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Higher funding needed for residential aged care

Research from the University of Queensland estimates that if aged care homes operate efficiently it would cost around $621 million per year to improve all homes to the best quality level measured in Australia’s current aged care system. The cost for all aged care homes to improve quality and to operate with a small-sized home model would be around $3.2 billion per year.

The University of Queensland conducted its research for the Royal Commission into Aged Care Quality and Safety using detailed financial data, a comprehensive set of care quality indicators for aged care homes, and a measure of relative care needs, which was developed by the University of Wollongong. The findings are presented in Research Paper 9 – The cost of residential aged care and Research Paper 10 – Technical mapping between ACFI and AN‑ACC which are available on the Royal Commission’s website.

The quality indicator data shows aged care homes cluster divided into three quality groups, with 11% in the best group, 78% in the middle, and 11% in the worst group. The best quality homes met all accreditation standards, had lower use of high-risk medicines, had lower issues and complaints, and had a higher customer experience rating.

The Royal Commissioners, the Honourable Tony Pagone QC and Ms Lynelle Briggs AO, say that the research suggests that higher funding is needed for residential aged care if it is to meet basic standards, and even more will be required for reform to achieve high-quality care in Australia.

“Australians expect that all are entitled to the best quality level of care in aged care homes. Additional funding will be needed to enable providers to meet those expectations consistently.”

The aged care homes most likely to be in the best quality group were small-sized or Government-owned homes. For example, the best quality group contained 41% of homes with 1-15 beds, but only 17% of homes with 31-60 beds and just 5% of homes with 61-120 beds. The best quality group contained 24% of Government-owned homes, 13% of not-for-profit homes and just 4% of for-profit homes.

The average total cost efficiency of aged care homes was estimated to be 88%, which is higher than has been estimated for health care sectors.

The researchers note that focusing on quality improvement rather than cost-minimisation may have wider benefits. For example, better care and quality of life for residents may reduce the need for hospitalisations, spending on high-risk medicines, as well as reducing workplace injuries and accidents in aged care homes. The data in Australia does not currently enable these hypotheses to be tested.

The research paper was prepared for the information of the Royal Commission and the public. Any views expressed in them are not necessarily the views of the Commissioners.

To read the Royal Commission’s research papers, please visit the publications page.