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Australia:
A fresh take on an old fix
Julie
Bishop, Australian Ageing Ministry
Surrounded by trade booths
showcasing bed hoists and commodes, Warren Hogan could be mistaken for a
new customer instead of the veteran economist in charge of reinventing
aged care whom I approach to ask what he has planned for his own exit. Hogan is as market-oriented as economists get, but his humour is drier still, delivered without a wink and probably over the head of most audiences. Grumbling about an airline delay, he blamed it on ATAQ. "Do you know what that stands for?" he asks. "Air Traffic Assoc...," I answered, blubbering my way through the acronym. "No, no, no," he snarls. "Aeroflot Trading As Qantas." He is not so brittle that life and death become pricing tools and pooh-poohs recent calls for populate or perish policies aimed at boosting fertility to shore-up the dependency ratio, which forecasts increasing numbers of older Australians being supported by a shrinking pool of working-age civilians. "I decry any thought of turning the production of children and the creating of life into a duty or something called an economic necessity. I would find that personally quite offensive," he says over coffee at the Woden, Canberra, bureaucratic headquarters of health and ageing. Such questions are not on his plate, which is heaped high enough with the thorns and briars of commonwealth subsidies in the heavily regulated business of residential care. Hogan chuckles because the pricing review, as it is known, contains scant reference to costs with its single mention of indexation, yet he has spent a year and $7.2 million investigating capital shortfalls, wages and staffing, profit levels, healthcare charges, budgets and balance sheets in a cottage industry of private and church-run facilities that more of us will brush up against in coming decades. Society is ageing and the fastest growing cohort is 85-plus - a birthday that, in the early years of the 20th century, few Australians lived to celebrate. The pension was made available to men at 65 because this was the onset of old age and families looked after their own, leaving charities to care for the enfeebled and indigent. Much has changed. Government programs in health, welfare and housing have multiplied and lifespans continue to defy expectations. In 2001, commonwealth spending on the needs of older people stood at almost $30 billion and demographic scenarios continue to feed the anxiety in Treasury's engine room. Uncertainty is the only surety in second-guessing what services people will need 10 to 20 years from now because who knows the scientific strides that might lead to dementia prevention and healthy ageing or how households and communities might band together to diminish reliance on nursing home care? Flexibility is Hogan's mantra and his recommendations to Ageing Minister Julie Bishop are aimed at giving consumers and providers of residential care greater control and choice, as well as expanding the range of services that will enable older people to live at home for as long as possible. Since this portfolio is so susceptible to scaremongering over vulnerable grandparents, Hogan will recommend strengthening the pillars of accreditation standards and aged-care assessment teams to reassure the community that freeing up these institutions and funding arrangements will not jeopardise quality of care - even though frequent visitors to nursing homes tell stories that make this destiny your worst nightmare. At the last election, contentious plans to introduce accommodation bonds for high-care places were junked because of threats that elderly people would have to sell their homes to afford entry. Providers have been screaming poor ever since because the loss of this capital-raising instrument has starved them of money to improve buildings, in line with the legislative deadline of 2008. Also, the costs of high care have outstripped meagre indexation rises set at less than consumer price index movements and the industry's pain threshold has created a climate ripe for reform. Providers are ready to trade for gains. Voters, too, have become better-versed in the notion that user-pays applies to everything from higher education to retirement and they may be more willing to consider shouldering the costs of an ageing society. Hogan will quarantine equity by shoring up provision of concessional beds for those on low incomes, as well as suggesting ways to assist remote and regional facilities, which often struggle to survive, let alone turn the kind of profit open to providers in urban and metropolitan centres. He is coy about the detail in the report on Bishop's desk, but we can expect recommendations for auctioning beds in the same way governments auction FM licences and taxi plates. Already beds granted to nursing home operators may be sold when a business changes hands, at a market value of about $15,000 in rural areas and $45,000 in metropolitan centres. Hogan has indicated that revenue raised from auctioning beds could be used to subsidise the provision of residential places in remote and regional Australia. Another proposal for freeing up the system could lead to the creation of vouchers or entitlements that would put subsidies in the hands of users. In this way they can choose from a menu of services, including home-based care or a residential facility. The commonwealth presently pays providers and their relationship dominates the industry, shutting out consumers. Vouchers or entitlements would break this nexus by empowering users to have a say in shaping services through demand. The idea was put forward by operators in Western Australia, Bishop's home state, which bodes well in the contest for political support. Hogan maintains he has no masters, although he has always served conservative governments, and insists he is not looking for another commission. Aged 74, he had to retire from commercial directorships because of mandatory retirement provisions that were outlawed this year as discriminatory, in keeping with the new push to keep older workers employed. But his rational bent guarantees few surprises for John Howard's team. He urges nursing home operators to hasten towards consolidation - at least in the back office - where shared payroll and other electronic systems will lead to savings. "In my judgment, the industry will expand over the next 10 years to form larger units and many more publicly listed companies, and out of that will come the opportunity for a different capital structure that is more competitive," Hogan says. Although he has all but promised providers of high-level care that their plaintive demands for accommodation bonds will be granted, he sees this as a short-term fix to be overtaken in time by capital-raising ventures as the industry breaks out of its cottage mind-set to behave like any other corporate sector. This talk makes some of the not-for-profit operators blanch. Francis Sullivan, of Catholic Health Australia, worries that commercial imperatives will force private nursing homes to chase investment returns, which are incompatible with the provision of compassionate care. Hogan's report will not please everybody, but there is consensus that he listened to all. "He has approached his job with great diligence," says Stephen Judd, of Hammond Care, who belonged to the 17-member industry reference group that met Hogan throughout the year. "Everyone wants 21st-century standards of care and we all want somebody else to pay for it." Plans for a federal election in 2004 dim the likelihood of significant reforms next year, but Hogan's report aims to get us thinking creatively about the future. He wants builders and home owners to consider wheelchair access and the width of hallways and bathroom entrances because you cannot have a system encouraging people to stay at home, only to discover that nursing services cannot bathe them or help them to the toilet. If you consider the myriad decisions ahead, then you begin to see where Hogan is coming from when he makes mischievous references to a draught of hemlock down the track.
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