Aged care homes should not be “short-changing” older people by making profits off government funding while falling short of mandatory care targets, advocates say, as pressure grows on the federal government to introduce the new Aged Care Act to parliament after repeated delays.
Recent analysis from the Ageing Research Collaborative at the University of Technology Sydney found nearly two-thirds of homes that turned a profit in the first half of the 2023-2024 financial year did not meet mandatory care-minute targets, despite substantial government funding.
Taxpayer funding for aged care services has increased by $12.6bn in the past five years, primarily to address concerns over quality of care, regulatory effectiveness, worker pay, and other matters arising during the royal commission into aged care quality and safety.
Since October last year, residential aged care providers have been required to deliver a mandatory average of 200 minutes of direct care to each resident per day, including 40 minutes from a registered nurse, and are funded as such.
But the Ageing Research Collaborative found that 63.9% of residential aged care centres turning a profit were doing so by essentially pocketing the federal government’s direct care subsidy, instead of providing enough staff to meet care requirements.
It found many homes were also generating margins from publicly funded direct-care services to cross-subsidise their losses from delivering everyday living and accommodation services. The homes with the lowest care-minute compliance rates tended to be operated by for-profit providers in large cities and regional centres.
Craig Gear, chief executive of the Older Person’s Advocacy Network (Opan), said the mandated minutes should be seen as the absolute minimum.
“Those care minutes absolutely make a difference in older people and older residents’ lives,” Gear said. “Providers should not be short-changing older people of the care minutes they need. It’s really important that we have a financially viable aged care system, but that means that profits need to be appropriate. There needs to be transparency about where the money is going. And there needs to be accountability for that.”
The first recommendation of the royal commission was a human rights-based aged care act, which it advised should come into effect no later than 1 July 2023.
But in June last year, the Labor government established the aged care taskforce to advise on the funding arrangements for the sector. The taskforce published its final report this year in March.
The chief executive of Council on the Ageing (Cota), Patricia Sparrow, said profits made at the expense of direct care was another example why a new aged care act was urgently needed.
“Yet older people are still waiting for this to happen. The legislation has been pushed back twice already,” Sparrow said. “Every day without this act is another day older people are left waiting for their fundamental rights to be recognised and protected.”
Gear said: “We are becoming increasingly concerned [about delays]. The new aged care act needs to be before the parliament this year, so that we can have an appropriate review by the Senate and for people to contribute to that review.”
Senator Penny Allman-Payne, the Greens’ spokesperson for older people, said the only driver for providers should be giving high-quality and affordable care to older people.
“Aged care should not be run for profit. It’s that simple,” Allman-Payne said. “Looking after older people is a public good – it shouldn’t be an opportunity for corporations to swoop in and make a buck or grow their asset portfolios.”
On 1 October, mandatory care minutes will increase to 215 minutes per resident per day and 44 minutes of registered nurse care.
A spokesperson for the health and aged care department said it would continue to monitor care minutes and provider expenditure “closely” to ensure that care funding was used to meet care requirements.
“Providers are required to meet care requirements and obligations around the management of funds. The Aged Care Quality and Safety Commission has the power to investigate providers to ensure they comply with quality and prudential standards,” the spokesperson said.
“The government established the Aged Care Taskforce to advise on funding arrangements to support an aged care system which is sustainable, fair and facilitates greater innovation in the sector. The government is currently working with the Parliament to secure support for these important reforms.”
Do you have an aged care story? Contact: stephanie.convery@theguardian.com
