Aged Care Financing Authority looking at use of RADs in residential care – following Counsel Assisting advice for their staged removal

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The Department of Health is funding the Macquarie University Centre for the Health Economy (MUCHE) to look at the role of lump sum accommodation payments in the residential aged care sector – and one of the leading witnesses at the Royal Commission’s funding and financing hearings is leading the charge.

MUCHE is collecting information on providers’ reliance on lump sum accommodation payments – and their opinion on the potential impact of a reduction in RADs on residential aged care accommodation financing – via a confidential 20-minute online survey with the results to be reported to the Aged Care Financing Authority (ACFA).

The study is being led by Professor Henry Cutler and the research team from the Macquarie University Centre for the Health Economy (MUCHE) and the Department of Accounting and Corporate Governance at Macquarie University.

Professor Cutler recently gave evidence at the Royal Commission that the only way to fund improved quality in aged care was to receive higher prices.

RADs making providers complacent and inefficient, Counsel Assisting says

Yet the Counsel Assisting submissions presented at the final hearing highlight that the reliance on RADs has increased the risk of “complacency and inefficiency” among providers – and consideration should be given to their phased removal.

“Instead, residential aged care providers should receive rental payments for accommodation based on the existing Daily Accommodation Payments and the Accommodation Supplement,” the Counsel Assisting recommended. “With appropriate modifications, this type of arrangement would enable providers to access higher levels of debt and equity financing to replace Refundable Accommodation Deposits.”

They add that this would be a long-term project that would require lengthy lead times for providers to adjust – but clearly the Department and ACFA are already thinking ahead.

You can take part in the survey here – it closes on 13 November 2020.