Chapter 8
Rural and Regional
8.1
Many older Australians indicate a desire to age in place. However for
older people residing in rural and regional Australia, this is substantially
more difficult to achieve, particularly as care level needs increase.
8.2
‘Ageing in place’ is commonly referred to as residential based care that
enables an individual to independently remain in their own home, or to receive
progressively increased services. This requires flexibility in delivery and
continuity particularly for rural areas, but also access to formal care
services within their own communities due to social connections.
8.3
Ageing in local community is important for not only the individual's
wellbeing, but also for the stability of community and cohesiveness of family.
8.4
Ease of access is essential for the wellbeing of couples where one with
dementia or other illnesses requires separate living arrangements. This can be
an additional burden in regional areas due to lack of transport and large
distances.
The proportion of elderly people within the population is
increasing. This trend is intensified and more prevalent in rural and regional
areas than in urban centers. In 2008 the number of Australians aged 75 years or
over within the rural population had been growing at over 3 per cent per year
for around a decade.[1]
8.5
Coalition Senators recognise the significant role that aged care
facilities play in rural townships. Aged care facilities and services in rural
and regional areas enable families to remain close as people age closer to
home, family and community. Aged care services are often one of the major
employers, thereby contributing to the economic activity of local townships. In
regional Australia there are 1225 Residential Aged Care providers, and 1124
(91%) have 60 beds or less.[2]
Regional aged care providers also play a significant role in providing a range
of services in the one location, as compared to metropolitan facilities able to
focus on niche markets.
8.6
Rural and regional service providers made significant representation to
the inquiry.
8.7
From submissions received, and evidence presented at hearings, all
submitters recognise the need for reform in the Aged care sector, and welcomed
the Productivity Commission’s report, Caring for Older Australians.
Regrettably, only 5-6% of the recommendations proposed by the Productivity
Commission have been adopted in the Living Longer Living Better package of
bills.
8.8
Coalition Senators are particularly concerned about the impact of this
package of bills on rural and regional areas. These Bills do little to
recognise the unique issues faced by rural aged care providers. Evidence
presented at four public hearings in Perth, Sydney, Melbourne and Canberra, and
in over 100 submissions received, highlighted some of the specific challenges
faced by rural and regional providers:
- The inadequacy of the existing ‘viability supplement’ to
compensate for the challenges faced by regional providers.
- The inequity of bond calculations given the much lower property
values of regional areas compared to metropolitan and coastal locations.
- The removal of retention payments affecting the viability of
regional providers.
- The challenge of recruiting and retaining staff in regional
locations.
-
The burden of accreditation and administration on smaller
providers.
- The challenges of rural providers to meet the staff and training
requirements of the Workforce supplement.
- The lack of funding for rural providers to invest in capital
works, expansion or upgrade of facilities, and recognition of the additional
cost of building in rural areas.
- Duplicating service delivery provided by other levels of
government.
8.9
There has been increasing concerns raised by rural and regional
providers about their future viability and the need to reform Australia’s aged
care system. The need for reform has been long overdue, markets by their
nature, cannot offer certainty and providers who cannot attract enough clients
will fail. This can pose risks for the clients of these providers, especially
in the case of aged care. There are also risks that providers will not enter a
market where demand is limited, such as in rural and remote areas or where
there are relatively few clients with particular needs, or a capacity to pay,
as rural providers are already closing down.
There are providers in rural and remote areas of Queensland
that have decided to withdraw their services due to viability issues.[3]
8.10
Addressing failures of the aged care market is a further reason for
government involvement. There are a number of areas where the market for aged
care lacks features of an ideal market. The level of demand for aged care
services varies across location and the cost. The expectation in regional area
of the reform package following the Productivity Commission’s report was high.
8.11
Coalition Senators are concerned that the government’s piecemeal
approach to so called reforms will result in increased complexity and cost
without addressing the core issues of both providers and people dealing with
ageing in rural Australia.
8.12
There are considerable challenges faced by aged care service providers
in rural and remote areas when it comes to implementation, delivery and
management of holistic aged care service including[4]:
- The relatively high cost of establishing and delivering services.
- Difficulties in attracting, retaining and professionally
developing suitably qualified staff
- The limited availability of medical practitioners and allied
health professionals to support the provision of aged care services.
-
Low incomes asset value
-
Distance
-
Logistics of continuous care provisions in rural locations
8.13
With this in mind, the Coalition points to the Productivity Commission
Report which gave special consideration to older Australians living in rural
and remote locations and concluded:
Where there are unavoidable and significant variations in
occupancy, alternative funding models, such as supplementary block funding and
capital grants in addition to mainstream funding, may be required to ensure the
ongoing availability of aged care services in these locations.[5]
8.14
It is disappointing that despite the Commission’s findings in 2011, the
Living Longer Living Better package of Bills that seek to reform the aged care
sector, continue to ignore the concerns raised by rural and regional providers.
8.15
Coalition Senators recognise the desirability of certainty for aged care
providers in regional areas. This will assist to ensure that the infrastructure
that is the lifeblood of these small community towns remains viable, as
recommended by the Productivity Commission Report. This perspective was
supported by industry:
There were a couple of things recommended by the Productivity
Commission which certainly the National Presbyterian Network and also Aged and
Community Services Australia have in the past supported. They include looking
at enhancing the capital funding stream; it is very small for the number of
facilities in regional areas. You can look at the fact that maybe you need to
do some block funding. At the moment, we fund aged care by the number of
residents or clients in aged care packages. If you do not have any old people,
you do not get any money. Maybe you need a level of guaranteed funding so that
there is an infrastructure that stays in those small community towns[6].
8.16
The following points highlight some of the concerns raised by rural and
regional providers in evidence provided to the Committee during the inquiry.
Inadequacy of the existing viability supplement
8.17
Coalition Senators recognise that aged care reforms cannot apply a ‘one
size fits all’ approach as providers in rural and regional locations face
different challenges to metropolitan areas. These concerns were identified in
the Productivity Commission’s report, recognising the relatively high cost of
establishing and operating an aged care service compared to similar services in
metropolitan and other regional locations. In addition, older Australians
living in rural and remote communities may not have high levels of income and
assets from which aged care providers can draw additional payments, such as
significant accommodation bonds or extra service fees.[7]
8.18
Coalition Senators are aware that the Government’s package of bills to
reform the aged care sector fail to address this issue of ongoing viability of
regional providers, and the specific challenges that they face.
8.19
When asked how the Living Longer Living Better legislation will improve
access to residential aged care for people living in regional, rural and remote
areas, the answer provided by the Department of Health and Ageing's Question
and Answer Fact Sheets state:
Under aged care reform, resources will be targeted to the
areas of aged care most in need. In general it is more expensive to build and
deliver aged care services in non-urban areas, compared to urban areas. A
viability supplement will continue to be made available to eligible providers
operating in regional, rural and remote areas. This will ensure services are
available for all older Australians regardless of where they live. [8]
8.20
The government's response was put to rural and regional providers and their
response was dismissive. The quote below from Narrogin Cottage Homes best
encapsulates their comments:
I love that comment: 'This will ensure'. It is an incredibly
laughable statement. I am very surprised that they used those words, because
that is saying that it meets a need. It does not. The viability supplement was
put in place many years ago. It was quite a complex ... The methodology itself is
so old and out-of-date. It has not been looked at for some considerable period
of time. So, when you make a statement that it will ensure that these services
are available, it is not making them available. It certainly assists, but it is
not a true reflection of cost of care. .. I am not saying the viability
supplement should be scrapped; I am just saying that, if we do have to keep it,
it needs to correctly reflect services in the region that the viability
supplement is being applied to.[9]
8.21
Clearly the existing measures are not working whilst the government’s
failure to address the underlying issues of the viability of service providers
in rural areas.
Inequity of the bond calculation
8.22
A further challenge faced by rural and regional providers through this
legislation is the strengthened dependence on bonds. Coalition Senators
recognise that aged care providers depend on the investment earnings of Bond
money to run their facilities. However, this ‘one size fits all’ approach by
the Government fails to recognise the significant inequity in property prices. One
submitter said;
In most country towns people's properties are not worth as
much as they are in coastal areas and in metropolitan areas. That means the
refundable accommodation deposit—in the new language—that they will potentially
pay will be lower. Under the current arrangements, we accept in our rural services
a substantial number of part bond payers who are not paying the full amount of
the bonds.[10]
8.23
Another issue for rural and regional communities is in the case of a
family farm, where the asset is inherited by the next generation leaving the
aged “owner” without the capacity to meet bond requirements. Coalition Senators
are keen to see greater flexibility in service delivery ensuring that regional
Australians are not disadvantaged by their geography as they age.
8.24
In giving clients greater flexibility to move into an aged care facility
and decide within 28 days if they want to remain, the delay in Bond payments
creates uncertainty for the provider and the relationship with their financial
institutions. The question remains that if someone wants to move in and fails
to pay, how can they be forced out, and where will they go?
Removal of retention payments
8.25
In many rural areas providers accept part bond payers, who are not
paying the full amount of bonds because their property’s value is low– and
therefore the aged care facilities rely on retention payments. Under these
bills, retention payments have been replaced by refundable accommodation
deposit – but the amount will potentially be a lot lower. Increasing the total
price to raise sufficient interest is not viable in rural communities, where
people simply do not have the money, either from the value of their property or
other assets.
The challenge for us under the government's new arrangements
is: with the retention amount removed from the equation there is then the
question of how do you make that up? The government appears to be saying that
the mechanism you use is to increase the total headline price to raise
sufficient interest in order to cover the lost income. There is a real question
of whether that will be viable in rural communities because people may simply
not have the money, even off the value of their property let alone other assets
they might own.[11]
8.26
Coalition Senators recognise the risk of unintended consequences from 'one
size fits all' policy initiatives.
Challenge of recruiting and retaining staff in regional locations
8.27
Coalition Senators recognise the challenge that rural and remote
communities face in recruiting and retaining aged care staff. In some rural
areas there are limited training opportunities where skill development relies
on the expansion of accredited courses, vocational training opportunities and
availability of advanced nursing courses. Whereas nursing staff in metropolitan
areas can easily access courses to develop their professional skills or
participate in advanced clinical courses under the watchful eye of trained
professionals, these opportunities are limited in regional and rural areas.
Distance can inhibit training opportunities for regional and rural service
providers, and further research needs to be undertaken to harness technological
advances to expand training opportunities in regional locations.
8.28
At the heart of the challenge facing many regional providers is the cost
of wages and labour, expressed by Anita Ghose, Director of Life Services with
Baptistcare;
I think one of the main issues that we face in rural and
regional areas is around our workforce. And the challenge we have is dual: we
need to provide a quality service—our clients, our residents, demand and expect
that—but we also need to provide quality staff who are trained and supported in
that environment. We have a unique demographic in Western Australia, which I
think has been lost in the national debate, which is around the challenges of
the tyranny of distance but also what has happened in terms of the cost of
living and the issues around our mining and resources sector, which in some
cases is being used as the explanation for every problem in the west. But I
have to say unequivocally that the issue around the cost of wages and the cost
of labour in regional and rural areas is decimating the viability of regional
providers. For Baptistcare, as Dr Morris mentioned, we have 60 per cent of our
services in regional areas. Our challenge is to not only find good staff but to
keep them. Unfortunately we have had to resort to bringing in expertise from
overseas using the 457 visa process. We have brought in nurses and qualified
practitioners from Ireland, the UK et cetera. The challenge in retaining those
individuals..We have firsthand experience of using recruitment agencies, at
great cost to the organisation. Our cost structures have increased in our
recruitment processes and bringing these individuals in from overseas. In one
instance, one of them lasted one week in a country town—and that was Albany.
They do not last that long because of the issues they face around being in
regional areas. The challenge for regional providers is that they are the rich
fabric of our demographic in Western Australia and we need to prioritise and
support. I do not think the workforce supplement does that at all. I think what
it does is erode the viability of those providers and disadvantage them.[12]
8.29
A similar view was expressed by Mr Paul Michael Sadler, Chief Executive
Officer, Presbyterian Aged Care New South Wales and Australian Capital
Territory, National Presbyterian Aged Care Network;
The other area that needs looking at is clearly the workforce
costs in some of these small communities in order to access things like
registered nurses and so forth. Particularly when you get to the really remote
areas, and Aboriginal services, they are huge and that need to be recognised.[13]
8.30
Skill shortages in regional areas occur for a number of reasons and not
only in aged care. Coalition Senators acknowledge that technology can deliver innovative
ways to access training and placement opportunities – which are not addressed
in these bills.
The burden of accreditation and administration on smaller providers
8.31
The accreditation process is yet another element that presents
significant challenges for rural and regional providers. Additional
administrative burdens are continually added that have a significant cost to
small rural service providers unable to defray the costs over multiple sites
like larger providers.
8.32
The need to tailor the challenges of the accreditation process are
outlined in the following submission by LHI Retirement Services:
It is proposed that a provider can be suspended from
undertaking ACFI appraisals if there have been two incorrect appraisals
submitted. An educative approach would be preferable to assist staff to
undertake ACFI appraisals rather than the proposed punitive approach. The
educative rather than punitive approach will assist smaller country rural and
remote facilities to use the ACFI process appropriately and accurately, and
reduce the number of facilities that will otherwise have to cease operating.[14]
8.33
Balancing regulatory burden is important in a sector concerned with frail
older Australians. However, its impact should be minimised on front line
service delivery and economic viability for providers.
Inability of regional providers to meet the workforce supplement
requirements
8.34
Regional providers have highlighted that retaining registered nurses in
remote areas leads to a higher workforce cost, which needs to be taken into
consideration when looking at the real cost of delivering aged care services in
regional areas. When added to the already thin margins of regional providers,
the onerous workforce supplement requirements could result in significant job
losses in areas where employment opportunities are limited.
8.35
During the inquiry, industry raised concerns that rural providers may
struggle to fund the additional costs of meeting the requirements of the
supplement;
ACSWA rural and remote providers, and small providers are
particularly impacted by the proposed Workforce Supplement. Members have
provided examples of the cost impost with respect to legal advice on the terms
and conditions of an enterprise agreement, travel and accommodation surcharges
to access relevant training, or to bring trainers or specialists to their
sites. This has particular relevance for providers in areas of WA that have to
compete with the mining resources sector to secure accommodation and airfares
for staff or presenters that significantly contribute to additional expenses.
Speculation about the additional costs to providers to fund
the Supplement requirements suggest that mitigation factors such as a reduction
in staffing numbers will be the most likely result, as providers have no other
option than to cut their costs and many are already under financial duress.
Providers have limited opportunities to increase their income to cover the
additional costs incurred by the Workforce Supplement as they are constrained
by a tightly regulated environment and there are no additional income streams
available to recoup the additional expenses to achieve the requirements of the
Workforce Supplement. ACSWA has received feedback that most small and rural and
regional providers will not be able to afford to take up the Supplement. In one
instance a 31-bed residential care provider has estimated that to receive
$17,000 from the supplement, it will cost them an extra $30,000 to meet the
requirements.[15]
8.36
Submissions received requested greater flexibility be given to smaller
regional providers in satisfying the requirements to access funding;
The workforce supplement will have significant impacts on the
sustainability of providers and the level of care delivered to the frailest and
most vulnerable members of our community....the capacity of small, independent,
rural and remote aged care providers to satisfy the requirements to access this
funding must be identified, acknowledged and addressed. For example, rather
than have an arbitrary delineation of 50 beds as a determining condition there
should be greater flexibility taking into consideration factors such as the
provider’s rural, regional and remote situation. The size of a facility should
not necessarily be the sole determining factor as other factors such as remote
location influence wage matters. Neither rural, regional and remote providers
nor standalone providers should be financially compromised in the implementation
of the workforce supplement.[16]
8.37
The government's blunt response fails to acknowledge the unique
workforce issues across regional Australia. Thin margins, lack of skilled
workforce, low number of training options and high recruitment costs of rural
and regional service providers already impact on their economic viability. The
government's changes could see a reduction in employment levels in aged care
services across the regions - a negative result for workers and the community.
Investment in
capital works and facility upgrades
8.38
Providers have expressed concern at the continued restrictions on the
use of bond money, which restricts the ability of smaller regional providers to
expand their services, and broaden their income base by widening the range of
aged care support services provided. Where metropolitan services can develop
niche services, rural aged care facilities fulfil a very different role,
providing in many cases a one stop shop for aged care services.
8.39
Providers have been critical of the lack of adequate capital funding
needed to upgrade their facilities;
Half of our members would be rural organisations. Until
recently I was a member of the board of Mary MacKillop, which is also providing
care in rural areas. They are a group that looks after the people nobody else
wants. They will tell you it is dire straits in country areas with facilities.
They have not been able to upgrade. Often the family farm is inherited, so
there is not the capital. I think it is very un-Australian for us to
continually focus on user pays and ignore the fact that people in country areas
are doing it so tough that we cannot within our system, whatever it is, find a
solution to their particular problems. It is only going to get worse for them.
Most of them do not have a competitor down the road; they are often the sole
provider for a very large area. I am sure there will be a need for the
government to come up with some better ideas.[17]
8.40
LHI have expressed a need for capital certainty if they are to remain
viable, as highlighted in a submission from LHI;
Refundable Accommodation Deposit (formerly Accommodation
Bonds) are the most important capital base for the future viability and
development of aged care facilities. The proposed periodic payments system must
not undermine the capital base of organisations and threaten future aged care
developments, particularly in the smaller rural and remote section of the
industry. A significant growth factor for residential care services is expected
to continue into the future and the capital base must be secure to ensure
replacement and additional developments are viable for the care of the elderly.[18]
8.41
Many regional providers of residential aged care are not-for-profit
community facilities utilising fundraising efforts from small communities in
order to meet increasing costs. As evidenced in the inquiry, the government’s
failure to acknowledge the lack of desire for investment in regional areas, due
to low demand, indicates their disconnection from the realities of operating
aged care in the regions.
Summary
8.42
Coalition Senators recognise that any reform of the aged care sector
needs to take into account the unique aspects of ageing in rural and regional
communities. From the evidence received, it is clear that a flexible approach
is required in rural and remote communities. The Living Longer Living Better
package of 5 bills inadequately addresses the specific needs in rural and
regional area allowing for continuity of care, within their community,
recognising the financial reality of lower incomes and asset levels, the higher
importance of access to home care and the acknowledged greater service delivery
costs in those areas.
8.43
Providers have suggested that flexible funding and delivery models are
required to address the specific concerns of rural and remote communities.
Evidence gathered during the inquiry supports reforms of the aged care sector
that will ensure the maintenance and development of facilities, high standards
of service delivery, adequate training, and coordinated delivery of aged care
services in rural and remote areas.
8.44
The Government has failed to take account of these realities due to the
lack of modelling to inform their response which does little to address the problem,
as the key recommendations within the Productivity Commission report are
ignored.
8.45
The Government has also failed to recognise that in many rural areas
there is not the demand, or at the very least, the stability of demand to
ensure a competitive process in aged care service provision. This is a
significant issue ignored in these bills.
Recommendations
That the Government reconsider the changes to address the unique
challenge of aged care service provision in regional, rural and remote
Australia as identified by the Productivity Commission enquiry “Caring for
Older Australians”.
That the Government take into account the need for flexible
funding and flexible provision models, that consider the many issues raised
throughout the inquiry, such as:
- building stock;
- standards of delivery;
- staff development;
- delivery of HACC services;
- service sustainability and support; and
- flexible methods of service provision.
| Senator Sue Boyce |
Senator
Concetta Fierravanti-Wells |
| |
|
| Senator Bridget McKenzie |
Senator Dean
Smith |
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