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Future funding remains a concern in the aged care industry


30 March 2011: At a recent business roundtable hosted by professional services firm Deloitte, representatives from Aged Care Association of Australia, the Productivity Commission (PC) and Deloitte, were unanimous that the Productivity Commission’s draft report “Caring for Older Australians” goes a long way towards addressing many of the reform issues that the industry feels are necessary.

However the attendees at the roundtable remained concerned about the detail regarding how the proposed funding solutions would impact on providers, in both the short and long term.

Deloitte Partner and Senior Living expert, Helen Hamilton-James said that the Productivity Commission had recommended that substantial changes be made to the current aged care system.

Some of the more substantial changes, in the PC’s report, included the removal of bed licences, the requirement to publish daily accommodation fees and the equivalent bonds and the requirement to offer a certain number of concessional beds which could be traded (amongst others).

“If these changes are implemented they could impact the bond structure of an organisation and lead to changes in future cash flows.
“Issues related to funding such a transition in the short term, in order to counteract potential cash flow problems, need also to be considered,” said Ms Hamilton-James.

“Whilst it is possible that larger organisations would be likely to have the breadth of operations to deal with any potential fluctuations in cash flows, smaller operators are likely to face greater issues,” she said.

Another recommendation was to unbundle the costs of aged care into Personal Care, Accommodation, Health Services and Everyday Living Expenses.

The discussion highlighted general support for the separation of costs of care from costs of accommodation. However, the report also highlighted concern about the complexity of the current system and how any future unbundling would be conducted appropriately.

“The areas of care and accommodation have long been considered to require a different focus. Their separation would hopefully lead to greater transparency within the industry, better focus on care outcomes and an evolution of the care options available to older Australians,” said Ms Hamilton-James.

The group believed that any unbundling would lead to changes in the level of regulation covering the sector. In particular it was agreed that regulations covering care would be expected to move more in line with those applied to hospital care and to better reflect the overall levels of funding received.

“Over time it is expected that closer interaction between aged care providers and hospitals will arise,” said Ms Hamilton-James.

“The aged care sector already has a number of best practices in place with regards to caring for special needs groups such as those requiring palliative care and those with dementia. This expertise could be used to effectively reduce the pressures on the hospital system, if the two were better integrated,” added Ms Hamilton-James.

The key recommendations in the report included:

  •  A framework for assessing aged care
  • Paying for aged care
  • Options for broadening the funding baseCare and support
  • Catering for diversity – caring for special needs groups
  • Age friendly housing and retirement villages
  • Delivering care to the aged – workforce issues
  • Regulation – the future direction
  • Aged care policy research and evaluation.

Last Updated: 


Jane Kneebone
Deloitte Australia
Job Title:
Director, Corporate Affairs & Communications
Tel: +61 3 9671 7389, Mobile: +61 416 148 845
Helen Hamilton-James
Deloitte Australia
Job Title:
National Leader, Senior Living
Tel: +61 2 9840 7380




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