective questions, each question should have an objective assessment criteria not subjective questions.
Scoring should be transparent and publicly available on record, and should focus on providers track record (with evidence from cross system reference on performance) and commitment to demonstrating capacity and commitment to delivering said project.
• Extending the state and territory level approach to all residential aged care places, regardless of when they were allocated;
yes
• Allowing the transfer of residential aged care places between providers to occur at a state and territory level, regardless of when they were allocated.
yes
• Strengthening the monitoring of offline places and require providers to bring their offline places back online within a required timeframe. The department could reclaim and reallocate these places where providers have not complied with these requirements.
Should already be in play. More focus on project readiness as part of assessment criteria would improve this issue and be more efficient than chasing up...
• Introducing the ability for providers to ‘top up’ residential aged care places to address consumer demand, outside of the ACAR;
not required if adopt regular ACAR process, alternatively rename and reshape process so can occur regularly.
• Simplifying the administrative process for providers to use a residential aged care place to deliver residential respite care, including requirements relating to managing a residential respite allocation and the incentive supplement;
agree
• Further streamlining the ACAR application process by exploring opportunities to improve data/information linkages with other processes or systems;
agree
• Enhanced transparency in processes relating to the ACAR.
Agree need to have objective concise forms and questions, based on track record and clearly defined scoring threshold
- agree
• Reduce the number of non-operational residential aged care places to maximise the availability of places to consumers; and/or
– agree, however this should be addressed in system design and objective milestones in allocation principles.
A re-balancing of the ratio of places, in accordance with needs to people at in appropriate aged groups as discussed above would assist,
Priority of Assessment for allocation on real project delivery milestones (open and transparent scoring matrix in assessment) rather than focus delay time frames post allocation would assist in this.
• Improve the administration of ACAR and places management process.
- Yes as discussed above and regular intervals – such as four monthly.
Forms do not need to a palabra of subjective questions, each question should have an objective assessment criteria not subjective questions.
Scoring should be transparent and publicly available on record, and should focus on providers track record (with evidence from cross system reference on performance) and commitment to demonstrating capacity and commitment to delivering said project.
• Extending the state and territory level approach to all residential aged care places, regardless of when they were allocated;
yes
• Allowing the transfer of residential aged care places between providers to occur at a state and territory level, regardless of when they were allocated.
yes
• Strengthening the monitoring of offline places and require providers to bring their offline places back online within a required timeframe. The department could reclaim and reallocate these places where providers have not complied with these requirements.
Should already be in play. More focus on project readiness as part of assessment criteria would improve this issue and be more efficient than chasing up...
• Introducing the ability for providers to ‘top up’ residential aged care places to address consumer demand, outside of the ACAR;
not required if adopt regular ACAR process, alternatively rename and reshape process so can occur regularly.
• Simplifying the administrative process for providers to use a residential aged care place to deliver residential respite care, including requirements relating to managing a residential respite allocation and the incentive supplement;
agree
• Further streamlining the ACAR application process by exploring opportunities to improve data/information linkages with other processes or systems;
agree
• Enhanced transparency in processes relating to the ACAR.
Agree need to have objective concise forms and questions, based on track record and clearly defined scoring threshold
Model 2: Assign residential aged care places to consumers - Overall model
19. Overall, what are your views on this proposed model?
Model 2 views
Whilst the removal of allocated bed places without the national prioritisation queue indeed would be a step towards a market driven industry and deliver the most efficient outcomes for consumers, the creation of the national prioritisation queue within the context of residential care has quite a number of problems and is not a more market driven process than currently exists, as with the current vacancy in the market and the existing allocated places already allocated give the consumer plenty of choice, should the decision to invest in the industry make commercial sense.
If the decision to invest in the industry going forwards does not make commercial sense, then it does not make sense the discussion is moot.
It is clear from the home care experience that the national prioritisation queue is problematic, given that it is not working well for home care why would you look at implementing it in residential care at this point in time when there are so many other present pressure points in the industry. It seems that for the consumer it is less efficient than the old system of an ACAT approval to allocated places for home care, as it has added another level of approval that does not seem to be efficient for the delivery of required services.
A market based approach lets consumers find services when they want them, a dual approval process that make consumers wait for the required service is less market driven than a single approval process.
According to recent ACFA reports, 1 in 5 people who enter residential care, are there for less than 6 months, 1 in 6 are there for less than 3 months, if there is a delay for the approval of services via a national prioritisation queue as there is currently in home care, this would mean that up to 20% of people requiring residential care, never get the services they require, as they might die before hand. Further this places an enormous additional occupancy risk to the industry, it could easily be contemplated that these delays could reduce occupies by a further 10% or given the shorter tenancy of this sector of the market (partial not full impact considered).
If the decision to invest in the industry going forwards does not make commercial sense, then it does not make sense the discussion is moot.
It is clear from the home care experience that the national prioritisation queue is problematic, given that it is not working well for home care why would you look at implementing it in residential care at this point in time when there are so many other present pressure points in the industry. It seems that for the consumer it is less efficient than the old system of an ACAT approval to allocated places for home care, as it has added another level of approval that does not seem to be efficient for the delivery of required services.
A market based approach lets consumers find services when they want them, a dual approval process that make consumers wait for the required service is less market driven than a single approval process.
According to recent ACFA reports, 1 in 5 people who enter residential care, are there for less than 6 months, 1 in 6 are there for less than 3 months, if there is a delay for the approval of services via a national prioritisation queue as there is currently in home care, this would mean that up to 20% of people requiring residential care, never get the services they require, as they might die before hand. Further this places an enormous additional occupancy risk to the industry, it could easily be contemplated that these delays could reduce occupies by a further 10% or given the shorter tenancy of this sector of the market (partial not full impact considered).
Model 2: Assign residential aged care places to consumers - Key design considerations (providers)
31. For those providers who are dependent on capital financing, what role does the ACAR system play in supporting their ability to obtain that financing?
Model 2 role of ACAR in capital finance
Further the national prioritisation queue in residential aged care adds further investment risk into the process of adding to new supply of aged care. Whilst in home care there is not large initial capital investment to open a service, the average capital investment these days for a large aged care facility would be $50 million dollars.
To make that investment and not have certainty to access of clients and be at the behest of government action of the day to turn on or off supply of residential packages is too high risk, and likely also to add increased ramp up times.
Further at present allocated places have an underlying asset value as a marketable commodity, and not only a good will value, and the reduction in the value of providers balance sheet needs to be considered, this also forms part of the assessment of the financier as part of there assessment of finance.
The issues raised about not having clarity about the take up of residential services is moot, at the moment with the ACAT assessment approval process, ACATs are providing choice when the make an approval, often providing an approval for different forms of care.
f there is underlying demand and a commercial investment case for providers to invest, they will if you removed places and had no prioritisation queue, then you would achieve an efficient marketplace.
To make that investment and not have certainty to access of clients and be at the behest of government action of the day to turn on or off supply of residential packages is too high risk, and likely also to add increased ramp up times.
Further at present allocated places have an underlying asset value as a marketable commodity, and not only a good will value, and the reduction in the value of providers balance sheet needs to be considered, this also forms part of the assessment of the financier as part of there assessment of finance.
The issues raised about not having clarity about the take up of residential services is moot, at the moment with the ACAT assessment approval process, ACATs are providing choice when the make an approval, often providing an approval for different forms of care.
f there is underlying demand and a commercial investment case for providers to invest, they will if you removed places and had no prioritisation queue, then you would achieve an efficient marketplace.
32. What might be required to ensure the residential aged care sector remains an attractive investment for financiers and lenders?
Model 2 how to ensure sector remains attractive investment
Certainty that if they lend providers to build aged care facilities they will be in a position to pay back the loan, or amortise it, especially begin to de-risk the borrowings as maximum exposure - after project capex is complete.
The idea of there not being supply to adequately do this at maximum exposure due to government playing with supply in a non transparent way will discourage investment in the industry.
The idea of there not being supply to adequately do this at maximum exposure due to government playing with supply in a non transparent way will discourage investment in the industry.
Model 2: Assign residential aged care places to consumers - Implementation and transition considerations
41. How could implementation of this model maximise the benefits and minimise risks/disruptions?
Model 2 implementation
Do not place artificial constraints on access to the system.
Let all people from a certain age be entitled to residential care rather than requiring assessment, e.g. everyone from age 85 can enter aged care without assessment.
Let all people from a certain age be entitled to residential care rather than requiring assessment, e.g. everyone from age 85 can enter aged care without assessment.
What steps/sequencing and timeframes would be appropriate to facilitate a smooth transition?
provide a 5 year transition system, so that other reform impacts post RC are known and clearer understanding to the impact of deregulation of home care and its impact on residential is understood too.
Really this change can not be considered in isolation, the whole of the aged care system needs to be considered togeather, road mapped and executed, especially around consumer and government expectations and costs to delivered expected services levels, compliance, deregulation and funding need to be considered together not desperately.
Really this change can not be considered in isolation, the whole of the aged care system needs to be considered togeather, road mapped and executed, especially around consumer and government expectations and costs to delivered expected services levels, compliance, deregulation and funding need to be considered together not desperately.
General views
42. Aside from the two proposed models, how else could we encourage greater consumer choice and a more consumer driven market in residential aged care?
Other models to consider
Complete deregulation of supply and removal of idea of national prioritization queue, let the market dicate product.
Create greater transparency about current supply of active, offline, allocated places in any given suburb / area and greater understanding in a post home care world what the real anticipated need is. Adjust policy ratios in line with these, make the more specific to the real aged cohorts, e.g. 85 year old not 70 year old, more clearly make population growth metrics and need metrics locally available and then let the market provide where appropriate.
Create greater transparency about current supply of active, offline, allocated places in any given suburb / area and greater understanding in a post home care world what the real anticipated need is. Adjust policy ratios in line with these, make the more specific to the real aged cohorts, e.g. 85 year old not 70 year old, more clearly make population growth metrics and need metrics locally available and then let the market provide where appropriate.