Funding of the Home and Community Care Program
1.1 Introduction
The Home and Community Care (HACC) program was established in
1985 as a joint Commonwealth-state initiative. The program funds a
range of basic maintenance and support services so that frail older
people and those with a disability can continue to live
independently in the community and avoid premature or inappropriate
admission to long-term residential care.
The Department of Human Services (DHS) administers the HACC
program which had expenditure of $470 million in 2007–08. Sixty
five per cent of HACC clients are over 70 and have significant
levels of frailty and disability. On average, HACC clients receive
less than one hour of service a week and only one third has a
carer.
Historical funding approaches have resulted in funding
inequities within and between regions. In particular, rural regions
have received much higher per capita funding (PCF) levels than
metropolitan regions. Consequently, where individuals live directly
affects both access and level of service.
The first step in achieving fair access is providing equitable
allocation of funds across the state. The audit focussed therefore
on funding equity at the statewide and intra-regional level. It did
not assess equity in service provision at the individual consumer
level.
This audit examined:
- whether DHS has effectively addressed the
funding inequities across the state and within regions
- regional planning and coordination of HACC
services which affect funding equity
- monitoring and reporting arrangements
including reporting on whether HACC achieved funding
equity.
The audit follows the 2004 audit of HACC, the Delivery of
Home and Community Care Services by Local Government, which
made a series of recommendations to improve the planning and
delivery of the HACC program.
1.2 Overall conclusion
Addressing historical funding inequity between regions has been
an objective for over a decade. This has not been achieved and
significant funding inequities remain.
This is mainly because objectives for HACC funding distribution
are multifaceted, with equity as one of a number of aims. Other key
commitments include maintaining existing service and therefore
funding levels at the regional level while also addressing changes
in target population size and location.
The approach adopted by DHS to address funding inequity between
regions recognises these other commitments and it has developed an
appropriate and transparent approach, the relative resource equity
formula (RREF), to distribute ‘growth’ funds in the HACC
program.
However, given that growth funds make up only a small portion of
the total HACC budget, the current approach to apportioning HACC
funds has largely perpetuated funding inequities and provided only
marginal funding to address relative equity. This type of funding
made up 1.4 per cent of the total HACC budget in 2007–08.
As a result relative funding equity cannot be achieved unless
there is a revision of the current funding approach and/or a
significant injection of additional recurrent funds.
1.3 Findings
1.3.1 Addressing statewide funding inequities
Movement towards equity in funds
distribution
Addressing relative funding equity between regions in the HACC
program has been a stated priority since 1992. From 2003 an
additional $2.3 million above the matched funding commitments of
the Commonwealth has been allocated in an attempt to remedy funding
inequities.
However, there has also been a commitment to maintain existing
service levels to all regions, adjusted for population growth. This
was because HACC demand exceeds supply in all regions within the
state and the level of service to individuals is generally so low
that it should not be reduced.
Consequently the DHS approach to addressing funding inequity has
not been to redistribute funds from relatively well resourced
regions to relatively under-resourced regions. Rather DHS uses a
proportion of HACC growth funds to ‘top up’ under‑resourced regions
in order to bring all regions in line.
Accordingly, under the current HACC strategy approved by the
relevant minister, funds are first allocated to maintain the
existing level of service in regions. Growth funds are then
distributed to adjust for population growth within regions, and the
remainder is applied to address resource inequities.
In effect, this approach has perpetuated existing inequities as
the growth funds simply add to the inequitable base. In 2007–08, 60
per cent of growth funds were allocated to adjust for population
growth leaving 40 per cent available to correct inequities.
As a result of the ministerial priority given to population
growth and maintaining the service base, there is no evidence of a
clear trend towards equity in PCF across the state. By DHS’s own
reckoning it will take up to 25 years to achieve funding equity
between regions using the current approach. In 2006 DHS calculated
that an additional injection of $11.6 million would be needed to
achieve equitable PCF.
The objective of maintaining the existing service levels
adjusted for population growth has been achieved. There has also
been a steady increase in the funding position of regions overall
with under-resourced regions having marginally improved their
position.
Relative resource equity formula
DHS has developed a more appropriate and transparent approach
targeting the allocation of growth funds to relative need. The RREF
targets funds according to five relevant population variables.
Ultimately the RREF should be applied to all funds once PCF parity
between regions is achieved.
Measuring progress towards funding equity
In 2006 DHS changed the measure of reporting progress towards
funding equity. It introduced a per capita benchmark for
metropolitan and rural regions respectively. This measures progress
against the funding benchmark and an improved funding position.
However, as a measure of comparative equity across the state it
falls short.
The statewide PCF measure used prior to 2006 should be
reinstated for reporting progress towards equity. In 2008 all
metropolitan regions remained below the statewide PCF while all
rural regions remained above. Except for two regions, all regions
fell within 10 per cent above or below the statewide PCF. The two
outlying regions were 20 per cent above and 15 per cent below the
statewide PCF.
Since regions will not always align exactly with the statewide
PCF DHS could consider that all regions had reached equity when
they come within 5 per cent above or below the statewide PCF
amount.
1.3.2 Addressing funding inequities within regions
DHS regions are addressing funding inequities within their
regions. The DHS regions examined took account of funding
inequities and other relevant factors when determining annual
growth funds distribution. The regions generally showed movement
toward per capita equity between local government areas, however,
the pace of this movement varied between regions.
Regional targets, or time frames stipulating how regions will
address relative funding inequity, are not used. These would
support greater transparency and consistency in addressing funding
equity within regions.
1.3.3 HACC-related services
The availability of HACC-related services in a region impacts on
relative resource equity, but is not included in planning and funds
allocation. DHS and the Commonwealth Government are yet to develop
an integrated approach to planning and sharing information for HACC
and related services, an imperative for using limited resources
more effectively and improving equity.
1.3.4 Performance monitoring and reporting
DHS’s performance monitoring and reporting arrangements are
comprehensive—addressing quality, service outputs, financial
accountability and risk management. They also include the
measurement of equity, efficiency and effectiveness as defined by
the Productivity Commission’s performance indicators for aged
care.
However, the audit identified opportunities for improvement.
These included reporting against
- a relevant measure for relative funding
equity
- outcome measures
- unmet demand.
Inclusion of these measures within the existing monitoring and
reporting framework would enable a fuller assessment of the
effectiveness and efficiency of the HACC program. DHS is working
with the Commonwealth and other state governments towards the
development of national outcome indicators for HACC.
1.4 Recommendations
Addressing statewide funding inequities
To deliver the stated objective of addressing historical
inequities, the Department of Human Services (DHS) should continue
to examine and provide advice to government on the current and
possible funds allocation strategies.
To this end DHS should:
- gain a better understanding of the rural
and regional per capita funding (PCF) and adjust the relative
resource equity formula (RREF) and benchmarks
accordingly
- assess the impact of applying the RREF to
the base funding to redistribute funds equitably
- regularly model the additional funds
required over and above the growth funds allocation to achieve
equity
- report its progress in addressing
statewide inequities by comparing all regions with the statewide
average per capita measure, as this measure fairly represents the
relative funding equity objective of achieving ‘equitable per
capita distribution of funds relative to the HACC target
population’
- set a target of bringing and retaining
regions within a convergence band of 5 per cent above and below the
statewide average PCF as the overall measure of achieving relative
statewide funding equity (Recommendation
4.1).
Addressing regional funding inequities
DHS should require regions to set accountability targets and
time frames for addressing funding inequity within regions
(Recommendation 5.1).
DHS, with the cooperation of the Commonwealth Government, should
develop an integrated planning framework for HACC and related
programs including measures of need, levels of service provision,
estimates of unmet need and targets for achievement of funding
equity (Recommendation 5.2).
Performance monitoring and reporting
DHS should enhance statewide monitoring and reporting
through:
- working with other jurisdictions to agree
on outcome measures for HACC service delivery
- implementing measures to report on levels
of unmet demand
- reporting relative equity in service
access and funding (Recommendation
6.1).
DHS should re-examine its reporting mechanisms with a view
to:
- reducing the administrative burden on
service providers with respect to reporting
requirements
- introducing a process to check services
reported as delivered are delivered
- developing guidelines for assessing
under/over performance including for recoupment of
funds
- revising the desktop review process to
include triggers for when a full service review is necessary
(Recommendation 6.2).