Chapter 3: Implications of charging accommodation bonds for access to nursing homes

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Chapter 3: Implications of charging accommodation bonds for access to nursing homes

2.22 Evidence to the Committee suggested that accommodation bonds will provide an incentive for nursing home proprietors to differentiate between prospective residents. APSF argued that currently there is `no incentive for proprietors to give preference to potential residents with greater income or assets as all fees are standard...The proposed accommodation bond arrangements will introduce an incentive for homes to differentiate between potential residents. This incentive is likely to be most pronounced in the for-profit sector'. [1] The NSW Council of Senior Citizens Associations (COSCA) stated that the imposition of the bonds represent `an iniquitous and inequitable provision which will discriminate against and disadvantage most seriously, vulnerable frail aged people, needing nursing home care in their final stage of life'. [2]

2.23 A number of groups that could be disadvantaged in terms of access to nursing homes as a result of the imposition of bonds were identified in evidence. These included:

People with dementia

2.24 It was argued in evidence to the Committee that the reform package needed to ensure adequate access to quality residential care for people with dementia and funding safeguards for these people in the new residential aged care system. [4]

2.25 DHFS estimated that some 60 per cent of nursing home and 47 per cent of hostel residents have substantial cognitive or behavioural characteristics associated with dementia. In addition to these residents, it is estimated that in 1996 there were some 135 000 in the community aged 60 and over who had dementia. The number is expected to rise to 177 000 in 2006 and 222 000 in 2016.[5]

2.26 Alzheimers Australia noted that the growth in the numbers of people suffering from dementia will mean a corresponding growth in the numbers of people needing nursing home care. [6]Alzheimers Australia noted that a major concern is the adequacy of the Commonwealth subsidies that will be attached to the Single Classification Instrument (SCI), now called the Resident Classification Scale (RCS), which will be applied to recipients of residential aged care and which will be the basis for allocating Government funds. Alzheimers Australia argued that `the additional costs of providing care to people with dementia must be included because of their unusually high and diverse support needs'. [7]

2.27 Alzheimers Australia further noted that the RCS may not deliver the level of funding required to adequately take care of these people `in terms of a proprietor finding an attractive client group, people with dementia have the potential to be unattractive because the funding is not adequate for their needs'. [8] Anglicare also noted that it had concerns that dementia `will not be recognised as an area which needs specific and adequate funding'. [9]

2.28 DHFS noted that improved funding for dementia care is a `major priority' and a specific objective in the development of the new RCS is to better identify the care needs of residents with dementia `this will ensure that residents with dementia are appropriately funded irrespective of the type of facility in which they reside'. [10] DHFS noted that under the RCS `the weighting for dementia has effectively been doubled which will ensure better funding for dementia care'. [11] Under the new funding arrangements, funding for hostel residents with identified dementia care needs increases by over 30 per cent on average. [12] In the 1997-98 Budget $1.5 million was allocated for people with dementia and their carers. [13]

2.29 Alzheimers Australia also noted that the introduction of accommodation bonds in residential care facilities has particular implications for people with dementia, whose impaired cognitive ability means that they may not have the capacity to make decisions for themselves on matters affecting their lives or financial situation, or to enter contractual arrangements with providers `provision, therefore needs to be made for the interests of a person with dementia to be adequately represented during negotiations with service providers by an advocate who knows and understands the person'. [14]

Sale of the family home

2.30 Some evidence to the Committee suggested that many older people will be forced to sell their homes in order to gain access to nursing homes. [15]

2.31 The Government has, however, argued that this will not be the case. The Minister for Family Services, the Hon Judi Moylan MP has stated that `there is no compulsion or legal requirement for anyone to sell their home. Entry contributions are essentially a private arrangement between the resident and the nursing home'. [16] DHFS reiterating this argument, told the Committee `the Minister has said categorically that nobody will be forced to sell their home to gain care and that indeed care will be accessed on need not means'. [17]

2.32 DHFS also noted that entry to a residential care facility represents a permanent move to a new home for the vast majority of residents. DHFS stated that about 50 per cent of people entering nursing homes currently choose to sell their homes `this figure is not expected to change significantly with the introduction of accommodation bonds'. [18]

2.33 Some evidence suggested that while admittance to a hostel is like a change of home and therefore a considered decision, entering a nursing home is likely to be a more urgent matter and mainly from acute care. In these circumstances the person is less likely to view it as a change of home but rather as a further step to returning home. [19] DHFS stated, however, that entry to an aged care facility represents a permanent move for the vast majority of residents. [20] Some 60 per cent of nursing homes residents die in the nursing home. [21]

2.34 The NSW COSCA noted that the distinction between nursing homes and hostels needs to be recognised. The Council stated that hostels are an accommodation option `and there is a choice about the accommodation you undertake and nursing homes, which provide health care for users and whose entry is usually by prescription and not by choice'. [22]

2.35 The Committee received considerable evidence that the need to sell a home in order to obtain nursing home care may have psychological and other consequences for older people. The Council on the Ageing (COTA) argued that the sale of a home in order to enter a nursing home `signals to the older person that they will never be able to return to normal life in the community. This may have consequences for the morale and life expectancy of older people'.[23]

2.36 The Office of the Protective Commissioner (OPC), which manages the financial affairs of people with impaired decision-making abilities in NSW, offered further support for this statement arguing that the Office saw `many people who go into nursing homes and, if the home is sold, they can pass away quite quickly, lose their will to live'. [24] OPC indicated that the general philosophy of the Office is that the sale of a person's home is the `last resort' option. [25] OPC also noted that `it is our experience that elderly people often resist the sale of their home in the hope that they may regain the capacity to manage in the community and return home. The knowledge that the former family home may be sold could encourage some residents to return home when they are not able to manage, putting themselves at risk of illness, neglect, injury and premature death'. [26]

2.37 APSF also argued that many older people if compelled to sell the family home will `lose hope' and may also `build up a deep resentment if they feel they are, as they see it, “forced” to sell their home against their will'. [27]

2.38 The Royal College of Nursing, Australia (RCNA) stated that `there is a very robust body of knowledge...that supports the general decline in health, once the person has made a conscious decision to sell their family home in order to enter some level of care, whether it is an independent living unit, a hostel unit or a nursing home'. [28]

2.39 Other concerns were raised in relation to the difficulties older people may face in negotiating the sale of a home. [29] Evidence to the Committee suggested that many aged people have cognitive impairments which result in their inability to make financial and other decisions (with over 50 per cent of people in nursing homes having some form of dementia). OPC suggested that there will be a large increase in applications for formal guardianship as a result. [30] NANHPH argued that for residents suffering from dementia, in particular, that the OPC would be available to make arrangements for the sale of the home and to attend to an aged persons financial affairs. [31] OPC argued, however, that the Office already had a heavy workload:

2.40 Residential Care Rights also expressed concerns that the various Guardianship Boards may not be able to meet the expected increased demand placed on their services. [33] OPC also noted that in NSW it would take about a month to get an Order through the Supreme Court and with the Guardianship Board four to six months for an exceptional non-urgent matter, such as that relating to a nursing home admission. [34]

2.41 OPC noted the `burden of the complexity of issues' that will have to be faced by older people in the situation of having to sell the family home. [35] Other evidence raised issues relating to the legal and financial difficulties in selling an aged person's property especially where there are families interested in maintaining the property. [36] APSF also noted that many older people wish to leave their property to their children or other relatives and regard the home more as a `family' asset and not an individual asset. [37] Some evidence also pointed to the potential for exploitation by real estate agents and/or financial advisers of older people having to arrange the sale of their home. [38] The Committee also raised the possible situation where the principal of a nursing home also operates a real estate agency. NANHPH argued that this would not present a conflict of interest. [39] However, OPC argued that there would be `an obvious conflict of interest, and we would want to see that principal remove himself or herself from one of those functions'. [40]

2.42 Evidence to the Committee also raised the potential problems of older people having to administer investments and/or income from the sale of the home. APSF noted:

2.43 DHFS stated that prospective residents and their families will be able to discuss options available to them through free advocacy services operating in all States and Territories or by contacting the free Financial Information Service (FIS) operated by the Department of Social Security. The Committee notes, however that the substantial reduction in funding for FIS announced in the 1997-98 Budget will reduce the level of services available to aged people. [42] DHFS noted that residents may also approach an independent financial adviser and a financial adviser may be present when prospective residents and providers are negotiating the level and/or payment options for accommodation bonds. [43]

2.44 The APSF, however, questioned the efficacy of financial advisers. APSF stated that:

Other consequences

2.45 Some evidence suggested that with the possibility that a number of older people and their families will try to avoid entry to residential care, a number of outcomes were possible, including older people not getting the care they need and additional strain on families and carers.

2.46 ACHCA and OPC noted a consequence of families deciding to care for their increasingly dependent and frail aged relatives beyond their coping capacity could result in the potential for elder abuse and neglect and an increase in admissions into acute care. [45] There is also a danger to the health and welfare of elderly people, often living on their own and increasingly frail, yet still hesitating to enter a nursing home or hostel due to a reluctance to sell their home.

2.47 Concerns were also raised that additional pressures will be placed on the Home and Community Care (HACC) program. [46] ACHCA noted that `with the combination of accommodation bonds in the nursing home, income tested charges, residence fees and so on, families will start to look at the economies of it. If the combination of all those elements is going to impact to the tune of, say, $50 to $80 a day on a family, then maybe they will want to look at the HACC program'. [47]

2.48 COTA noted that HACC is already under pressure to provide services for younger people with relatively high care needs rather than providing services for people who have a reasonable capacity for independent living. [48] Moreland City Council commented on the impact at the local government level, arguing that there will be a considerable increased demand for HACC and other community services by older people `and with Council receiving significantly diminished and diminishing resources to provide these services'. [49]

Negotiating accommodation bond agreements

2.49 Concerns were also raised in relation to the ability of residents and/or their families to effectively negotiate the terms and conditions of accommodation bonds with nursing home proprietors. Evidence to the Committee indicated that nursing home placements generally take place as a result of a health crisis and/or family care breakdown. Some 60 per cent of people entering nursing homes do so from an acute hospital. [50]

2.50 Evidence indicated that most aged people entering nursing homes, and their families, are under great stress. They are often not in a position to negotiate, on an equal basis, the amounts of the bond involved. Many of those entering nursing homes also lack the requisite mental capacity (because of dementia) necessary for negotiation of bonds and, indeed, other contractual issues. [51] Alzheimers Australia noted that this has particular implications for people with dementia by limiting their capacity to enter into contractual arrangements with proprietors. [52] The combination of these factors leaves open the likelihood of exploitation and financial abuse of people entering nursing homes.

2.51 OPC noted that:

2.52 Family and friends may be able to fulfil the negotiating role, however, as noted above, entry of a person into a nursing home often occurs at a time when family and friends are distressed at the move. The Combined Pensioners and Superannuants Association of NSW (CPSA) stated that `given these circumstances, the ability of both the potential resident and their family and friends to negotiate a fair deal has to be seriously questioned'. [54]


2.53 The Committee believes that the reforms ignore the reality of the psychological value of the home on the health and wellbeing of older people and the possible detrimental health effects that the `forced' sale of the family home may present for many older people. The Committee is of the view that the sale of a person's home should be only an absolute `last resort' option after all other options are considered.The Committee believes that it is important for the Minister's commitment that older people will not be forced to sell their homes to be a genuine component in the implementation of the new aged care reform. The Committee believes that the only way of guaranteeing that older people will not have to sell their home is to exclude the home from the assets test. The Committee considers that DHFS should review all other available options and canvass these options widely with all major stakeholders.

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[1] Submission No.58, p.8 (APSF).

[2] Submission No.6, p.1 (NSW COSCA).

[3] Submission No.58, pp.8-9 (APSF).

[4] Transcript of Evidence, p.194 (Alzheimers Australia); Submission No.61, p.1 (Alzheimers Australia).

[5] Submission No.94, p.28 (DHFS).

[6] Transcript of Evidence, p.201 (Alzheimers Australia). See also Transcript of Evidence, p.79 (Anglicare).

[7] Transcript of Evidence, p.195 (Alzheimers Australia).

[8] Transcript of Evidence, p.196 (Alzheimers Australia).

[9] Transcript of Evidence, p.79 (Anglicare Australia).

[10] Submission No.94, p.29 (DHFS).

[11] DHFS, Additional Information, 22 May 1997, p.3.

[12] Minister for Family Services, Media Release, `Aged Care Structural Reform Details Announced', 26 May 1997, p.3.

[13] Portfolio Budget Statements 1997-98, Health and Family Services Portfolio, p.226.

[14] Submission No.61, p.3 (Alzheimers Australia).

[15] Submission No.51, p.2 (Residential Care Rights); Submission No.65, p.4 (COTA); Submission No.17, pp.3-5 (Mr Boyce).

[16] Minister for Family Services, Nursing Homes Residents Safeguards, 27 August 1996, p.3.

[17] Transcript of Evidence, p.239 (DHFS).

[18] Submission No.94, p.36 (DHFS). See also Transcript of Evidence, p.239 (DHFS).

[19] Submission No.38, p.8 (ACHCA).

[20] Submission No.94, p.36 (DHFS).

[21] Submission No.60, p.13 (ACA).

[22] Transcript of Evidence, pp.29-30 (NSW COSCA).

[23] Submission No.65, p.3 (COTA).

[24] Transcript of Evidence, p.52 (OPC).

[25] Transcript of Evidence, p.51 (OPC).

[26] Submission No.68, p.3 (OPC).

[27] Submission No.58, p.11 (APSF).

[28] Transcript of Evidence, p.129 (RCNA). RCNA provided an extensive bibliography on these issues.

[29] Transcript of Evidence, p.48 (OPC).

[30] Transcript of Evidence, p.49 (OPC).

[31] Transcript of Evidence, p.11 (NANHPH).

[32] Transcript of Evidence, p.50 (OPC).

[33] Submission No.51, p.9 (Residential Care Rights).

[34] Transcript of Evidence, p.50 (OPC).

[35] Transcript of Evidence, p.48 (OPC).

[36] Submission No.68, p.5 (OPC).

[37] Submission No.58, p.11 (APSF).

[38] Submission No.51, p.2 (Residential Care Rights); Submission No.58, p.17 (APSF).

[39] Transcript of Evidence, p.12 (NANHPH).

[40] Transcript of Evidence, p.50 (OPC).

[41] Transcript of Evidence, p.112 (APSF).

[42] It was announced in the 1997-98 Budget that funding for FIS officers and Migrant Liaison officers will be reduced by 25 per cent.

[43] Submission No.94, p.24 (DHFS).

[44] Transcript of Evidence, p.113 (APSF).

[45] Submission No.38, p.7 (ACHCA); Submission No.68, p.5 (OPC).

[46] The HACC program is a joint Commonwealth and State funded program which provides services to support frail older people, and their carers, to remain in the community. These services include home help, personal care, meals on wheels and home nursing. See Submission No.65, p.3 (COTA); Submission No.38, p.7 (ACHCA); Submission No.61, p.4 (Alzheimers Australia).

[47] Transcript of Evidence, p.214 (ACHCA).

[48] Submission No.65, p.3 (COTA).

[49] Submission No.77, p.3 (Moreland City Council).

[50] Submission No.50, p.4 (CPSA of NSW).

[51] Submission No.51, p.5 (Residential Care Rights); Submission No.68, pp.4-5 (OPC).

[52] Submission No.61, p.3 (Alzheimers Australia).

[53] Submission No.68, p.4 (OPC).

[54] Submission No.50, p.4 (CPSA of NSW).