Senate Community Affairs Legislation Committee, , 8:10:37 to 8:23:31
Analysis of the $1.4 billion underspend in aged care, attributed to lower-than-forecast occupancy rates and the significant growth of home care packages over the last decade.
Topics: Government spending, Social services
Speakers: Senator The Hon Anne Ruston, Mr Daen Dorazio, Mr Robert Day, Mr Blair Comley, Ms Sonja Stewart
Just is probably you may be led off the hook, but don't go too far away. I'm just wondering what proportion of residential age care residents live in homes that do not receive additional revenue from higher everyday living
Thank you. Senator, at this time we don't have definitive data on that. That will be available in the annual the FRACs, the financial report of the Australian age care sector, which I think my colleague, Mr. Abel mentioned is still some time away. So being the first year of operation of those of the health arrangements, we don't yet have the data.
So all my questions around health are probably not going to be answerable.
It may depend on what your questions are.
Well, I just wondered whether you'd you know done any finance modeling on the financial impact of those homes that don't charge health and only charge the basic daily everyday living fees, you know, how many age care homes estimate will be operating as a added deficit in delivering everyday living services under the current funding settings? Those sorts of questions?
Yeah, so Senator, I I can't answer those questions other than to say that I HACPA did look at this in the pricing advice. Um our understanding, and I'll refer to um defer to Professor Pavan on this, is that there are still quite significant data limitations, but I'll perhaps hand to you.
That's right. Um it sounds like we have a lot of information that would have made everybody's life a lot easier. Um just finally um before I I will get the inspector general if I could. Um but while we're doing that, um did the department model the cost of reinstating human override into the integrated assessment tool. override in the the terms in which the Parliament's been asking for and the Ombudsman now has been asking for? Have you modeled the costs of reinstating that tool?
Yes, we have. Um but I would be for any answer specific questions. The estimate the estimates that we would come to are genuinely high degree of uncertainty with the nature of an override of this type. So I would just put that caveat before anyone else's other questions.
Um I think Senator, as the Secretary said, there is there's a degree of uncertainty both in terms of there are a number of different models and also in terms of some of the assumptions around what uh practice would be. Um, but our initial preliminary modelling if there was sort of a with very few if any limitations on assessor's ability to override that cost could be up to eleven billion dollars over the Ford estimates.
Okay, is it possible to provide that information?
Um I think that is predominantly in terms of the cost of both increasing the average price of a support at home package and increasing the number of packages to maintain um wait times in sort of roughly the order of magnitude they are at the moment.
Okay. It'll be really good if you could provide us with that um uh that information as to how you got to that. Um maybe that could be in conjunction with providing us with the information in relation to the change in costs or the average cost of packages, because it strikes me as we don't have the average, you didn't couldn't provide me with the average cost of packages at the beginning of 2025, at the end of 2025 or now, um, and yet we seem to be talking numbers here. So if you could maybe provide me with all that information as a contained package of information?
Yeah. I I think to be clear we did it as a um an assumption in terms of if an override was up to classification levels on average,
then the cost would be this rather than having a well I'd like to understand what basis you made that assumption because it appears from the figures that uh there has been no difference in the classification. So you'd have to argue on average, you'd have to argue that but anyway. Um so just finally um before I get the expected general, the 1.4 billion dollar underspend um unutilisation. You talked about $727 million being uh under spent in relation to support at home under utilisation. I'm just keen to understand what the other $67 million was attributed to.
While they come to the table, that's essentially residential. And my recollection is it's driven by slightly higher occupancy rates than we forecast. So if you think about residential the higher occupation. Slightly higher, sorry, sorry, so slightly lower occupancy rates than forecast.
Yeah.
So when we do what are the occupancy rates?
So it doesn't mean occupancy rates have fallen, it's just they're lower than was estimated in the budget when the provision was made.
Um, Senator, of the underspend that you've referred to, um 570 million of that was residential care, of which 517 is Department of Health expenditure, and the the balance is Department of Veterans Affairs, so some residential care funding flows through Department of Veterans' Affairs for veterans.
So that's an understanding of less than days than you. That was less days of occupancy than you're expecting.
It's essentially less days of occupancy, yes. The vacancy rate.
So I'm just trying to understand here. So you've got you've got over half a billion dollars of funding that is not been spent in residential care, and you've got a whole heap of people who are stranded in hospitals for want of a residential age care place. I'm sort of keen to understand why we aren't doing better at spending money, because I mean we've got 1.4 billion dollars of unspent funds over the last financial, last it's only a nine-month period. And yet we're hearing the states and territories cry out because they've got stranded patients. We're hearing home care providers crying out because they're not able to deliver full scope of service to people in who are receiving home care packages because they've been given 60% of their packages. Um does seem to me that there's a bit of cost saving going on here, not directing to actually delivering the outcomes that have been promised time and time again.
So we've um spent some time going through the support at home program and the underspend with that. Uh with the residential care, it is around that forward projection around the occupancy. There's a number of activities that are underway directly relating to the delayed discharge of older people in hospitals across Australia. Um I'm not sure if you wanted to go any further in the figure, but that is the break breakdown, some of it is veterans' affairs, and the majority of it is in the health department.
So, Senator, you asked about the occupancy rate. Um, the latest data that was released in the um quarterly uh sorry, not the quarterly financial snapshot. We released the stock take data, which is essentially the number of occupied beds in the system uh has risen to about 91.7 per cent. So um occupancy is relatively high, it's not quite as high as was built into the forward estimates. So that 570 million underspend represents roughly a 1.9% variation between what the forward estimates assumed would be spent versus where we've actually landed.
Is um how much of that is attributed to um homes not opening all of their beds because they Can't get access to the resources to be able to meet the requirements to be open. How much of that underoccupancy or lack of occupancy is driven by the fact that there is always going to be a period of time after somebody passes away before another person's able to occupy their room for very obvious reasons? So I mean, what is hotels always call full occupancy a certain number? What is, in your opinion, full occupancy in terms of age care?
So our I guess working assumption and what we hear from the sector is that 95% would be effectively full.
95%.
And what and as I say, this is sort of our current judgment. What we see across the country is in areas where occupancy is at that level, that's where the hot spots are, if you like, in terms of it being difficult to find a bed. The um and most of those impacts, if you like, are local. Occupancy does vary quite significantly across across regions. So in aggregate, the occupancy is 91.7%. We've acknowledged that in some areas it is it is higher.
So where are those regional hotspots? Oh, sorry, where are those hot spots and how and can you give us a regional breakdown of them?
Uh we can look at what we can provide on notice, Senator. I don't sort of have that in front of me, but I'm happy for us to look at that. Um the other thing I would just add is that when we are relatively in the grand scheme of things relatively recently, in the sense that this is data that's sort of closed a couple of months ago, um, it is sometimes difficult to decompose what is due to constrained supply and what is due to other factors. Notwithstanding the conversation we've had about support at home, if if we look at the data, the the number of people ten years ago, there was well under 100,000 home care packages in the system. Now there's we're on track, I think we'll be through 400,000 in the in the foreseeable future. So that has had some downward effect on on demand for residential care. I none of that is to say that there's not pressures in the system, but the significant growth of more substantial support at home in the last decade has meant that demand for residential care while still growing is perhaps not growing quite as fast as we'd originally thought.
Okay, so you you're saying basically that you've saved 517 million dollars in the Department of Health because of an under demand for residential care.
No, I'm saying because of under less people in beds than would otherwise have been. I'm saying part of that may be.
But you don't know why.
We can't decompose that into the components of why. There are several reasons. One is we know that suppliers constrained as we've acknowledged, another is more and more people are being supported to stay at home longer, and given that this is data based on a couple of you know that close only a few months ago. I don't think we're at the position to s to attribute how much of that under spent is due to what to what factor.