Aged care in Australia unviable

The Grant Thornton report Australian Cost of Residential Aged Care Research: Service Costs in Modern Residential Aged Care Facilities has just been released. It presents a sobering picture of the viability of aged care homes in Australia.

The cost of building and providing care services to a single room with ensuite ( the standard set up for modern aged care homes) falls short by $65 per person per day for the for-profit sector and $46 per person per day for the not-for-profit sector.

The report was commissioned by a consortium of aged care industry organisations and aged care providers including Australian Unity and Catholic Health Australia.

To quote from the report:

The Productivity Commission’s Caring for Older Australian’s Report proposes a fundamental shift away from the currentsystem of central planning for aged care and heavily regulated pricing, towards a more market based, user-pays approach. The objective is to create a more sustainable and efficient system that is adaptable to future need. An effective pricing model would recognise the real cost of service delivery as well as the balance between user contributions and subsidies.

 The analysis in this report demonstrates the importance of the Productivity Commission’s recommendations in achieving the objectives of economic sustainability and service viability. It also highlights the need for an independent and transparent analysis and interpretation of service costs and subsidies relevant to resident care, living expenses and accommodation.

 When you do the sums, we have to do something to increase the viability of aged care homes. The margins are just not there to (1) pay existing care staff a just wage and (2) increase staffing levels to a level that support person centred care.