The study undertaken by the University of Queensland (UoQ) describes the importance of meeting rising consumer expectation through the delivery of efficient services that deliver on quality. The authors indicated that the delivery of quality services efficiently should be a ‘central concern’ for policy makers.

Additionally, the Report highlights that measuring efficiency without proper adjustments for quality differences between facilities will not provide accurate information about their relative performance i.e. an ‘inefficient’ service could be delivering high quality outcomes, driven by higher input costs with the additional quality improvement not being properly considered.

We note in the Report the author’s finding that smaller facilities are more likely to achieve a Q1 quality outcome (quality levels are described further below) but are also more costly per bed day than ’larger’ facilities ($274 per bed day for a Q1 outcome for ‘smaller’ facilities verses $235 per bed day for a Q1 outcome for ‘larger’ facilities).

Government and small facilities came out as more likely to achieve a Q1 rating, with a strong correlation between size and quality across ownership and provider types.

An association was found between the total cost and the quality of residential aged care services.

For profit providers were over-represented in the Q3 rating category (Q3 being characterised by lower customer experience rating, a higher failure of meeting accreditation standards, and higher number of complaints and issues).

We think an important finding of the report was that the aged care sector would appear to be more efficient than the healthcare sector which includes hospitals, with an average total efficiency score of 0.88 (0.91 in relation to direct care) and 0.83 respectively.

In relation to quality outcomes the Report says that only 11% of facilities met all accreditation standards, had no issues or complaints, a high customer experience rating, and lower utilisation of high-risk medicines, with the majority (78%) having a mix of outcomes.

The Report estimated that:

• If all facilities were operating WITHOUT any cost inefficiency the whole sector would have spent $15.7 billion in 2018-19;
• If ALL facilities were to operate at Q1 quality level at their current operating size, it was predicted the sector would have required an ADDITIONAL $621 million in 2018-19; and
• If they were to operate at Q1 and a small-sized model of home, this number would be $3.23 billion

The Study

The authors indicate the Report was commissioned to:

• estimate the efficient cost of delivering residential aged care for the range of output quantities and care qualities observed historically;
• assess the historical level and distribution of inefficiency of service providers, using the estimates; and
• determine the efficient costs required to achieve the different care qualities for all aged care facilities

Seven quality indicators were used including consumer experience ratings, reported issues, accreditation standards not met, prescription of four high-risk medicines (sedatives, antipsychotics, opioids and antibiotics).

Residential aged care facilities clustered into three quality levels:

1. Q1 (11% of facilities) – met all accreditation standards, had no issues or complaints, a high customer experience rating, and lower utilisation of high-risk medicines;
2. Q2 (78% of facilities) – had a low failure of meeting accreditation standards, a moderate level of customer experience ratings, potentially sub-optimal use of high-risk medicines and a low-number of complaints and issues; and
3. Q3 (11% of facilities) – these had a lower customer experience rating, a higher failure of meeting accreditation standards, and higher number of complaints and issues

The study found:

• Government owned and small facilities are more likely to be in Q1
• the correlation between size and quality of facilities was strong and consistent across ownership AND provider types
• In the Q3 group- for-profit providers represented a higher proportion of facilities than their relative importance in the sector

Results

Average total cost efficiency among residential aged care facilities 2014-15 to 2018-19 was 0.88:

• average cost efficiency associated with direct care was 0.91 over the same period;
• this result is higher than reported in literature; and
• the efficiency levels of other healthcare sectors such as hospitals (0.83).

This indicates the sector operates relatively efficiently.

An association has been found between the total cost and the quality of residential aged care services.

• A similar association was found for direct care;
• But NOT for other non-care cost categories i.e. hotel services, administration etc.

For small facilities, the average efficient total cost of resident bed day was estimated to be:

• Q1: $274
• Q2: $267
• Q3: $261

For facilities with more than 30 beds, the average efficient cost per resident per day in 2018-19 was estimated to be:

• Q1: $235
• Q2: $224
• Q3: $234

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