Opinion: Advance Australia Fair

Written by Steven Hughes, aged care specialist and consultant.

Socialist aged care has created inequality across the industry.

The introduction of the AN-ACC funding model aims to provide ‘equitable funding’ in aged care. Yet, the reality is that the industry is more divided, has less growth potential, and is less profitable.

The Department of Health and Aged Care’s (DoHA) prescription of mandated care requirements, along with their suffocating control of revenue streams, has made aged care providers function like state-owned enterprises.

When the Department says ‘jump’, aged care providers respond with the obligatory, ‘Kris Kross will make you…’.

Bureaucracies are woefully inefficient at allocating resources, with the AN-ACC model over-simplifying funding and neglecting the unique financial characteristics of each provider.

Seventy percent of aged care providers are in a metropolitan region and receive the same funding per resident. However, a range of variables exist between each of these metropolitan facilities.

Not-for-profits (NFP), for example, have the highest average staffing costs per resident compared to forprofits. NFP’s, on average, have 7% higher RN and 6.5% Total Care labour. This equates to approx. $500k of additional annual labour expense per facility.

Variable expenses like food, medical supplies, continence, utilities, and recruitment expenses disproportionately impact smaller providers who are less able to take advantage of economy-of-scale pricing.

Head office management costs for small providers are spread over fewer residents, further increasing running costs per resident.

Average hourly rates vary widely across regions. Providers in Sydney pay higher average hourly rates than providers in Brisbane. Providers in Perth pay up to 23% more than providers in Hobart.

By ignoring provider differences, the AN-ACC funding structure has created an ‘urban underclass’, a group of providers left behind by the ‘equality-for-all’ funding model.

And DoHA’s recent AN-ACC amendments embed the class struggle at a facility level.

The 2% RAD retention will provide additional funding for higher means residents and could limit access to care for the now less profitable lower means residents.

Ironically, the Department spent millions of taxpayer dollars on a legal battle to prevent providers from charging their own RAD retention fee but have since backflipped to now embracing the idea.

The solution for our industry is simple. More provider autonomy. Providers must be able to generate revenue according to their own unique financial requirements and let the market, not a bureaucrat, decide who is viable

Yet there is hope. Even in Soviet Russia, all providers have avenues to success. Labour management is now the key to provider profitability.

Continuous attention over workforce rostering, through quality AN-ACC and labour reporting, is essential for timely strategic decision-making to achieve superior care and maximum profitability.

Providers united will never be defeated, so let’s work towards a sustainable industry together by achieving our financial perestroika.