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Aged care review chance to fix funding disparity in rural Victoria

Posted 11 November 2015

Wednesday 11 November 2015

New modelling commissioned by the Victorian Healthcare Association shows the disadvantage experienced by aged care providers with less than 50 beds, most of which are located in rural and regional Victoria, under the current federal aged care funding model.

In its submission to the Aged Care Financing Authority (ACFA) Review into Issues Affecting the Financial Performance of Rural and Remote Providers, the VHA highlights the need for a funding model that supports rural aged care providers to be sustainable.

VHA CEO Tom Symondson welcomed the review and said public residential aged care providers in regional and rural areas, which make up 89 per cent of Victoria’s public care facilities, were at a particular disadvantage under the current system due to the higher costs associated with delivering care to smaller isolated communities.

“We have known for some time that aged care funding hasn’t fully met the needs of smaller public aged care providers which are crucial for ensuring people are able to age in their communities among their friends and family and often within the community they have dedicated their lives to,” Mr Symondson said.

“Sadly the current aged care funding arrangements are failing small rural communities where the demand is lower, distance means services are more expensive to run and the economies of scale just aren’t there to make the same efficiency savings as their larger metropolitan counterparts.

“This modelling confirms our position showing the current funding model favours larger centralised providers that operate 50 or more beds.”

On a sliding scale and based on a conservative average fixed annual operating cost of $100,000, the modelling shows that for aged care providers to be sustainable current funding falls short by an estimated:

  • $51K per year for aged care providers with 20 beds
  • $65K per year for aged care providers with 15 beds
  • $76K per year for aged care providers with 10 beds

Mr Symondson said, while the Government provides rural aged care services with a viability supplement, this falls far short of the gap small aged care providers need to be sustainable.

“Rural aged care providers are essential for people who wish to stay in their community in their later years, particularly where a market failure has meant there are no alternative aged care providers in the area,” Mr Symondson said.

“We hope the ACFA review is a chance to remedy the shortfall and see the investment in aged care rural providers desperately need to continue providing care to all communities.

“Additionally, as suggested by the newly appointed Minister for Aged Care Sussan Ley in Parliament (page 26), we have high hopes the ACFA review will address the funding issues faced by Victoria’s seven multi-purpose services due to an outdated funding arrangement that is currently seeing MPSs underfunded by $3 million a year.

“This needs to be addressed urgently so that Victoria’s MPSs can continue to deliver the flexible model of care that enables them to meet the individual needs of their communities.”

“We are pleased the aged care funding issue is finally under the lens and look forward to working with Minister Ley to ensure all of Victoria’s public aged care providers are supported to not just be sustainable but to thrive.”

Media contact: Rachel White – 0438 815 561 rachel.white@vha.org.au

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