Dropping supported ratios could create two pace market

Ratios for supported residents should be dropped, and the 40 per cent rule should be calculated on monthly not daily basis, the Aged Care Financing Authority (ACFA) has told Government in its latest report.

But industry analysts say dropping the ratios could create a two-pace market, with not for profit providers ending up with higher numbers of supported residents and reduced access to higher accommodation payments.

ACFA’s recommendation follows an industry consultation that took nearly two years after a request from Government for advice on cost neutral mechanisms to ensure access to care for supported residents.


This included reviewing the efficiency, effectiveness and appropriate level of the supported resident ratio for each aged care planning region, and the 25 per cent discount applied to the maximum accommodation supplement amount where a service does not provide more than 40 per cent of its eligible care recipient days to supported residents.

In its report to Government that was published overnight ACFA said there is not a strong case for the continuation of the regional ratios as they are consistently exceeded by an average of around 20 to 30 percentage points in the great majority of cases.

However, it said the financial incentive of the separate 40 per cent ratio seems to be more effective in influencing provider behaviour and supported residents appear to be able to gain the services they need, with supported residents making up around 47 per cent of all residents nationally.

David Sinclair of StewartBrown said that while the recommendations will not impact overall access to supported places, the Government needs to factor in potential longer term impacts on the industry as a whole.

“There isn’t a risk that residents won’t have access to supported place but we could end up with a two-pace market of haves and have nots,” he said.

“Average percentages are either over 40 per cent or down around the regional ratio, there isn’t much in between. Providers are either going for minimal or going for a bit over 40 per cent.”

“If they drop the minimum there’ll be provider that are only just above the regional ratio who say they don’t have to provide supported residents any more.”

“In the major cities and major regional centres, we could end up with the market being split in two with the not for profits having a high ratio of supported residents which might reduce their access to cash as they won’t be getting as many bonds.”

“If we look at North Sydney the average ratio is 33 per cent because of changing demographics and levels of wealth, superannuation feeding in and liquidation of housing assets. There simply isn’t strong demand for supported places.”

“The providers most affected are the ones pointed out in the report – the smaller facilities where one person might be 2 per cent of population. Those are usually in regional and remote areas where ratios are around 50 per cent any way.”

ACFA also recommended the calculation of the 40 per cent ratio be moved to a monthly rather than daily basis to improve administration and reduce difficulties that can arise when a service regularly moves above or below the ratio.

“This makes sense,” Mr Sinclair said. “The system is overly complex at the moment so anything that can be done to make it easier is worthwhile.”

In its report ACFA said the net impact of the 1 July 2014 reforms does not appear to have adversely affected access to services for supported residents with the overall proportion of supported residents increasing from 44.4 per cent at 30 June 2014 to 46.8 per cent at 30 June 2016.

However, it did note anecdotal evidence that some providers were showing a preference for non-supported residents but this does not appear to have led to significant shifts in access.

ACFA said it will continue to monitor this issue in its regular annual reports on the sector.

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