While, again, there is a generous chorus of support for the Productivity Commission’s recommendations for reform of the aged care system, the final report, released on Monday, has flushed out some vocal dissenters.
Among them is Bupa Care Services (BCS), which operates 47 residential aged care facilities in Queensland, NSW, Victoria, SA and the ACT and is part of the global health and care company, Bupa, which operates in 195 countries.
In a statement released on Tuesday, Bupa Care Services congratulated the Productivity Commissioners for undertaking “an incredibly complex project and putting the consumer at the heart of their recommendations” before urging the Government to adopt only incremental reform to guard against adding financial burdens to consumers or destabilising the industry “at a time when sustained growth is needed.”
BCS Managing Director, Paul Gregersen, told Australian Ageing Agenda (AAA) that Bupa’s joint submission [with Regis, Japara, Domain Principal and Primelife] to the Productivity Commission’s draft report, “talked about modifying the current system, which in our opinion would deliver a sustainable decade.”
“We believe that the current funding system works well, offering consumers a range of choices,” said Mr Gregersen.
“The system is not fundamentally broken from a structural point of view,” he told AAA. “But what does need sorting out – and what the Productivity Commission has done a good job of - is putting consumers at the heart of it.”
“If you think of a family caring for a widowed mother, they will want a flexible amount of care and different types of care at different times. Certainly we need a system that is flexible enough for that.”
“But whenever you talk about greater choice, it leads to significantly increased costs. Already food costs and utility costs are going up and soon there’ll be an additional cost associated with having a green environment; so we need to make sure people are not paying more for the increased choice,” Mr Gregersen said.
Mr Gregersen said he believed the aged care sector was already providing choice.
“Already people have good choice. There are 53,000 [residents] currently paying a bond – about a third of all people in aged care. Approximately one third pay a lump sum bond and two thirds, a daily fee for their aged care accommodation. It is often not realised that a bond is a loan, the bulk of which is returned to the resident’s family,” he said.
The people’s choice
Pointing to the findings of some market research commissioned recently by Bupa, entitled Funding Aged Care – the Voice of Consumers, Mr Gregersen said up to 80 per cent of older Australians would prefer their aged care provider to receive the bond, rather than the Government, if the funds are used to improve aged care facilities.
“We question why the Productivity Commission is advocating home credit schemes and pensioner savings accounts when current arrangements work well,” Mr Gregersen said.
“Why would the PC recommend a scenario that is likely to see the Government take control of the $10 billion held in bonds which the industry currently uses to improve aged care services?
“Such a move would fundamentally destabilise the sector and have adverse effects on the quality of care available to older Australians over the longer term,” Mr Gregersen said.
Mr Gregersen also expressed concern regarding the increased workforce challenges, particularly around delivering community care.
“We have a shrinking workforce. Do you need a smaller or a larger number of workers for care in community? Of course you need more, which is OK, providing there are enough carers in our community.
“But based on the system we have at the moment, where we have less community care than we have residential care; that system is already creaking.”
“The rhetoric of the Prime Minister and the Minister for Mental Health & Ageing is good: we have to make it smarter and better for the consumer. Certainly the gateway agency and smartening up the front end; linking packages and breaking down silos between different levels of care is absolutely essential,” said Mr Gregersen.
“But in terms of residential aged care, why is there a burning platform for radical change. We know what happens with radical change – the focus shifts to new funding tools and systems when we should be focusing on caring for people properly at the end of their lives. My question is, why do we need to do it?”
“What consumers really need is flexible access to the full range of care services that will satisfy their individual needs in a timely fashion.
“We caution the Government against making any radical changes which will divert the industry’s attention from its core goal of providing high quality care to those who need it most,” Mr Gregersen said.
Bond or no bond?
CEO of Aged Care Association Australia, Rod Young, said that one of the significant unknowns in the proposed new system was how many people would pay a bond or not.
“I’ve just presented a paper in Perth on this issue. If bonds levels were run down and we had to fund the capital stream, converted to a daily charge, and we had to do it quickly, you could not and it would cause considerable damage to the industry. There needs to be far more work done to understand what will be the continuing attraction to the consumer to pay bonds versus a daily charge.”
“It must be approached slowly because if everyone decided not to pay a bond any more it would cause considerable damage,” Mr Young said.
But, says Young, there are other elements of the proposal which potentially mitigate against this outcome.
“Imagine if the government decides to open up high care and low care to bonds? With new entrants to high care paying bonds, then overall you would have an increase.
“If you pay a daily fee, one assumes you have put your money into the new pensioner savings account and you’d get CPI [consumer price index increases]. Assume your property is worth $300,000; you might be out of pocket by $10,000.
“If I am a consumer, am I happy to lose 10 or $12,000 and accept that it’s gone? Or pay a lump sum and have it all refunded?” he says.
Mr Young says there is another part of the equation he believes people seem to be ignoring. “At the moment a lot of people are exempted from paying accommodation bonds because the partner is still living in the house. In this scheme, assuming the government adopts the recommendation, my share of the family house comes into account and I am expected to pay a portion based on that.”
“At the end of the day, we don’t have to sell the property until I pass on or my partner does and then the residue flows back to my estate. It actually releases more equity from the housing stock.”
“I think people haven’t quite understood that that this will release additional equity to contribute towards a person’s accommodation costs, which is currently not available. At the moment there is only the government supplement of $32, because currently the property is exempt. But it needs to be said, this system, while still protecting the home, releases additional equity that is currently not available,” said Mr Young.
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