Aged Care Facilities Disappearing Fast
Tal Williams, Partner, writes in the Australian Financial Review 9 May 2011 that the trend towards fewer, much larger, profit-driven institutions does not bode well for Australia's rapidly greying population.
In a surprising twist to the supply of aged care facilities in Australia, there are now, according to annual reports from the Australian Institute of Health and Welfare (AIHW), 242 fewer facilities for accommodating elderly Australians than there were ten years ago.
There are some small qualifications concerning the number of co-located high and low care facilities, but, broadly speaking, it is an unexpected result, which has actually accelerated dramatically in the past four years, and tells us a great deal about where the provision of supported accommodation facilities is heading for elderly Australians.
It is also worth noting that, in the same ten years, the ratio of service provision between those that are run For-Profit and those that are Not-For-Profit, according to a Report on Government Services and AIHW figures, has also changed significantly; with rises in facilities that provide services for profit (from 27.1% to 35%) and a decline in not for profit operators (from 63.4% to 59%). The increase in For-Profits does not directly correlate with the decrease in Not-For-Profits, as service provision supplied by governments has also declined and been absorbed by For-Profits (from 9.6% to 6%).
What we are witnessing is a change in provision that involves smaller facilities (less than 30 beds) closing in favour of larger ones that provide for savings in economies of scale. The average bed count per facility, according to the AIHW, has risen from 46 to 61. What this means, very generally, is that we now have greater numbers of profit driven facilities looking out for our elderly in larger facilities. And the change to this arrangement is accelerating. What will be the impact be on the provision of quality of care for older Australians, as they are admitted into this system in the future?
Surveys referred to in the Productivity Commission’s Draft Report ‘Caring for Older Australians’ released in January this year with final submissions now under consideration, mark out a bleak business territory in high care with reports of 40 per cent of providers operating at a loss, average returns on investment for modern high care facilities with single bedrooms at around 1 per cent, and 39 per cent of high care facilities (22 per cent in June 2009) and 48 percent of low care facilities (39 per cent in June 2009) only able to achieve operating profits. Last week’s decision by the Full Bench of Fair Work Australia allowing aged care workers to bargain for higher wages will only put further pressure on providers.
This is the year that the first tranche of baby boomers begin their retirement and, as greater numbers move into the system with projections reaching 8 million over 65s by 2050, the change of ratio between For-Profit and Not-For-Profit will likely continue to shift.
As Ken Henry said, speaking at a presentation to the Committee for the Economic Development of Australia (CEDA) forum, in 2010, where he focused on the recent Intergenerational Report, spending on health is predicted to double in the next 40 years so that about a quarter of Australian Government spending, now directed to health, age-related pensions and aged care will increase to almost one-half.
Pressures on Government funding (the society of 2050 is also expected to have only 2.7 people of working age to support each Australian aged over 65), retirees with wealth and higher expectations for their care, a sector that does not welcome new entrants because of the large investments required for infrastructure, and which is also heavily regulated, should only further drive the push toward an increase in For-Profit facilities at the expense of Not-For-Profits.
The Productivity Commission’s ‘Trends in Aged Care’ 2008 refers to a highly technical analysis that compares efficiency in For-Profit and Not-For-Profit facilities that was used by the Hogan Review (2004). The review commissioned the Centre for Efficiency and Productivity Analysis CEPA to analyse 500 facilities in a highly technical analysis of the amount of inputs (labour, capital, materials) required to generate outputs such as the number of aged care clients handled per full time equivalent staff. The authors declared For-profit facilities as more efficient than not-for-profit facilities.
It is useful to compare this study with another published in the British Medical Journal, a senior author of which is Dr. Gordon Guyatt, a professor of medicine at McMaster University in Hamilton, Canada. This study performed a systematic review comparing quality-of-care measurements in 82 individual studies that collected data from 1965 to 2003 involving tens of thousands of nursing homes, mostly in the United States. The authors found that Not-For-Profit facilities delivered higher quality care than For-Profit facilities in terms of quality staffing, a lower prevalence of pressure ulcers (bedsores), a lower frequency of use of physical restraints and fewer deficiencies governmental regulatory assessments. Dr Guyatt said that ‘For-Profit providers cut corners to ensure shareholders achieve their expected return on investment.’
Comparisons of analyses brings to mind that troubling phrase that Mark Twain attributed Benjamin Disraeli about lies and statistics. All the same the trends in age care provision are clear and the truth is that the care of our elderly is of great importance because it’s a telling marker of our levels of social compassion, and, it’s worth remembering, because it’s where many of us will end up, and that’s the difficult task the Productivity Commission must work to resolve.