New research raises important questions about optimum

facility size and its links to efficiency and equity of access.

Bigger is not necessarily better in aged care, especially for residents with special needs. That’s one of the major findings from a groundbreaking new study of all aged care homes in Queensland.

Its author, quality assessor Dr Bev Richardson, analysed the results of the first two accreditation rounds. She found the state’s dominant provider, Blue Care, which manages 85 homes, had lower average compliance rankings than other large and small providers.

Her research raises important issues for government, policy-makers, and service providers. These include the maximum size of facility and ownership concentration beyond which efficiency and cost savings may diminish; the conflict between competition policy and equity issues relating to residents and care; and in order to maintain a level playing field, whether taxation and other benefits should be withdrawn from the charitable sector when it employs the same standards and practices as the for profit sector.

Richardson’s research compared accreditation results by several classifications and categories including governance structure, provider and facility size, type of ownership, region, dependency and accessibility (meeting special needs such as language and culture, dementia or being in a rural or remote location).

Her thesis shows that of the five provider categories by size, the dominant group, Blue Care, and single homes had the lowest compliance. Medium-sized homes (with 41 to 80 beds) achieved the highest compliance, followed by smaller homes with less than 40 beds.

Over the period of the study, lowest compliance levels for different sectors were the public sector – lowest for quality improvement and quality planning-related outcomes; the Aboriginal deed of trust service (ADTS) sector for quality control and human resource-related outcomes; the non-profit sector for education and staff development; and the private sector for outcomes related to material resources.

Other results showed that providers owning more than 26 homes, or managing more than 80 beds in any one home, were less effective as measured by outcome ratings. As economic rationalist policies tend to link effectiveness with efficiency, these findings suggest there is a point at which diseconomies of scale may apply, due to increasing management or supervisory costs.

“While both large and small provider sizes were found to be highly effective in compliance with the accreditation standards, large scale operations offering less care to residents with special needs [language and culture, dementia, and in remoter locations] were more likely to be efficient, while small scale operations providing care to a broader range of needs were more likely to be equitable,” Richardson says.

“The regulatory and policy frameworks are currently exerting contradictory pressures. In the pursuit of increased industry efficiency, equity of access is sacrificed.”

Her research concludes that government and departmental support for increasing efficiencies in the sector – inspired by bipartisan support for competition policy – is incompatible with government policies on equity and access in aged care. It suggests providers showing greatest efficiencies have done so by ignoring special needs – such as culturally and linguistically diverse, indigenous, dementia and those in remote and regional settings – which have higher transaction costs.

Richardson believes the new institutional order raises interesting policy questions in relation to sector convergence and the need for a level playing field.

“The four sectors have traditionally had profoundly different operational objectives – the private, public, non-profit and ADTS sectors being profit maximising; equity; flexibility and responsiveness; and community empowerment respectively.

“If it is shown that the public and non-profit sectors are competing equally well with the market sector, it needs to be questioned whether in embracing the concepts of national competition policy, these sectors have de-legitimised themselves.”

If efficiency drivers are paramount and the historic values framework is of less importance, is there a continuing need for different models of service delivery, she asks.

“Policymakers may need to consider whether it is justifiable for non-profit organisations to continue to benefit from the taxation exemptions associated with charitable status, which sets private sector providers at a distinct disadvantage. In the economic vernacular, the logical extension to competition policy would mean a regulated competitive market should be structured to provide a level playing field,” says Richardson.

However, if the focus remains on results for residents, there is a need to question which strategic drivers would be most appreciated by residents: would they prefer to live in a home with a strong values base that is responsive to diverse individual needs, or would they prefer to live in a home where operational decisions were based on efficiency, which may exclude caring for members of special needs groups where transaction cost implications apply, she says.