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The government has increased the Australian National Aged Care Classification price to $303.19 per resident per day from 1 October – around 65 per cent higher than it was in September 2022 but only 2.55 per cent higher than the current rate of $295.64.
The hotelling supplement – which the Independent Health and Aged Care Pricing Authority is currently reviewing – will remain at its current rate of $22.15 per resident per day.
Current care minute requirements and AN-ACC fixed and variable funding categories will also remain unchanged.
But the increase has not been welcomed by stakeholders, with Anglicare Sydney chief executive officer Simon Miller calling it “a cut in everything but name”.
“In real terms this means less money for the care of older people, not more. If aged care isn’t funded properly, you don’t save money, you just move the cost to our hospitals. There’s a direct line between this decision and ambulances ramping outside emergency departments next winter, with older people caught in the middle,” Mr Miller said.
“This is being called an increase, but when wages are climbing 4.75 per cent and costs are rising faster than the funding, it’s a cut in everything but name. Older people are being short-changed, and the dedicated workers who care for them are being asked to do more with less.”
Ageing Australia CEO Tom Symondson called the new price a “bitter disappointment for anyone committed to caring for our elders”.
“The Australian government’s decision to impose a real terms cut on residential care funding could not be more poorly timed or thought through. AN-ACC funding will increase by 2.55 per cent on 1 October and funding for hotelling (or daily services funding for things such as food) will be frozen pending a review with no clear outcome,” Mr Symondson wrote on LinkedIn.
“Just in case you skipped over the important part, let me repeat it – 2.55 per cent. With CPI at 3.5 per cent. And an increase in aged care salaries of 4.75 per cent that came in more than two months ago and hasn’t been funded. With fuel over $2. And prices of some clinical supplies having doubled in recent months due to the uncertain global environment.
“Put simply, this ‘increase’ is a cut. A cut to providers, and a cut to older people.”
Projects shelved due to AN-ACC change
Mr Symondson said that “numerous” CEOs have told him they are shelving projects as a result of the new AN-ACC price.
“Beds that would have been built will not be built unless the government acts urgently and decisively to reverse this,” he said. “And this will hit rural and remote areas hardest.”
Bolton Clarke CEO Olivier Chretien described the new price as “disappointing” and also cited the larger rises in wages and inflation.
“The mandate that IHACPA has been given is to reduce provider margins on care to zero, but this is inconsistent with the investment that the sector needs to meet growing demand. Having a zero-margin target also means that there is no room for error in IHACPA’s methodology, which we are still in the process of reviewing,” Mr Chretien said.
Catholic Health Australia agreed, saying the AN-ACC increase fails to meet the rising cost of caring for older Australians.
AN-ACC increase really a funding cut
CHA director of aged care Alex Lynch said it’s a “significant real-terms funding cut” that “further jeopardises older Australians’ access to quality, sustainable care at a time when the sector is badly struggling.”
He also noted the concern among providers about how this underfunding will impact regional Australia, where costs are growing beyond those in metropolitan areas.
“Many providers are already making an operating loss and this funding cut will put them in greater peril,” Mr Lynch said.
“They will have no choice but to scale back support services and delay or scrap many plans for providing new services, as well as capital works and investment in urgently needed new beds.”
However, the announcement from Minister for Aged Care and Seniors Sam Rae about the new AN-ACC price said making sure the aged care system was properly funded was a priority of the Albanese Government.
But he failed to mention the inflation rate or the recent increase in wages.
“This announcement means more funding for aged care homes, supporting workers and better care for our loved ones,” he said.
Aged care providers disagree.
Mr Lynch said the new AN-ACC pricing “undermines the new Aged Care Act” as it leaves providers “unable to absorb the significant compliance, governance and administrative costs of implementation.”
CHA calls for urgent review of decision
CHA is calling on the government to urgently revisit the decision and increase funding indexation to reflect real costs.
“The government has made significant decisions to support the aged care system but this funding cut is a major step in the wrong direction,” said Mr Lynch.
“It goes directly against the government’s aim to ensure Australians have access to a quality, affordable and safe aged care system and must be reconsidered.
“Providers are being clear that this move will jeopardise critical services that directly impact older Australians.
“This includes non-clinical staff, compliance teams whose job is to respond to resident and family feedback, workforce development and innovation.”
Mr Miller also criticised the decision to leave the hotelling supplement unchanged, saying it – alongside the decision to raise the AN-ACC funding by only 2.55 per cent – echoed concerns raised during the royal commission that successive governments are committing the minimum rather than what the system actually needs.
“The government must fund aged care at the true cost of care and resolve the hotelling supplement review without delay, so older Australians get the care they deserve and the people who provide it are properly backed,” he said.
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