Residential aged care: Proposed alternative models for allocating places

The allocation of bed licences through the ACAR provides consumers confidence that providers are independently assessed with respect to the providers capacity to provide aged care services and the liklihood that they will continue to do so throughout the resident's admission to the facility.

Providers and their owners, whether they be for profit or otherwise, require some level of certainty as to the long term viability of their significant financial investment in aged care facilities. Building are expected to operate for many years and the allocation of bed licences is critical to the long term investment decisions of providers. The removal of the ACAR bed licence system which provides some long term certainty and replacing it with a market driven system which is susceptible to short term fluctuations will inhibit investment in facilities. The risk that a facility could permanently lose critical occupancy as a result of external market forces, or even internal forces such as a poorly managed critical incident, could significantly reduce investment in aged care services. At a time when many facilities are operating in deficit due to constrained and uncertain funding, wage and operating cost growth removing the ACAR process could result in a reduction in investment and cause providers to exit the industry and cause investors to find more secure opportunities elsewhere.

I believe the current ACAR model is capable of fulfilling the design principles however it is presently inefficient. Providers who have been allocated places must be forced into using those places or commencing meaningful development in relation to those places. Providers can not be allowed to apply for places then not use them in a timely manner as this needlessly restricts alternative investment and, I suspect, inflates forward estimates of government funding on residential care.

Providers will find it increasingly difficult and costly to operate under a model which increases operating risk. In a free market providers would simply increase their fees to ensure their risk:return is balanced but in a regulated market where revenue growth opportunities are restricted it means providers will pull back on investment or exit the market all together.

Under the current ACAR model consumers already have choice of provider and routinely shop around for their facility of choice. This may not be the case so much for those living in remote areas but the majority of elderly Australians already do choose their aged care facility and already have the opportunity to access a range of different provider facilities.

Less tinkering in the system and long term certainty of capital investment return.

Operating Profits of providers are essential if we are to maintain or attract investment in the residential aged care sector. Many providers can not achieve this fundamental element which is the lifeblood of for-profit and not-for-profit providers alike. Deliberately restricted ACFI, negative funding indexation in real terms over consecutive years, expanding compliance obligations in quality and safety, and the need (and desire of providers) (and expectation of consumers) for providers to maintain or increase staffing levels is an unsustainable model which is now critical. In this respect the decision whether to maintain, modify or replace the ACAR model is not as important as the real and pressing priority of ensuring operational funding to ensure providers don't close their doors. I acknowledge many providers are operating profitably but question whether this is market driven efficiency, as is offered as one of the benefits of the ACAR 2 model, or merely reflective of the levels of care and staffing provided which, all too often, fail to meet the expectations of the Consumer and of The Aged Care Quality and Safety Commission .