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ROYAL COMMISSION: Potential funding options for aged care

The second day of Adelaide workshops for the Royal Commission into Aged Care Quality and Safety continued presenting propositions to industry professionals and researchers around investment and care streams and the transition process into aged care.

Dr Henry Cutler, Director at the Centre for Health Economy of Macquarie University, provided his expertise on funding models that could work in aged care. [Source: Aged Care Royal Commission]

This workshop of discussion was in line with yesterday’s format and aim to assist the Commission on making recommendations for the Final Report to redesign the aged care system.

Investment stream

The first panel discussion for the day was inquiring whether a separate funding stream for episodic events would be beneficial, for example, restoring function, providing respite, and delaying or preventing the progression to more intensive forms of care. 

Senior Counsel Assisting Peter Gray QC described this suggestion as “not only humane”, but also having good economic sense, in terms of delaying the progression of people to more expensive and intensive care. 

“This stream is the centrepiece in providing scalable and flexible responses to episodic deteriorations and also in providing respite,” says Mr Gray.

Panellist Dr Henry Cutler, Director at the Centre for Health Economy of Macquarie University, says that different funding models can have different types of incentives and limitations, and that there “will never be one perfect funding model”, however, the health care system uses multiple funding models that could work.

“The underlying principle for all funding models should be the same and that is to deliver value, so obviously improved outcomes for the best available cost. But also have an equity principle in there as well allowing people to access care when they need it,” explains Dr Cutler. 

He believes a block funding arrangement is a simple approach but doesn’t provide any incentive for quality or to maintain costs. 

A capitation approach, where people are enrolled in the service and can use it on episode nature could work, says Dr Cutler.

Panellist Sue Elderton, Chief Executive Officer (CEO) of Carers Australia, adds that this separate funding for respite, restoring function, and delaying more intensive forms of care, is “not only sensible, it’s exciting”.

She says that respite has always been at the tail end of aged care services and never had much thought put into it in the past.

Panellist Dr Gill Lewin, School of Nursing, Midwifery and Paramedicine at Curtin University, included a suggestion that the funding mechanism needs to be able to support a fast assessment and response to a sudden change or event.

Going further, she believes that episodic care should be free to the individual.

“I think that outcomes are the absolute key in this model, continuous measurement and monitoring of the outcomes to ensure that what is trying to be achieved,” says Dr Lewin.

“This is not only in terms of accountability for the funder, but absolutely critical for the older person themselves to be able to actually visualise the gains that they are making… Measurement is a critical part.”

Care Stream

During the second panel discussion, Counsel Assisting proposed a different care stream funding model, which intends to put the care recipients choice at the centre by using a comprehensive care needs assessment to develop individual budgets, which can be directed by the person receiving care.

Mr Gray says this funding stream would support the longer term and more stable service care needs, rather than episodic clinical needs.

The question put to panellists was whether this funding stream for longer term care was appropriate.

Panellist Professor Deborah Parker, Chair of the Ageing Policy Chapter at the Australian College of Nursing (ACN); and Professor of Aged Care (Dementia) at the University of Technology Sydney, says that ACN is not supportive of the separation of personal care from nursing and allied health or medical care.

ACN believes it would not lead to comprehensive care for older adults, and Professor Parker added that witness submissions at the Commission last year has shown ongoing concerns around the poor coordination between different care services.

“(ACN) do agree that you would need a higher level of stream service for people with what I would call the complex needs, but it is around the delivery of how the system is coordinated and I’m sure that will come up,” says Professor Parker.

Panellist Maree McCabe, CEO of Dementia Australia, agreed with Professor Parker around concerns of choice coming from this new care funding stream.

“Choice is not necessarily available in all settings and I think that one of the things is that certainly funding should follow the care recipient. One of the challenges that we have with dementia, as an example of complexity, is that it is a progressive disease,” explains Ms McCabe. 

“Regrettably, as people progress through their dementia pathway, there will be a time when they are unable to make those choices.”

Panellist Annie Butler, Federal Secretary for the Australian Nursing and Midwifery Federation (ANMF), says that the ANMF would be happy to compromise with the Commission between a funding system that maximises choice of the recipient without compromising their safety.

“We strongly support the need for all older people to have choice and greater control, we support the concept of universal access to a continuum of care and support categories or services to meet assessed needs in a timely manner,” says Ms Butler. 

“[ANMF] are just not convinced that a system built on individualised funding via a voucher mechanism or debit care system mechanism is the way to achieve it.”


The last panel session for the day discussed the transition to a new system and implementation of these strategies for the aged care sector.

Counsel Assisting wanted feedback from panellists about considerations the Commission should take into account when forming a transition and implementation of new programs.

All panellists agreed that the continuity of care during a transition to a new system is essential.

Sean Rooney, CEO of Leading Age Services Australia (LASA), explained that the track record of human services when applying new systems has shown that proper implementation is fundamental.

He added that there is a lot of action that can be taken now to make the current aged care system better.

This included reducing the home care waitlist, support to assure that quality of care and sustainability of organisations is not compromised for older Australians, and support for the workforce by upskilling staff in complaints handling, clinical care and governance.

Panellist Robert Bonner, Director of Operations & Strategy, Australian Nursing & Midwifery Federation (SA Branch), was in agreeance with Mr Rooney.

“We agree that there is work we can do immediately and needs to be done immediately. We wouldn’t disagree with working on the things that can be tackled upfront. We would argue there needs to be urgent action now to include workforce numbers and reform

“We would agree that there’s work that can be done immediately and needs to occur immediately and work that will be required to be done over time. So we wouldn’t disagree with the idea of let’s work on the things that are able to be tackled up-front,” says Mr Bonner.

“...There [also] needs to be urgent action beginning now in terms of workforce supply and workforce reform.”

On the question of whether the transition phase to a new aged care system needs to take into account the viability and sustainability of aged care facilities, panellist Dr Henry Cutler, Director of the Centre for Health Economy, Macquarie University, supported the concept.

He says there will be a change in aged care in some way and the Government needs to allow for the change and resources to shift and respond to any structural reform that comes out of the Commission.

“I agree that as a system there needs to be sustainability of providers and there needs to be continuity of care and that may be having some sort of model within government to make sure that people aren’t left out in the cold,” says Dr Cutler.

The next Royal Commission workshop will be on February 21 in Adelaide, discussing the future of the aged care workforce.

What do you believe should be considered in the bigger picture for the future of the aged care system? Tell us below in the comments.


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