The #agedcarerc hearings this week will be significant, I think. Staring this morning. On financing, funding and prudential regulation. I will try and update as we go, though live tweeting last time nearly killed me so I'm making no promises!
If you want to get up to speed, many of these issues will be addressed at this #agedcareRC hearing. Notably, this telling detail from BDO Australia analysis commissioned by the inquiry. thesaturdaypaper.com.au/news/politics/… Image
Senior counsel assisting #agedcareRC Peter Rozen QC starts with some broad detail. For example, Home Care providers "are not required to report to the government what kinds of goods and services are provided with ($2.5bn in) home care package subsidies the Commonwealth supplies."
DoH surveyed to try and understand this. "The survey revealed that in 2018-19 there were negligible amounts spent on nursing and allied health care of 15 mins of each per fortnight, even for the most needy package holders." 15 minutes. #agedcarerc
And, as we know, in residential care: "the prudential reporting regime does not require providers to submit sufficient information about related party transactions on matters such as loans and interest, management fees and rent." We can't follow the money.
Rozen: "Further, there is no specific requirement on residential aged care providers to spend any particular portion of that money on care."
D'oh I am a massive idiot. This isn't Rozen, this is Peter Gray QC. Sorry, my brain is stuck in the previous hearing.
PETER GRAY QC: "As the analysis in tab 114 shows expenditure on a per capita basis for people aged 70 and over has remained flat since the 1980s in real terms." Under the current funding model, ACFI, there is NO requirement to acquit this spending against individual care.
"In the report produced by BDO, it is
clear that despite the pressures that approved providers have faced, some are managing to extract sufficient profit margins to provide significant returns on their investments." This is fine if care is adequate, Gray says. But it's not.
In my piece at the weekend, we showed that resi care providers hold $30bn in accommodation bonds that are ~guaranteed~ by the commonwealth. Now, there are growing concerns about this system.
On bonds: "Over recent years, BDO’s analysis indicates that liquidity has decreased amongst a significant number of providers, to the point where there may be grounds for concern about the recoverability of a large amount of these deposits." Especially with Covid-19 deaths.
On need, this is key.

"The surprising truth is that no-one can say whether the current levels of funding available to providers for various forms of care correctly calibrated to the costs of providing high quality care." No one can say. Govt should know but they don't.
"Compounding this problem is the fact that the way in which funding levels have been indexed for inflation since the 1990s has meant that funding has not increased in line with real cost increases in service delivery inputs." Dept of Health concedes this. #agedcarerc
Now, to the facts Scott Morrison has been denying since 2018! The following is precisely what was cut in the aged care budget, now being called out by the Royal Commission. For the avoidance of all doubt.
"In addition... indexation of residential care subsidies calculated through the Aged Care funding Instrument (ACFI) has been frozen on two occasions in recent years. There have been other interventions to reduce ACFI such as 2016 amendments of high care classification criteria."
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But remember, both Morrison and ABC Fact Check incorrectly said aged care funding wasn't cut. What a debacle.
So, moving on, why are some providers doing well and others are on the verge of collapse? Staffing is one.
"One feature of the current system is that providers are left to their own devices to determine appropriate staffing levels and skills mixes under a vaguely expressed statutory expression that they maintain appropriate staff," Gray QC says.
"As we have previously submitted, there should be mandatory (albeit somewhat flexible) staff contact time, and there should be acquittal of staffing costs. This will result in higher funding accompanied by public accountability for expenditure on care," Gray says. Huge.
I won't go into the foreshadowing of all the propositions Gray QC will put later in this hearing as I am about to jump on my weekly editorial teleconference with the bosses. But will pick out any interesting bits from here.
Fuck, here's an interesting one. Regarding those massive accommodation bond deposits, analysts recommend liquidity ratios of 15% in order to meet obligations. This was a key measure in previous 11 cases of providers triggering govt guarantee of bonds because they could not pay.
"In 2018 financial year, 193 of 777 approved providers had liquidity levels of less than 15% and of those 60 providers had liquidity levels of less than 1%. Stewart Brown found value of the bonds of the providers with a liquidity ratio of less than 1% was $4.3 billion."
Gray: "The Commonwealth government took over full administrative and funding responsibility for aged care in 2012, but has not yet assumed a proactive system governance role. It should do so now, either directly or by appointing a dedicated independent body to do so."
To go back to accommodation bonds, found this briefing to the Department of Health in the tendered aged care exhibits. To understand it, you need to know: Bonds can be paid as a lump sum, a daily fee (based on bond value x interest) or as a combination of both.
Providers keep the interest from these bonds where they are paid as a lump sum. It's free money! BUT they do have to pay back the original amount when a person leaves their care. Usually, fine, because new entrant bonds would cover the value. However, we are now seeing new trend.
New entrants are choosing daily fees over lump sum bonds. So providers are having to front up for the repaid bonds and they're not getting them back. This advice to govt estimates $1bn has been lost since February alone. That is enormous. This is a viability issue. Image
Put another way, the aged care system as it currently stands bears a striking similarity to a pyramid scheme.
Now this is interesting. Re: the cuts to direct care subsidy (the ACFI) which the govt refuses to acknowledge. Now, Department of Health tells the #agedcareRC that indexation hasn't kept pace with costs (data has been showing that for yonks) Image
Department now proffers its own theory on why it says providers were 'overclaiming' the ACFI: because it wasn't keeping pace with costs. And how did they deal with that? By freezing the indexation and lowing complex care payments. Brain genius. Image
Day 2 of #agedcareRC hearings regarding financing, funding and regulation of aged care. First up is Professor Michael Woods, from UTS. He was also the lead commissioner with the @ozprodcom for its 2011 review of aged care (that became the blueprint for Labor's 2012 reforms).
We are talking about the rationing of aged care places in nursing homes. As it currently stands, operational places are handed out by the Australian Government each year in regional allocations. Professor Woods says this effectively "constrains supply."
"At the moment if you constrain supply then unsurprisingly it allows a lot of poorer providers to continue to operate," Professor Woods says. Essentially this is because good providers have a brake on their ability to expand beyond the places handed to them by govt.
Woods is asked about how much we should pay for our own care. At the moment their are caps on lifetime contributions -- subject to a means test -- that can be claimed from people. The rest is funded by the taxpayer.
"But for other people who have accumulated wealth and earn income above those certain levels, there is little argument as to why they should be spared drawing on their income and assets and having that funding transferred to taxpayers," Prof. Woods says.
Should family home -- whether owned by person as a single occupant in context of home care or by a couple / more than one person living in it re: going into a nursing home -- be included at a greater extent in aged care means tests? At the moment it is "significantly protected."
Woods: "There is clearly scope for the wealth that is embedded in somebody's home to be available to supplement their income to contribute to paying for aged care services and in that particular report we suggested one mechanism."
Commissioner Tony Pagone asks the obvious question which is (I'm paraphrasing): aged care isn't really a free market, is it, because for a start people often enter nursing homes in an emergency and once they're in the system there is an "inertial difficulty" in switching services
Woods: "What we should assume is that we don't actually have a perfect market and by no means is it a perfect market and therefore regulation plays an important role as does the transparency of reporting and accountability."
Hands up anyone who reckons we have proper regulation, transparency and reporting accountability! We've already heard this week the Dept of Health has literally no idea where the money goes.
Now talking about having an independent pricing commission of sorts in aged care (similar to the Independent Hospital Pricing Authority which Prof. Woods says is a good example)
"You want to separate out policy from regulation and from provision and that's, you know, tried and tested approach to public policy," Prof. Woods says. Long way to go on that front in aged care.
"We only have to look at the moment as to government decisions relating to ACFI or residential aged care to see things like indexation pauses and changes to weightings," Prof. Woods says. Wait for it. Next tweet.
"And other actions which I consider has directly related to the very parlous state of many providers in being able to provide adequate levels of staffing and care," Prof. Woods says. This is a direct call to account of Govt cuts to ACFI. #AgedCareRC
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Woods on pricing changes: "That has to happen immediately because the current level of the pricing, the choice of the indexation (COPE) etcetera... they are all matters requiring urgent attention and should happen now." Urgent. Attention.
Prof. Woods says there are waiting lists for Commonwealth Home Support Programme but we don't know what they are because, unlike Home Care Packages (national queue is 100,000+ people), no wait list is published. People just don't get support and we don't know.
Back to user contributions in aged care, Prof. Woods says it is "absolute madness" that just because somebody gets old that the taxpayer suddenly has to start paying for their care. He's advocating this for people with means. Everyone else should be supported.
Next witness is Professor Naoki Ikegami from St Luke's University in Tokyo. Prof. Ikegami is an expert in long-term care and comparative research in health systems. He is also bringing some absolutely chaotic bookshelf energy to the #AgedCareRC and I am extremely here for it. Image
Unfortunately I have to potter off and do a few other things for the rest of the afternoon, so please just radiate in the energy of this bookshelf for the time being. Or go check out the live stream!

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More from @SquigglyRick

18 Sep
Full aged care story since the Coalition came to power. It's a man-made disaster. Govt so spooked by Covid-19 aged care impact it met with major financial institutions to see if it needed to intervene - to protect its exposure to billions of $ of bonds. thesaturdaypaper.com.au/news/politics/…
The reason govt was exposed at all comes in 2 parts. "Blunt" cuts (Department's word, not mine) made to funding when Morrison was Treasurer, which affected nursing home residents in the poorest areas, and fact NONE of the oversight measures announced in 2018 budget have happened.
Since 2015-16, the year of Morrison's $1.7 billion budget saving, aged care expenditure per person 70+ as a share of GDP has been going DOWN.
Read 5 tweets
23 Aug
Royal Commissioners: "Had the Australian Government acted upon previous reviews of aged care, the persistent problems in aged care would have been known much earlier and the suffering of many people could have been avoided.”
This in relation to new research released today by the #agedcareRC which shows Australia has no quality indicators for home care and only 3 in residential aged care. “It is unacceptable that in 2020 the aged care system is still without this," Commissioners say.
For context, these were recommended by the @ozprodcom in 2011 (yes, almost a decade ago) and again in 2017 (yes, three years ago).
Read 5 tweets
21 Aug
Aged Care Minister Richard Colbeck starts the hearing by acknowledging those elderly Australians who have died from Covid-19 in nursing homes. Sincere condolences, he says. "Every death is an absolute tragedy."
Colbeck says the aged care workforce has been operating under "quite unfair scrutiny" at times. Then says no country has managed to avoid Covid-19 outbreaks in residential aged care.
"We can always do it better. I acknowledged at the last hearing there were some things that we haven't got right," Colbeck says.
Read 78 tweets
14 Aug
Scott Morrison is up at a press conference talking about aged care failures. He is referring to the massive operation underway now. Which, again, is not the issue ventilated over the last week. There. Was. No. Plan. None of the issues were unforeseeable.
“No one has ever had to deal with this before,” he says. Except by March in Australia people had. In China, in Italy. In Hong Kong. In Europe.
Morrison is referring to the Victorian aged care response centre and fact more than 400 aged care residents have been transferred to hospital. Again, this is months and months and months late. More on the origins of this debacle in @SatPaper tomorrow.
Read 19 tweets
10 Aug
The #agedcareRC has begin its hearing this morning into impact of Covid-19 on the sector. Peter Rozen QC is delivering opening remarks. Says there is nothing surprising about the horror headlines.
"In light of those deficiencies, it is hardly surprising that the aged care
sector has struggled to respond to COVID-19... the de-skilling of the aged care workforce was identified as a likely consequence of the lack of regulation of staffing in aged care," Rozen says.
"The consequences of a shortage of clinical skills in aged care homes for care quality and resident safety have been demonstrated time and again in the case studies this Royal Commission has examined."
Read 226 tweets
28 Jul
If you want a bit more background on the complete disaster in aged care in Victoria (a fed govt responsibility) then let's revisit this thread I did in early 2019 covering the last seven or so years of aged care policy. Short answer: the sector was already on its knees pre-Covid.
I knew. They knew. Everyone knew (except ABC FactCheck for some reason??). This isn't a shock to anyone who has paid even scant attention to aged care policy in recent years. But the commonwealth would very much like you to forget.
And of course, now we have a figure. The aged care royal commission estimates the sector needs at LEAST an extra $13 billion each year. Possibly $26bn. thesaturdaypaper.com.au/news/health/20…
Read 16 tweets

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