This is the final report of a project undertaken by the Australian Health Services Research Institute (AHSRI), and commissioned by the Australian Government Department of Health (DoH), to develop options and recommendations for future funding models to be adopted for the residential aged care in Australia.
The Australian Government has legislative and regulatory responsibilities for aged care and invests substantial amounts of funding to the aged care sector annually ($10.6 billion in 2014/15). Its most recent budget papers suggest that it is facing higher than projected sector-wide growth, estimated at $3.8 billion over the next four years. In this context, AHSRI was commissioned to undertake this project as part of ongoing reforms in the aged care sector.
This review of the current system and consideration of options for the future has addressed five key issues: classification and assessment tools, pricing, funding models (including analysis of the resource and infrastructure implications), implementation considerations and audit mechanisms. Review activities have included a qualitative review of national and international approaches to aged care funding, a context and environment scan, and stakeholder consultations; and quantitative analysis of Aged Care Funding Instrument (ACFI) data provided by the Department of Health (DoH).
The key deliverables (included in the body of this report) are a set of options and a recommended approach to funding reform and a high-level implementation methodology. A number of criteria emerged from the qualitative and quantitative reviews that formed the basis for formulating the options for aged care sector funding and for the selection and design of the recommended option. These included sustainability and certainty, equity in funding between different types of providers (particularly in the recognition of fixed and variable costs), alignment with cost drivers, incentive systems, approaches to the assessment of resident care needs, operational efficiency and implementation considerations.