Ageing at home? How Australia can cope with 1.2 million over-85s

By 2040, an estimated one in five Australians will be aged over 65. Many would prefer to age at home.

Australia’s aged-care landscape is changing fast to meet the growing demands of an ageing population that wants to stay in their own home.

Never before have so many people grown old together. By 2040, an estimated one in five Australians will be aged over 65 and 1.2 million of them will be older than 85. Judging by current trends, many – if not most – of them will want to continue ageing in their own homes rather than in residential care. With recent government reforms creating a more market-driven environment for in-home aged care, they may just get their wish.

Australia’s aged-care sector has been largely government funded and dominated by not-for-profit providers; however, this may change over the next decade. The number of private, for-profit start-ups is expected to grow in line with the new regulatory push toward consumer-directed aged care and the generational shift from the frugal post-Depression generation. The culture-changing baby boomers are used to having choice – even if they have to pay for it.

New age for aged care

Professor Hal Kendig, chief investigator at the Centre of Excellence in Population Ageing Research, says a growth in in-home care reflects the overwhelming desire of older Australians to age at home or, as the rhetoric goes, “age in place”.

“Some of the studies that I’ve overseen find that people aren’t so happy about moving into the workplace of other people – namely residential care,” he says.

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Recent reforms to aged care will see all in-home care packages delivered on a consumer-directed care basis from February 2017. These reforms, announced in the 2015-16 federal budget, are expected to deliver regulatory savings of A$4.51 million a year.

Kayathri Thangarajah, senior manager audit and assurance with Grant Thornton and a member of the firm’s health and aged care group, says these reforms will foster a more competitive environment for in-home aged care, as consumers will have more say about the care and services they access and how and by whom they are delivered.

“The private, for-profit providers may think they will be more successful than not-for-profits, because they can run more efficiently and have a more dynamic workforce,” she says.

"You need to be focused very much on providing compassionate care." Martin Warner, Home Instead

“I think what you’re going to find is that a lot of the not-for-profit providers are going to have to focus on being better and find what their value proposition is … the for-profit providers are coming in with a relatively low-cost service, because they have volume in terms of both nurses and consumers.”

Ageing goes private

Martin Warner, Australian director and franchise holder of US-based private in-home care company Home Instead, agrees that consumer-directed care presents opportunities for private businesses such as his own. He welcomes greater transparency to the industry.

“Previously, it was the providers who dictated to the consumers what was happening,” says Warner. “Clients have had little choice over the services they received. They couldn’t change their care provider if they weren’t happy, they couldn’t necessarily change the caregiver and they were told when they were going to receive services.

The retirement challenge
“Most importantly, organisations that received funding for clients didn’t have to account to the client how that money was being spent. To me, that was extraordinary.” 

Warner opened Australia’s first Home Instead office in Brisbane in 2005, and there are now 18 franchises in the country delivering in-home care services such as dementia and palliative care, meal preparation and escorting clients to appointments, shopping or social outings. 

Each franchise can set its own fees; however, pricing is structured at a flat rate of between A$45 and A$48 an hour.

“This includes 24-hour support as well,” says Warner. “If someone calls, we will answer the phone. They don’t go to a call centre and we don’t put them on hold.”

A system feeling the strain

While the public aged-care system provides an important safeguard for in-home care, it is under strain. A 2013 report from the Productivity Commission projected that by 2060, Australian governments will face additional pressures on their budgets equivalent to about 6 per cent of national GDP. This principally reflects the growth of expenditure on health, aged care and the Age Pension.

Peter Hanley, managing director and co-founder of private in-home care provider National Care Management, describes the public system as severely rationed.

“There are much fewer places than there is demand out there,” he says.

“Even those lucky enough to get a package usually get fewer hours than they need and private services are filling the gap. In our case, we’ve got a niche within that private system, which is expertise to help you navigate through the system and find the care you need.”

Founded by a geriatrician and two former Bain & Company management consultants, National Care Management aims to improve the quality of life for its clients, many of whom have multiple chronic conditions such as dementia and diabetes. 

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It also uses technology to support independence and to make in-home care cheaper. Devices include technology to manage medication, personal emergency response systems and sensor mats next to the beds for clients at high risk of falling.

“Medical research has shown that a quick response is the biggest thing after a fall if you want to reduce the costs associated with hospitalisation and post-hospitalisation care,” says Hanley. “The quicker you get there and get [a client] attended to, the better.”

Commerce with compassion

The increasing demand for in-home care, coupled with the shift toward consumer-directed care, represented a solid business opportunity for National Care Management; however, Hanley’s motivation was also personal.

“I had been supporting my folks through various [aged care] scenarios and I just found it, frankly, really hard,” he says.

The retirement shortfallHanley believes government provisions for aged-care have been challenging for many elderly Australians and their families to navigate. He points to the government’s My Aged Care website, which is designed to help steer people through the maze of options. 

“My Aged Care is all about basic domestic and personal support and that’s a critical part of support for people in the home, but is only one part,” he says.

“Without anything integrating that with medical care, it can be misdirected and, in some cases, might build dependency rather than independence. If you’re just putting in services and taking functions away from people, you can actually accelerate their deconditioning rather than build capabilities.”

Each client of National Care Management is assigned a qualified healthcare professional, who helps develop a care plan in consultation with the client’s family and then coordinates with service providers to deliver the healthcare requirements. 

Hanley says clients pay a care-management fee of around A$200 a week for the first few months and then A$150 a week on an ongoing basis. 

“This basically gives them unlimited access to a care manager and we take the risk on how much of the care manager’s time they use,” explains Hanley.

“Our expert professionals sit down with the client and their family to prioritise the things that are really going to make a difference in terms of their health, reducing their risks and enhancing their quality of life.” 

Hanley points to the distinct benefits of this type of personalised service.

“Sometimes it’s out of the box. It could be reconnecting them with flower arranging, if that’s what gave them purpose and meaning in life. I mean, these kinds of things you’re not going to find on My Aged Care, I can tell you.”

With consumers having more choice, the landscape for care will become more competitive. Warner cautions private providers to think beyond the bottom line. “I think there will always be people wanting to come into this industry from an opportunistic position,” he says. “But it comes down to the culture of your organisation. 

“If you are focused completely on the bottom line from day one, I think you’re going to be in trouble. You need to be focused very much on providing compassionate care.”

"There are much fewer places than there is demand out there.” Peter Hanley, National Care Management

Aged care refroms

Before the mid-1980s, about 90 per cent of Commonwealth funding for aged care went to Australia’s residential care sector. 

Retirement systemsWhen the Hawke government embarked on major reforms of aged-care programs in 1985, Australia had one of the world’s highest rates of residential aged care – about 140 beds for every 1000 Australians over the age of 75. 

Subsequent government reform resulted in the Home and Community Care program, which delivered home-care packages to support eligible individuals who wished to remain in their own home. 

In 2013, the federal government contributed A$1.1 billion to these packages and in-home care recipients added about A$80 million. 

There are now more than 59,000 home-care packages available, and this number is growing by more than 13 per cent a year, which is much higher than the growth in residential aged care.

In-home care and the housing market

While recent reforms to in-home aged care may relieve pressure on the healthcare system, they may also have an impact on housing availability. 

A recent report from the Australian Housing and Urban Research Institute found that almost half of all Australians who had moved to a new home after turning 50 were likely to have downsized. However, it also found that many people were discouraged from doing so due to the lack of suitable and affordable housing stock in familiar and accessible locations.

With younger generations struggling to find affordable inner-city housing, the trend toward greater in-home care may have even broader implications for the future property market.

“Each generation says they’re going to get priced out of the property market and yet somehow manage to find a property they want,” says Grant Thornton’s Kayathri Thangarajah.

“However, with the ageing population staying at home more than moving into residential care, I don’t think it’s going to be in the areas that people want, at least in the short term.”
Thangarajah notes that nursing homes located more than an hour away from Sydney often find it easier to attract residents than those located in inner-city areas.

“People are moving their parents closer to where they live, and as the kids are being priced out of the market, they’re moving further away from the centre of Sydney,” she says.

“You can’t see that happening with in-home care, because the whole purpose of it is that you stay at home.”

Read next: Aiding clients in aged care means helping at a critical time


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