Residential aged care: Proposed alternative models for allocating places

COTA Australia does not believe the ACAR arrangement works well for consumers. It can be said that the ratio of beds to people over 70 ensures growth, but the ration is a separate matter to the ACAR. COTA believes that the current allocation model constrains choice for consumers and fosters a power imbalance between providers and consumers/residents, and we continue our advocacy for removal of the ACAR and for placing the government subsidy in the hands of consumers and families.

Providers have control of the government contributions which enables them to be more confident than otherwise about future demand and use this to obtain loans. For poorer quality providers the strength of the ACAR is it protects them from competition from better providers. ACAR restricts opportunities for good providers to expand services in response to market opportunities.

While the paper mentions allocations targeted to specific special needs groups, COTA Australia notes that this often lasts one cycle of resident death or transfer (if that!) and subsequent consumers seeking placement are not necessarily of the same target population. While we understand the operational imperative to 'fill a bed', the lack of ongoing matching of places allocated based on special needs characteristics with resident profiles over time means that there is no reliable data about actual and current places filled for the initial allocated group/s.

Restricts good providers from expanding in response to consumer preference and demand, in areas of known need, and to compete directly with poorer quality / out of date providers. Protects poorer quality providers and thus creates reputational damage for the whole sector.

As noted above, consumer choice is limited at a national level, but particular geographical areas (across metro and rural, regional, remote) and special needs groups are specifically disadvantaged.

The evidence of consumers, residents and families who tell us that they cannot get a place when or where they wish - in addition to evidence presented in the Productivity Commission report (2011) ,the Aged Care Roadmap (2016) and the Tune Report.

COTA Australia would like to strengthen the first principle (dot point) as 'provide opportunities' is a minimal response - we believe there must be a consumer driven market, not just opportunities for that to occur.
We agree with the second principle and improving access but suggest it needs to include a level of protection or safety net for those vulnerable consumers who can't afford to pay.
We also agree with the third principle and note recent discussions with potential equity investors (both private funds and OS and Australian super funds) about the conditions for investment to transform this industry - they all say removal of the ACAR is a key condition for investment. The ACAR actually adds uncertainty and risk for equity investors.
Financial sustainability for consumers means ensuring the provision/safety net for those who can't afford to pay, as well as protection against defaults of RADs, which put consumer funds at risk. Sustainability for providers also includes the element of needing strong equity investment to ensure new build targets can be achieved.
Sustainability for government lies in effective planning and stability within provider ranks, and acceptance that poor providers may not survive without a guaranteed allocation of places, while good providers may expand beyond their current scope in response to market forces.
This reform is consistent with the recommendations of the Productivity Commission, the Aged Care Roadmap and other policy positions - and we believe will underpin the sector transformation for which we have been advocating.

COTA Australia has documented its support for giving consumers control over their residential funding in many policy documents and submissions, including its 2018 document 'Keep fixing Australia's aged care system', in which we point to the need for a 'robust and well-phased Structural Adjustment Strategy' to support a change of allocation model. We suggest there be a principle that commits to effective planning, management of viability challenges and time lags between consumer demand for, and investment in and construction of, new places, as well as enhanced or amended powers for the department to appoint administrators or manage defaults.

We do not see this model as a benefit to consumers generally, even though places may be more available in some locations.
We do not see this model as consistent with the Government’s in principle decision in the 2018 Budget package ‘More Choices for a Longer Life’ to end ACAR and place more control in the hands of consumers. It also does not fundamentally change the architecture and culture of aged care toward a more consumer choice and control approach.

We are not convinced it can and are concerned that this model falls far short of our position that places are allocated directly to consumers who can take them to a provider of choice.
Adequate provision in such areas probably requires additional resources being made available so that it financially viable to provide services. However we note experience with Home Care Packages where prior to them being in the hands of consumers certain RRR areas could not attract providers but now that the funds are in consumer hands they can develop local services. We also note that in many regional areas choice is now available when it was previously not.

We are not convinced it can and are concerned that this model falls far short of our position that places are allocated directly to consumers who can take them to a provider of choice.
If the funds are in the consumers' hands then groups of consumers (e.g. Aboriginal & Torres Strait Islanders; CALD communities) can use their collective bargaining power to negotiate for providers who are prepared to introduce culturally safe services that can be accredited as such (e.g. by NACCHO) which will attract people from that population.

This model does not meet our objective for consumer place-holding and variations can't make that happen.

Not in our view

Ensuring places that are not operational are either re-allocated or made operational

The impact for consumers is that they will be denied choice of good providers who have no vacancies and are not allowed to grow in response to consumer preference; and they will be stuck with having to go to less than optimal providers.

Very little unfortunately.

There remains a disconnect between home care, in which consumers have control of their subsidies, and residential care, where they don't - potentially discrimination by location.

There appears to be minimal change.

There should be sufficient time to ensure that current providers have time to establish viable business practices.

Standard communications protocols especially for vulnerable groups e.g. in language communications resources for CALD and ATSI consumers and families.

This model is consistent with COTA's long term advocacy for residential bed/place funding to follow the consumer. This position has been supported by industry, including provider peak bodies, through the National Aged Care Alliance's Vision in 2009, Blueprints in 2012 and 2015, and the Aged Care Sector Committee's Aged Care Roadmap in 2016. Similarly, recommendations of the Legislated Review of Aged Care in 2017 (Tune Review) included removing ACAR and introducing portability of residential places to place control directly in the hands of consumers. The Productivity Commission also supported a move towards a consumer directed market in residential care in its 2011 Caring for Older Australians report.
We recognise that there are real issues to be dealt with in any transition between systems of funding, but such issues are not insurmountable and are frequently overstated. The problems perpetuated by not making this change are more fundamental and threaten the viability of the sector and the government’s fiscal position vis a vis the cost of aged care.
The Tune Review identified two years' notice from the date of government's announcement to proceed with a consumer directed model of residential care as a feasible timeframe for transition. We support this.

The experience from the home care reforms has shown that demand can only be measured with a single queue, managed through clear prioritisation criteria. However, the supply of residential places is compromised by the high numbers that are not operational and the capacity of providers to receive allocations in geographical areas and then not build them.
Allocations for special needs groups are also problematic as language or ethno-specific places are often not maintained for their target group beyond the initial occupancy as subsequent vacancies are filled by the first possible paying resident.
We believe that allocating places to consumers will provide the necessary data about consumer preferences, provider readiness, and areas of thin markets to inform future allocations. It should also be possible to cross-reference with home care so that people waiting in both queues can be identified and counted only once.

As reflected in the discussion paper, many people with high care needs receive approval for both home care and residential care and would appear on both queues if there is no correlation of the two.
We are also aware that residential care is not the first choice for many of those assessed, and the colocation of ACATs with state health services means that assessment for residential care can and does facilitate clearing consumers who are 'bed blockers' in the hospitals.
Urgency of need can also vary and the application of a wellness and reablement model, or more formal rehabilitation, may also have an impact on reducing urgency over time, such that a residential placement is no longer required.
Date of approval and urgency are both applicable factors, but we suggest that there are additional factors that need to be determined through effective co-design of the allocation model and transition planning.

Consideration of reablement models or rehabilitation, for consumers who are eligible and assessed as likely to benefit, prior to placement on the queue is one factor, and carer need, or death of a carer is another.
However, we believe that genuine co-design should occur within and across the sector and with a wide variety of stakeholders to identify answers and solutions for some of the questions raised in this consultation.

We agree that there should be a validity period but don't have definitive views on the length. We suggest consideration of a two step timeframe process:
i) accept but need to organise dollars,finances (e.g. selling house); and
ii) signing an actual contract with a provider

We do not see this as a problem. Consumers have to be assessed as needing care, so what's the issue with deferring take-up.

1. Better My Aged Care functionality
2. A national program of System Navigators
3. Comprehensive and transparent information

Expanded information about point 3:
COTA Australia strongly believes in the need for the compulsory provision of information in a much more comprehensive, comparable and transparent way than is currently done by most providers; and a staged timetable for implementation of this (some things can be done immediately, others will need development). This is an essential step in equipping consumers and their families or other informal carers with information sufficient for them to narrow down choices for service provision on a more level playing field.
As outlined in our submission and in previous submission to various Parliamentary and Government inquiries, we believe such comparable information should include, at a minimum, information on:
• Consumer experiences
• Consumer reviews of services
• Quality of life indicators
• Information about the skills mix and numbers of staff
• Timely and accurate measure of performance against the aged care standards
• Relevant and meaningful quality of care indicators
• Transparency about prices, including those items which are mandatory and those items which are genuinely elective

Supported resident provisions remain in place. We are aware that many providers cherry pick residents now or specialise in certain special needs groups, so not sure how relevant this question is.

COTA believes providers will make this call depending on how successful they think they will be. Some providers won't need to change anything because they are in demand and are waiting for the ACAR to be removed so they can expand; while others will need to become market responsive for the first time; some will learn some won't and they will eventually disappear, which is good.

By being market aware and responsive.

We are aware of organisations that will do so only if these and related reforms proceed. Happy to discuss.

We believe this model will encourage innovation and differentiation. The more that resources are in the hands of consumers the more it will be possible to develop service options that appeal to different market segments, and to demonstrate the range of alternative service options that can be developed.

Some providers who win ACAR places use them to support funding, but others the banks won’t touch. even if they have places. Getting rid of ACAR will mean that providers with investor backing can proceed without waiting for ACAR. The ACAR is actually creating uncertainty and blockage in equity investor supported development by providers who are already in strong demand and know where they want to grow.

As identified earlier, we are advised that some financing and investment organisations are waiting on this and related reform as a signal to enter the sector and support providers prepared to be market savvy and innovative. Investors want to back good quality providers to expand and to do that need both certainty and the likelihood of a viable return. The ACAR is the creator of uncertainty for investment.

In contrast to model 1, we believe model 2 can support adequate availability when
places are allocated directly to consumers who can take them to a provider of choice. Adequate provision in such areas probably requires additional resources being made available so that it is financially viable to provide services. However we note experience with Home Care Packages where prior to them being in the hands of consumers certain rural, regional and remote areas could not attract providers but now that the funds are in consumer hands they can develop local services. We also note that in many regional areas choice is now available when it was previously not.

We believe model 2 can support our position that places are allocated directly to consumers who can take them to a provider of choice. If the funds are in the consumers’ hands then groups of consumers (e.g. Aboriginal & Torres Strait Islanders; CALD communities) can use their collective bargaining power to negotiate for providers who are prepared to introduce culturally safe services that can be accredited as such (e.g. by NACCHO) which will attract people form that population.

Yes, we believe this should be possible but more work will be required in conjunction with the sector to determine specific parameters.

We believe the overall impact on organisations and stakeholders will:
a) change culture to be more consumer controlled
b) encourage innovation and diversity
c) lift overall quality of providers by good ones expanding and poor ones being driven out
d) give more consumers real choice

A true market operating with consumers able to choose their provider, but with adequate safety nets and solutions to ensure consumers from special needs and vulnerable groups and communities are not disadvantaged.

This model would enable consumers to have choice of providers for their residential care to suit their needs, preferences and life experiences.

We suggest that respite care places should be given to consumers and priced so they are attractive.

Providers have this status and it is up to each consumer to decide if they want to access it and pay accordingly. ideally this reform should be accompanied by a loosening of the cap on daily fees.

We believe the most important aspect of capital grants is that places are actually built. You can remove ACAR and still make capital grants as part of enabling places to be built in areas where costs are otherwise prohibitive.

1. We need an industry transformation plan over 5 years, in which the ACAR is abolished end year 2.
2. Department needs to have the power to appoint administrators to take control of services that are not up to standard or not financially viable, or both, to allow for continued operation while arranging transition
3. There need to be funds to provide bridging finance for transformation when structural change is occuring, and during 2 above.

A good transition plan will need to be developed with the sector as a whole. Should remove supply constraint on residential care as a parallel measure.

Communication plan and strategy to be developed and implemented.

By talking to consumers and finding what they are looking for. Working with consumers to develop the operational elements of a consumer-driven market will help identify ideas that work and improve quality of life for consumers.

Remove supply constraint and free up the daily fee with protections for vulnerable consumers.

No