Residential aged care: Proposed alternative models for allocating places

Many consumers enter residential care well outside the ACPR in which they receive approval for residential care. Evidence of this will be provided in a paper titled "The ill-informed market for residential aged care". Although lacking data on the quality and financial stability of providers, many consumers are clearly making active choices, rather than just accepting the first available local place.
There is however no system for following persons who have been approved for residental care, but who not been able to enter such care. Occupancy rates in areas with low population densities are generally low, suggesting that more places have been built in remote areas than are needed. Providers are free to refuse entry to persons whose financial or health circumstances are unattractive to the provider. Wirhour a system for followimg persons approved for residential care, we do not know what damaging forms of discriminatiin are being practised.

Providers get immdiate benefits fron an allocation of places at a specific site. Places have a commercial value. The provider may find it easier to get development finance, as there is a lower probabilty of a competitor being allocated places at a nearby site. But the willingness of potential residents to move substantial distances makes this a limited advantage. In the many years it takes to build a home new licences may be granted nearby.

Entrants to not-for-profit homes live on average anout 38 months before death, while those to for-profit homes only live about 33 months on average (submission by Cumpston, Sarjeant and Service to Royal Commission into Aged Care Quality and Safety, 10 September 2019). Although some for-profit providers may be providing unacceptable quality of care, in aggregate for-providers received about 68% of the places allocated in the 2018-19 aged care approvals round.
Although the compliance history of ogappliants has to be considered under section 14-1(3)(a) of the Aged Care Act, notices of non-compliance and sanctions have been applied inconsistently (submissjon by Cumpston and Bail to the Royal Commission, 12 February 2019).

Lack of any published data on quality and financial stability is a problem for consumers nationally.
Lack of data on types of person unable to find residential care is a problem for the affected persons, for the Department of Health in carrying out its legal responsibilities, and for providers wanting to meet specific needs.

The aubmissions cited above to the Royal Commission by Cumpstom, Sarjeamt and Service, and by Cumpston and Bail.

"Provide opportubties for a more consumer driven market" should be "Provide a well-informed consumer-driven market".

Persons seeking resudential care should have access to reliable data on the quality of care and financial stability of peoviders.

In kudging the adequacy of goverment funding and supervision of aged care, the public shoukd have reliable data on quality of care and financial stability, abd on petsons unable to obtain tesidential care.

If places are to be awarded to providers promising to meet special needs or cater for specific health conditions, then there should be systems in place to ensure these promises are kept.

Provided consumers are well-informed about quality anf foncial stability, reducing locational controls is a good idea. Providers usually have a better idea of the likely demand for their services than the Department. They will not risk capital without reasonably assured demand.
Providers should not be encouraged to invest in ACPRs significantly below the aged care provision ratio, as there are many reasons why this ratio may not be appropriate.

Thanks to many years of ill-founded ACARs, many rural, regional and remote areas may already have too many residential places. Research is needed on persons who choose to move long distances, and why.

Research is needed on which vulnerable cohorts are unable to get suitable care. Fixing problems may require changes to quality measures or provider funding methods, rather than building new homes.

Procedures are needed to allow tge entry of new providers, tather than restricting allocations to existing providers .

Allocation of places should take into account objective quality measures, as well as notices of nob-compliance and sanctions.

As an actuary, I have been analysing the aged care industry using demographic and financial models. This submission is made on behalf of comsumers, a group serously under-represented in aged care consultations.
If model 1 is introduced within the present ill-informed system, then even more of the places are likely to go to large homes run by for-profit providers in city locations. This will seriously disadvantage consumers, as there is emerging evidence that many such homes provide unacceptable quality of care (see Cumpston Sarjeant and Service submission to Royal Commission, 10 September 2019).

Even more residents in for-profit homes will die prematurely.

Given meaningful information flows to consumers, providers and regulators, model 1 might allow a better-informed market, giving better care to all who need it.

To maximise the benefits to consumers, any information on quality and finances should be published as soon as it is available. It should also be used in any future allocations of places. Consumers should not be allowed to enter residential care without access to relevant quality and financial information about the provider. New places should not allocated to any provider with poor quality or inadequate capital.qq

Quality of life data have been publicly available since consumer experience reports were first collected in May 2017. Three quality of life indicators have been mandatory since 1 July 2019. Cumpston Sargeant and Service have used ACFI data to show that average stays before death are about 38 months in not-for-profit homes, but only about 33 months in for-profit homes. On the data already available, it should be possible to identify which providers have statistically significant deviations below acceptable care standards. Such providers should be publicly identifed, and not eligible for any place allocations.
From de-identified aged care financial reports for 17-18 supplied on 9 September 2019 in response to FOI request 1268, 107 out of 885 providers had negative total assets. These 107 providers accounted for about 13% of all residents. There may be good reasons why providers are able to operate with negative or low capial, but consumers are entitled to know the figures and the reasons. Providers should be goven one opportunity to submit publishable balance sheets, with publication starting from 30 June 2020

Frankness about nature of the changes being made, and the reasons for them, would be essential. In refusing access to FOI request 1179 for the five regression equations forming part of the proposed new provider payment system, the Department quoted section 47E(d) of the FOI Act, which provides that a document is conditionally exemp if its disclosure would ... have a substantial adverse effect on the proper and efficient conduct of the operations of the agency. Secrecy about how an agency operates may have very adverse consequenced on the public good.

Model 2 is inadequately described, and no simulations or trials appear to have been made of its operation in practice. Given enough teeth, it will force homes to accept entrants who do not meet their usual financial, medical or social criteria. Without such teeth, it may be just an excuse for government to inadequately fund and supervise residential care.

The concept of demand exceeding available places is unhelpful for residential care. Homes target specific sections of the market, and there will always be expensive homes for those with high means. If some homes or closed, or no new homes built, then more persons with low means or difficult medical conditions will be unable to enter residential care. If sufficient numbers of the unadmitted persons die in well-publicised misery, there will be political pressure to increase supply.

Urgency of need must be given priority. If an aged person is unable to care for themself, has no money to buy care and has no carer, then a squalid death outside residential care is likely.

See above.

Once assigned a place, there should be no limit on the prriod for which it is valid. Otherwise homes would have incentives to stretch out negotiations until the assigned place lapsed.

Obce a person reaches the top of the queue, they should remain there. They should be allowed to make requests for admission to multiple homes, as any one hmoes may not have a vacancy, or may not want the applicant.

Consumers will need good informatio on the quality of care and capital adequacy of the provider.

Persons with limited capacity to pay will need to bring with them sufficient government-funded financial incentves to make them acceptable to providers.
Special needs groups should be protected by anti-disrimination legislation, but allowed to choose between competing homes.
Homes not able to provide quality care to those with dementia should not be allowed to admit any residents, as the onset of dementia is unpredictable but widespread.

Model 2 would be better overall for consumers than the present system, as it would quanttheify and draw attention to the plight of persons approved for residential care but not able to obtain it.

The aged care sector is currently driven by providers, who currently operate almost free of scrutiny of their quality of care or financial stability. This is very unsatisfactory for consumers, who may miss out on admission to residential care, or receive low-quality care once admitted. Public discussion of propoals for change, such as model 2, is a novelty, and may do good.

Model 2 would be a radical change, as it would give new rights to consumers, and limit the freedom of providers to choose between applicants. Without careful design, it might reverse the trend towards homes specialising in particular market segments, and increase the numbers of large homes providing low quality of care and low quality of life.

Any decision on model 2 should be deferred until data on persons unable to obtain care, and on provider quality of care and capital adequacy, are publicly available.
It may be that problems of non-access can be addressed by low-cost targetted measures. Following persons fron approval for residential care on would give data very useful in the design of a queue system.

Full dislosure of the reasons for change, and of how they are expected to operate in practice.

To obtain a more consumer driven market, consumers need to know much more about providers. Data on quality of care and capital adequacy should be publicly available for eac provider. Knowledge of the occupancy rate of each service would also help consumers.
Modern technology could also be used to make the market function better. Consumers should be able to select a nuber of residential care services, and nake simulataneous applications to each of them. To facilitate this, details of the consumers ACAP assessment and financial circumstances could be centralky stored.

It is good to see that the responses to the discussion paper will be published on the Department's website. This will encourage discussions berween submitters, and further research by some of the submitters.

Documents to be uploaded in supprt of this sumission are

Cumpston JR "The ill-informed market for residential aged care"

Cumpston JR, Sarjeant HB and Service DA "Improving the quality of residential care"

Cumpston JR and Bail K "Data on residential aged care quality.

Please email any questions toRedacted text