Wednesday, 29 June 2016 11:10

Health of Frail Older People Will Be Harmed By More Severe Agedcare Cuts Than Expected

The UnitingCare Australia Aged Care Network today released independent modelling that demonstrates the full extent of the impact of the aged care budget cuts on sick and frail older people in residential aged care.

The Government announced $1.2 billion in cuts to aged care funding in the 2016-17 budget through reductions in the complex health care component of the Aged Care Funding Instrument.

However, according to the modelling, completed yesterday by consultants Ansell Strategic, the proposed funding cuts appear to be materially underestimated by the Government with the analysis indicating that the impact of the cuts will be in excess of $2.5 billion over the next four years alone, which is nearly $840 million more than the Government’s forward estimates.

As the changes are permanent, the report confirms there will be long-standing cuts that will significantly affect the care of the most vulnerable residents. The report anticipates that the funding cuts will result in a net decrease in ACFI funding in excess of $1.1 billion per annum beyond 2020.

Ansell Strategic examined the impact of the budget cuts across 501 aged care services or 21 per cent of the national aged care sector. Aged and Community Services (ACSA) and Catholic Health Australia (CHA) partnered in the modelling, which also examined strategies to better and more sustainably manage the health care needs of older people in aged care.

Steve Teulan, Chair of the UnitingCare Australia Aged Care Network, which represents one of Australia’s largest providers of aged care services, said that while service providers understood the need to carefully manage growth in health care expenditure, the recent cuts went too far.

“The 2016-17 budget was particularly harsh as it targeted people with complex health care needs and those receiving treatment for severe pain and chronic diseases like heart disease, diabetes and dementia.

“We wanted to fully assess the impact of the funding reductions so we commissioned modelling that looked at the potential impact on nearly 39,000 older people in aged care homes.

“The results are stark. The cuts far exceed the amounts stated by Government and will reduce funding to support older people in care by $6,655 or 11% per resident each year.

“The Government is arbitrarily reducing the level of care assigned to frail older people in care, thereby reducing the level of funding available to deliver that care. Under these arrangements, the funding will not cover the costs of services currently provided to residents with complex health care needs.

“This would mean that older people in care may miss out on vital treatments including physiotherapy, pain management and skin care.

“As not for profit providers, the cuts will also seriously threaten the viability of our aged care services and thus our actual ability to care for older people into the future,” said Mr Teulan. 

UnitingCare Australia believes that the analysis indicates the cuts will compel aged care providers to review staffing levels and admission strategies across the country.

“If these cuts are implemented as stated, by 2017 service providers will be forced to seriously consider both turning away sick old people who are seeking admission from hospital and reducing services, particularly allied health.

“Both responses are unacceptable to UnitingCare Australia and could be avoided if the Government agreed to work with the sector to develop funding approaches that restrain expenditure but avoid the periodic deep cuts in funding that risk negative health outcomes for residents.

“It is critical at this time that we provide feedback to our political leaders so that they can understand the impact on the most vulnerable people in our society. Rather than merely cost items on a budget spreadsheet, they must be seen as what they really are – our family members and loved ones.

“They deserve better and our acute care health system and hospitals are already under extreme pressure.

“We call on the incoming Prime Minister and Treasurer to halt these cuts and to work collaboratively with the aged care sector to identify sustainable options for meeting the health care needs of older people in care,” said Mr Teulan.

UnitingCare Australia calls on the incoming Government to:

  1. Defer any funding cuts until proper analysis is undertaken by the Commonwealth;
  2. Establish a taskforce to review the funding process for aged care with a view to establishing a more sustainable model;
  3. Evaluate the relative costs of providing care to frail aged people in aged care services; and
  4. Develop an instrument that provides certainty to residents and providers, and affordability for taxpayers.


Number of Non-Profit homes surveyed 501
Homes Residents assessed 38,723
Residents Proportion of All Australian residents in survey 21%
Impact of cuts per resident ($) - full implementation of cuts) $6,655 decrease per resident
Impact of cuts per resident (%) - full implementation of cuts 11%
Average Not-for-Profit Net Earnings (EBITDA) $7,680*

*Source: Aged Care Financing Authority - Australian Government July 2015

Media contacts for inquiries/interviews

General inquiries/copies of the report - Gerard Delaney Ph 0413 274 176

National/NSW/ACT - Steve Teulan, Chair, UnitingCare Australia Aged Care Network; Director Ageing, Uniting, Sydney (Alison Thyer Ph 0457 568 938)

Qld - Geoff Batkin, CEO Wesley Mission Brisbane (Amy Cobb Ph 0418 996 503) 

Vic/Tas - Victoria Jacques, GM Victoria North West, Uniting AgeWell (Charisse Ede Ph 0437 822 594)

WA - Vaughan Harding, Chief Executive, Juniper, Perth (Ph Mob 0403 586 605)

SA - Jane Pickering, Chief Executive, Eldercare, Adelaide (Ph 08 82911025)