The number of Australians aged 65 and over is expected to increase rapidly, from around 2.5 million in 2002 to 6.2 million in 2042. That is, from around 13 % of the population to around 25 %. For Australians aged 85 and over, the growth is even more rapid, from around 300,000 in 2002 to 1.1 million in 2042.
There is an increasing entry of large for profit investors and investment groups in to the aged care sector (e.g. Lend Lease, BUPA, Regis and Japara). In the midst of significant change and reform in the sector; policy makers continue to flag the ongoing challenge of how to provide equitable access to aged care services for older people living in regional, rural and remote (RRR) Australia.
Research confirms that RRR Australians often struggle to access health services that urban Australians would consider a basic right. These inequalities mean that RRR Australians have lower life expectancy, worse outcomes on leading indicators of health and poorer access to care compared to people in major cities. Death rates are higher than in major cities and increase in line with degrees of remoteness.
People living in RRR areas are more likely to defer a visit to their general practitioner due to cost and have higher rates of potentially preventable hospitalisations. Patients often have to travel significant distances for care; incurring additional costs.
In those country towns that do actually have their own residential aged care facility; it has often been established through local fundraising / family bequests and is run by a small not for profit group (often formed specifically for that purpose). The Board governing the facility are often ageing themselves.
In the current era of aged care reform; small not for profit groups with a proud history of serving their local communities face a challenging prospect. Residential aged care facilities in RRR areas are generally small in size. The facilities lack the economies of scale and economies of scope which are found in more urban areas and aged care costs more per resident in these settings on a ‘like for like’ basis. NFP providers are therefore increasingly facing a difficult decision:
• Be “bought out” or “taken over” by a larger provider (which many NFP boards consider not to be an option because it compromises their not for profit ethos, history, mission and values or is not permissible in their constitutions).
• Enter in to a spiral of being unprofitable, unable to afford capital upgrades; therefore charging lower price for suboptimal facilities and facing eventual closure.
• Imminent closure due to the inability to maintain the standards required to meet quality compliance obligations.
Each of these has implications for the small RRR communities and townships serviced by the residential aged care facilities. Research confirms that most older people want to “age in place” - close to their families, friends and connected to the country townships where many of them have spent most of their lives.
A two tier structure is likely to emerge: those who can afford to re-locate and those who can’t.
Closure of small RRR facilities will place additional pressure on the public health system due to inappropriate admissions to local hospitals due to the lack of availability of residential aged care beds; with concomitant public health costs. In other cases, older people will be forced to move away to larger regional or metropolitan centres to access aged care. They will be separated from family, friends and community networks and face increased costs to maintain contact with family and friends left behind in their home communities.
In many cases, the facilities are also significant local employers. The service in Gunnedah for instance, is the second largest local employer after the Shire Council. The
closure of these facilities would therefore also impact heavily on local economies and the social fabric and wellbeing of small RRR communities; forcing more people away to look for work and feedback back in to a cycle of disadvantage for small RRR communities and inequitable access to services and supports.
Solution:
A group of six separate not for profit residential aged care providers from regional, rural and remote NSW have banded together and are committed to forming a new legal entity which will enable them to:
• Pool their collective resources, particularly for corporate and “back of house” functions to achieve significantly increased economies of scale and efficiency gains.
• Share their learnings and innovations to improve service offerings across all facilities.
• Achieve greater efficiencies in meeting quality compliance requirements.
• Undertake research and evaluation more effectively to inform continuous improvement.
• Maintain their unique local identities and community connections.
• Continue to serve their local communities.
The providers are based in Barraba, Bingara, Coonamble, Denman, Gunnedah, Inverell, Moree and Quirindi. At least two of these localities have a population of less than 1,500 people and all have less than 10,000 residents (based on the 2011 Census data).
Three of the eight providers have facilities of 30 beds or less (some with attached retirement villages and / or independent living units). Analysts have identified that the optimal size for a profitable return on residential aged care facilities is typically
in the range of 70 – 100 beds; therefore making them unlikely targets for take-over by larger groups (further limiting their future options).
This new Alliance project represents a catalytic project in a highly traditional sector which has seen limited collaboration and cooperation between providers, even in the NFP
space – with most providers viewing each other as “potential competitors.”
It is an important project that has the potential to make a real difference for older Australians
living in regional, rural and remote communities of NSW.