Aged care providers aren’t properly revealing how they spend billions of dollars of federal government funding and a major overhaul of the sector is needed, the aged care royal commission has heard.
A seven-day hearing is examining the sector’s financial models and the most appropriate ways to regulate and support the delivery of care.
The inquiry will from today examine funding models and the most appropriate ways to support delivery and regulation of aged care.
“Consistent with its origins, age care today is a piecemeal system,” counsel assisting the commission, Peter Gray QC, said during opening submissions on Monday.
The commission heard residential care providers receive $11.7 billion a year in federal subsidies and $12.4 billion in revenue, which includes residents’ contributions.
“Their annual reporting requirements do not adequately reveal how that money is used or what profit or loss is made in providing residential care services,” Gray said.
“Further, there is no specific requirement on residential aged care providers to spend any particular portion of that money on care.”
No one is able to see whether current levels of funding for providers is correctly calibrated to meet the costs of providing care, he added.
“The Commonwealth government took over full administration and funding responsibility in this area in 2012 but in our submission has not yet assumed a proactive system governance role,” Gray said.
“It should do so now.”
He said the government only had a “rudimentary” reporting and monitoring system of providers’ financial management.
“An ambitious program of long-term reform is needed to achieve a coherent and high-performing system,” Gray said.
Aged care faces a big challenge in coming years to deliver top-quality care for an older population, he added.
The commission heard the way funding levels have been indexed since the 1990s has meant funding has not increased in line with costs.
Gray said providers are “left to their own devices” to determine staffing levels and skill mixes.
The commission is set to receive evidence from 43 witnesses, including consumer bodies, aged care providers with different scale and operating models, as well as economists and the sector regulator.
Professors from Japan and the Netherlands will speak about the lessons Australia can learn from other countries.
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