Retirement and aged care residency - trends
As readers may be aware, Holman Webb acts for many clients in the retirement and aged care space – both not-for-profit entities and private enterprises. Increasing activity in that area has resulted in a number of government reports being issued, with industry input being sought into ways to improve the services on offer. Based on our experiences and these reports we have drawn together some interesting material about the trends in the provision of aged care services.
Issues before Tribunals
A quick look at Tribunals across Australia’s eastern states, where disputes between Retirement Villages and residents are heard, shows us striking similarities in the matters that come before the Tribunal for adjudication. The most common of all these is the problem of ongoing charges. The rate at which these disputes are being heard in each of the Tribunals in Queensland, Victoria and New South Wales is increasing.
One of the more common examples of a dispute over ongoing charges occurs when a resident of a facility spends some time away from the village or in hospital and the facility continues to keep their room available while they are away. At times the hospital stay is extended or sadly, the resident dies, leaving the family with costs associated with keeping the room at the facility available. Villages and residents often get confused about the way that different charges must be treated (and how this should be included in Residence Contracts).
But there are many others. We recently acted for a Retirement Village who was successful in removing a recalcitrant resident, but most other claims relate to budgets and charges. Every facility must levy recurrent charges so that they can continue to provide their residents with services that add to their quality of life. When the facility needs to make a change to the level of these charges, it is important that the change is communicated correctly and the process complies with the requirements of the relevant act and regulations.
Indeed, having core documents and processes that comply with the legislative changes that came into place last year in New South Wales is essential.
Statistics
At the Consumer Tenancy and Traders Tribunal the number of cases involving recurrent charges has doubled in the decade to 2010. In Queensland the situation is much more pronounced with a sixfold increase in the number of cases involving recurrent charges that have reached the Queensland Civil and Administrative Tribunal, while, in Victoria, at the Victorian Civil and Administrative Tribunal, the increase is three times.
It is surprising to note that there are now fewer facilities for accommodating elderly Australians than there were ten years ago. This is according to annual reports from the Australian Institute of Health and Welfare (AIHW), that show that 242 aged care facilities in Australia have gone in the past decade.
The figures are affected by small fluctuations around the number of co-located high and low care facilities, but, generally, these statistics paint a different picture than what might be expected of where supported accommodation facilities are heading.
Decline of the Not-for-Profit Sector
It is also true that, over the same decade, the ratio of service provision by private, profit making providers and the not-for-profits, according to a Report on Government Services and AIHW figures, has also moved significantly; with an increase in facilities that provide services for profit (from 27.1% to 35%) and a not-for-profit decline (from 63.4% to 59%). The increase in the former does not directly correlate with the decrease in the latter, because government service provision have also declined and has been taken up by private providers (from 9.6% to 6%).
It seems that the smaller facilities, usually with less than 30 beds, are the ones that have closed in favour of larger facilities that believe they can make savings in economies of scale. Bed counts, per facility, according to the AIHW, have risen from 46 to 61. What we now have, generally speaking, are greater numbers of profit driven facilities that are much larger.
Surveys referred to in the Productivity Commission’s Draft Report ‘Caring for Older Australians’ released at the beginning of this year, describe a tough business environment in high care facilities with reports of 40 per cent of providers operating at a loss and average returns on investment for modern high care facilities at around 1 per cent. The report also showed that 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, were able to achieve operating profits.
General
This is the year that the first wave of baby boomers begin their retirement, and, as these greater numbers move into the system with projections reaching 8 million over 65s by 2050, the ratio change between private profit making enterprises and not-for-profit will continue to shift. Whether or not this shift has anything to do with increases in disputes before each of the various state-based tribunal would require a more in depth analysis of the figures, but added financial and compliance pressures on providers may make it more difficult to indentify risks associated with disputes and resolve them quickly.
As pressures on the sector continue to mount, the potential for disputes continues to rise and aged care providers must be awake to those risks, ensure their documentation and processes comply with the new requirements (in NSW) and put sensible policies and practices in place to safeguard themselves and their residents.
Tal Williams
Partner
T: +61 2 9390 8331
E: tal.williams@holmanwebb.com.au