Gov does not understand true costs of care: LASA

The announced indexation rise for aged care subsidies and supplements of just 1.4 per cent for the 2018/19 financial year has been met with alarm from providers across all services.

The rates, determined by the Commonwealth, fall well short of the rise in operating costs and the consumer price index for health care, which is around 4 per cent per annum.

The Aged Care Funding Instrument (ACFI) indexation increase of 1.4 per cent in the “Activities of Daily Living” and “Behaviour” domains and just 0.7 per cent in “Complex Health Care” follows an indexation freeze in 2017-18 in all domains.

Data released by StewartBrown last week showed that 43 per cent of residential aged care facilities experienced a financial loss in the last nine months (to March 31, 2018) up from 41 per cent in the December quarter. This rises to 58 per cent in outer regional, remote and very remote facilities.

Chief Executive Officer of Leading Age Services Australia (LASA) Sean Rooney said the rates for the coming financial year shows the Turnbull Government is oblivious to the true cost of providing care to older Australians.

“The majority of residential aged care facilities are experiencing significant and sustained financial stress due to funding cuts by successive governments, combined with rising operating costs and growing acuity and complexity of residents’ needs,” Mr Rooney said.

“The coming year’s aged care subsidies with an indexation rise of just 1.4 per cent are totally inadequate. This rise does not even come close to the consumer price index for health, which has been estimated to be over 4 per cent and comes on top of successive minimum wage rises of 3 per cent and 3.5 per cent in July 2017 and July 2018.

Mr Rooney said this indexation rise is only a third of what is required for aged care providers to keep up with rising costs, let alone expand their services to meet rapidly growing demand.

“Despite ongoing data and evidence from industry experts and recent independent reviews finding that Australia’s aged care system is under-funded, there is no plan to address this situation,” Mr Rooney said.

“Recognising the true costs of delivering age services and providing realistic funding is the only way we can guarantee a sustainable age services industry that meets the needs of all older Australians.”

Mr Rooney said LASA has been calling for an immediate 4 per cent funding indexation increase or about $470 million across the sector.

“This modest amount of funding would go some way towards short term sector stabilisation, pending a comprehensive plan for on-going aged care funding sustainability,” Mr Rooney said.

ACSA CEO Pat Sparrow said while welcome, the rise will do little to provide sustainability for significant numbers of aged care providers currently in financial stress.

“There has been a growing trend of residential aged care providers making a loss, particularly those in remote and rural areas,” Ms Sparrow said.

“There were a range of budget initiatives to provide financial support but overall they still don’t address the issue of the deteriorating financial health of providers – attributed by StewartBrown to a combination of the ACFI freeze in 2017-18, amendments to ACFI which commenced in January 2017, and the increasing costs of direct care.”

“StewartBrown data has found there has been an increase in care labour costs of 4 per cent since June 2017 with over half of this attributed to additional costs and hours worked in both care management and allied health staffing.”

“The StewartBrown data also shows there are declining results for Home Care Package providers making level 1 and 2 packages very marginal and today’s indexation announcement of 1.4 per cent just does not keep up with increasing costs of care delivery.”

“We need a serious overhaul of the financing approach to aged care so that the costs of care can be met. This can only be achieved through a combination of taxpayer funding and individual contributions from those who can afford it.”

“That is why a funding model – based on real delivery costs – needs to be developed. This would result in additional funding which could then be indexed appropriately to keep pace with inevitable cost increases.”


1 July 2017 1 July 2018 % change
Daily home care subsidy rates changes from 1 July 2018
Level 1 $22.35 $22.66 1.39%
Level 2 $40.65 $41.22 1.40%
Level 3 $89.37 $90.62 1.40%
Level 4 $135.87 $137.77 1.40%
Activities of daily living
Low $36.65 $37.16 1.39%
Medium $79.80 $80.92 1.40%
High $110.55 $112.10 1.40%
Low $8.37 $8.49 1.43%
Medium $17.36 $17.60 1.38%
High $36.19 $36.70 1.41%
Complex health care
Low $16.37 $16.48 0.67%
Medium $46.62 $46.95 0.71%
High $67.32 $67.79 0.70%

The StewartBrown report is available here: 


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