AT THE MARGIN OR ON AVERAGE: SOME ISSUES AND EVIDENCE IN PLANNING THE BALANCE OF CARE FOR THE AGED IN AUSTRALIA

COMMUNITY HEALTH STUDIES VOLUME Vl l , NUMBER 1,1983 AT THE MARGIN OR ON AVERAGE: SOME ISSUES AND EVIDENCE IN PLANNING THE BALANCE OF CARE FOR THE AGED IN AUSTRALIA Craig Bennett Policy and Projects Division, South Australian Health Commission*, Adelaide, 5000 Robert Wallace School of Social Sciences, Flinders University of South Australia, Bedford Park, 5042

The views expressed in this paper do nor necessarily reflect policies of the Commission.

Abstract Aged people can be cared for in a variety of

institutional and non-institutional settings. While many arguments have been advanced for changing the balance of institutionalized and community-based care in view of the ageing of Australia’s population, the debate has generally lacked a methodological framework for rigorously comparing the alternatives under consideration. In this paper, some of the issues involved in a comparative cost analysis of various alternative forms of care for the aged are discussed, the results of an Adelaide-based survey are summarized and possible implications for policy-makers are suggested. Introduction

The care of aged people in Australia has become a problem of enormous dimensions. It is an issue that Governmentscannot ignore, yet one where much basic information is simply not available. The enormity of the problem can be highlighted as follows. In 1982-83, it isestimated that the Commonwealth Government will spend approximately $963 m. on accommodation and home care for the aged - $886 m. (92.0 per cent) on residential accommodation and care and $77 m. (8.0 per cent) on home care and domiciliary care serves, of which the aged are the major users. A further $6,600 m. will probably be spent on age and service pensions.’ In addition, the number of aged people in Australia is expected to increase substantially between now and the end of the century. The number of people aged 65 years and over is expected to increase from 1.40 million to 2.34 million over the next twenty years, while the number of people aged 75 years and over is expected to increase even more dramatically, from 0.50 million to 1.07 million.2 These people will make substantial demands on health and related welfare services. For example, it has been estimated that in New South Wales, males aged 65 years and over and feamles aged 60 years and over - a group comprising 8.6 per cent of the State’s population - occupy 30 per cent of the

BENNETT & WALLACE 35

acute hospital beds, consume 40 per cent of the prescribed drugs, receive 70 per cent of community health services and occupy 90 per cent of the nursing home beds.’

The debate over the care of aged people in Australia has centred around two issues. First, what is the appropriate delineation of responsibilities between the various levels of Government (Commonwealth, State and Local) for the funding, administration and provision of aged care services in Australia? This issue remains unresolved despite a host of Government inquiries over the past decade.‘ Secondly, how should Government funds be allocated between the various forms of long-term care for the aged? These alternatives include institutional care (e.g. nursing homes and geriatric wards of hospitals), hostels and domiciliary care services (in particular, home help, home nursing, delivered meals and paramedical services). This paper is directed towards this second issue.

Institutional vs Non-Institutional Care Despite the diversity of aged care services

available and the heterogeneity of people being cared for, it is frequently argued that non- institutional forms of care should be promoted over institutional alternatives. The relatively high level of provision of nursing home beds in Australia is cited regularly and it is argued that non-institutional forms of care are not only cheaper than institutional alternatives but that they also better accord with the preferencesof the aged.

The argument is often put in a striking form. For example, when addressing Hospital Board members in August, 1981, the then South Australian Minister of Health (the Hon. Mrs. J. Adamson) urged an extension of non- institutional care and gave the cost per d a y of caring for a stroke patient as $1.90 where domiciliary services were used, compared to between $29.00 andji54.00 per day wherecare was provided in a private nursing home.5 Such

COMMUNITY HEALTH STUDIES

statements are common and the assertion that institutional care is relatively expensive is widely accepted as an established fact.

It is also often asserted that a significant number of aged people are being cared for inappropriately in institutional forms of care. A number of recent studies have suggested that a substantial proportion of nursing home patients do not need the level of nursing care available to them there. The 1977 Report of the Commonwealth Committee on the Care of the Aged and Infirm (the Holmes Report) indicated that, for up to 20 per cent of nursing home patients, alternative modes of long-term care could be considered as realistic substitutes.6 From a number of overseas studies, Doobov estimated that up to 25 per cent of nursing home patients and from 10 to 30 per cent of hospital patients could be satisfactorily treated at home if appropriate home care services were made available.’ Moreover, in her 1978 survey of nursing home patients in Melbourne, Howe concluded that up to 30 per cent of them could be adequately cared for in either hostels or the general community - and this in the State with the lowest level of provision of nursing home beds per capita in Australia.’

However, the argument may be overstated. We believe that methodological considerations as well as a detailed analysis of the characteristics of the users of aged care services may lead to somewhat different conclusions. The options open to Australian policy-makers in this area may not be as clear cut as many people have argued.

The Methodology of I Comparative Cost Studies

A technique which can throw some light on these issues is that of comparative cost analysis. Comparative cost analysis requires tha t all the relevant costs be identified and assessed. It treats the benefits of alternatives as identical and purports only to rank them in terms of the i rc~s t .~ Policy-makers may, of course, make their own subjective assessment of the benefits involved and set them against the measured costs produced from the comparative cost analysis.

An assessment of the comparative costs of various forms of long-term care for the aged is a complex task. While there has been little done on this topic in Australia, a number of overseas studies suggest a possible methodological framework. Identifying and assessing all the relevant costs in this area is not easy. For home- based care of the aged, i t is difficult to value the considerable care often provided by relatives,


friends, neighbours or volunteer services. Alternative bases for costing include the foregone earnings of the providers of care; the Compensation they would require to provide similar services as a commercial transaction; the sum the proyiders would willingly pay if some other person or group could provide identical services and the cost of buying in similar services from external providers. There can be disagreement about which alternative is appropriate, but not about the proposition that to treat such services as “free” is to underestimate the costs of home-based care.

A valid cost comparison must also ensure that only genuinely comparable cases are considered. The aged in need of care have a diversity of needs reflecting, for example, their degree of disability. To compare the cost of caring for a person with a mild impairment following a stroke with that of caring for a person substantially paralysed is nonsensical. For sensible policy decisions, the costs of alternative modes of care must be identified for relevant categories - such as those of dependency. Similarly, for each category, the personal circumstances of the individuals concerned must be considered.

Consider, for example, a person with a moderate disability following a stroke. Where the afflicted person has a f i t and concerned spouse, home care (with due allowance for the care provided by the spouse) will be less costly than equivalent care provided for a similarly afflicted person who lives alone. A valid comparison of the costs of caring for particular categories of persons permits identification of the full consequences of transferring such persons from one mode of care to another. The widespread view that home care is the least-cost mode of care often follows from crude comparisons of non-comparable cases, not from subtle analysis of similar cases.

Our view of the appropriate methodology is illustrated by the simple schema of Figure 1. For persons in a defined social situation, the costs of providing specified forms of care appropriate to specified levels of disability in an institutional setting are indicated by the curve CN in Figure l(a). OG represents the costs of the minimum level of services and care associated with admission to an institution (for example, basic “hotel accommodation” costs). At a certain level of dependency, additional costs are incurred in line with the extra services needed and the upper plateau of CN covers levels of dependency‘ where the person requires assistance in all daily activities.

In Figure l(b), the curve CH traces the costs of


costs of

Care

c1

l ( a ) : Costs of Institutional L’JKC

Related to Dependency Levels l(b): Costs of Non-Institutional Care Related to Dependency Levels

costs Of

care

Dependency Dependency a

BENNETT & WALLACE

l(c): Canparative Costs of Institutional and Non-Institutional Care Related to

Dependency. Levels costs

Care Of I

v’ I : I 0 I

Dl Dependency

FIGURE 1

37 COMMUNITY HEALTH STUDIES

providing comparable levels of care (at each level of dependency) in a domestic situation. The shape of CH reflects the ability to provide domiciliary care of various types and in finely divisible quantities adjustable to individuals’ needs. The schematiccost curves for institutional and home care are set side by side in Figure l(c). OD, denotes the level of dependency beyond which institutional care is less costly. The presumption underlying Figure 1 is that at levels of lesser dependency, home care is more economical; for example, because only those services needed by the individual are supplied and non-professional services can be used. Beyond ODI, institutional care is less expensive. More of the cost of the basic “hotel” services of the institu’tion (for example, the cost of preparing meals and cleaning) can be apportioned to the cost of the care of the person and other needed services (such as the need for continuous access to a supporting person and occupational therapy) can be provided more economically within an institution. Further, the provision of a large volume of domiciliary services to a highly dependent person involves large transport and co-ordination costs. These costs can be particularly acute in areas of low service density, such as rural areas.

Evidence tosupport thegeneral form of thecost functions denoted in Figure 1 is provided by a number of overseas studies. Opit and Wager argue that, for severely disabled groups in the United Kingdom, intensive domiciliary care has similar (and perhaps greater) costs than institutional care.lO,ll Gerson and Hughes draw a similar conclusion from their analysis of home care as an alternative to short-term inpatient care in Canada.12

The simple schema described above shows why general statements about the comparative costs of home and institutional care can be misleading. Valid comparisons can be drawn only for similar types of people. Aged persons in need of care comprise a widely diverse group. For example, Howe’s survey of nursing home patients in Melbourne revealed a great range of physical and mental conditions. We found a similar diversity in our 1978 survey of the users of Adelaide’s long-term care services.13 Users of domiciliary care services, for example, ranged from persons with a minor difficulty calling for an inexpensive modification to their home to persons requiring continuous support with every-day tasks (such as bathing, cleaning, shopping and preparation of meals) as well as needing nursing care.


To accommodate this problem of the heterogeneous nature of the aged, we and others, such as Mooney,l‘ have used the degree of dependency as a classifactory criterion in the manner illustrated in Figure 1. A logical extension of this approach is to focus upon the “marginal” group of persons and to eschew statements about the average costs of caring for heterogeneous groups by alternative means. According to this view, the arithmetic fact that the average cost of caring for all persons in nursing homes is greater than that for all persons receiving domiciliary care is not particularly useful information when making decisions about the allocation of the diversity of individuals to appropriate forms of care. By contrast, the marginal approach seeks to identify those specific sub-groups who may be cared for at less cost by a transfer from one form of care to another. In terms of Figure 1, the marginal approach is concerned to identify persons with dependency levels less than OD1 who have been inappropriately admitted to an institution and those persons with dependency levels in excess of OD1 who could receive equivalent care at less cost in an institution.

As mentioned earlier, there is a commonly- expressed view that the more important misallocation involves the institutionalisation of persons who could more cheaply be cared for in a domestic .setting with support from domiciliary services. We suspect that this view is, in part, a misconception based upon the average approach criticised above. However, even if it were established that persons with a particular level of dependency could be more cheaply cared for by domiciliary services, i t does not follow than an extension of those services will reduce the overall cost of caring for the aged. As we and Fordyce, Mooney and RusselP argue, the critical weakness in that approach is the implicit assumption that the authorities can identify, and therefore restrict, the extension of domiciliary care services to those persons in the marginal group who would, in the absenceof theextended servi:es, be in s t i t u t i ona 1 i sed. In the administration of domiciliary services, however, the authorities must use broad rules which are socially acceptable. It may be that theauthorities can devise administrative rules which ensure that a specific extension of domiciliary services can be confined to a sub-group of the aged of whom, say, half would seek admission to a nursing home if thedomiciliary services were withdrawn. It may be that the cost of domiciliary care per recipient is less than the cost of the nursing home


care per recipient. But this does not ensure that extension of domiciliary services to a group of 100, of whom 50 would seek admission to a nursing home in the absence of the services, will reduce the overall cost of caring for the aged. Clearly, for a valid cost comparison, the capacity of the authorities to identify the “marginal” persons and to treat them as a distinct group must be considered together with the differences in the cost of caring for persons in alternative modes of care.

Some Empirical Results There have been a number of studies on the

characteristics of nursing home patients in the various States of Australia over the past decade. In addition to the two 1978 studies mentioned above, Refshauge surveyed over 300 nursing homes in the Sydney metropolitan area in 197V while, in 1975, Rizzo et a1 surveyed over 400 nursing homes throughout New South Wales.”

Although these surveys highlighted the heterogeneity of nursing home patients, some broad trends were discernible. The nursing home pat ients surveyed were shown to be overwhelmingly aged, female and without partners ( i .e. they were separated, widowed, or had never married). Amongst the aged, being a male and still married apparently results in a considerably lower probability of being admitted to a nursing home. Rowland has summarized the situation as follows:

“in the growing elderly population . . . there has been no dampening of the expansion of the numbers of aged widows, the dominant group among the aged in need of support . . . They represent the majority of the ‘problem’ elderly because they attain ages at which infirmities are most prevalent, they are necessarily dependent on persons other than a spouse and their incomes are often limited.”18

“care of the aged, even more SO in institutions than in the rommunity, is increasingly the care of very old women.”lg

Other general characteristics reported in these surveys included the importance of social considerations as determinants of admissions to nursing homes, the high level of demand for nursing home beds, the lack of rehabilitation facilities in many of these institutions and the general expectation of those responsible for their care that most of them would stay in nursing homes indefinitely.

In addition to revealing these general characteristics of nursing home patients, our

Similarly, Howe has argued that:


1978 study also tackled the question of the extent to which other forms of long-term care for the aged could be considered as alternatives. The data. that forms the basisof thisstudy was selected in two stages. First, a representative sampleof all the nursing homes, hostels and domiciliary care services in metropolitan Adelaide was selected for study. Secondly, a systematic sample of the patients, residents and clients of these selected organizations was then taken. In total, 303 patients from 20 nursing homes, 185 residents from 8 hostels and 200 clients from 4 domiciliary care services were surveyed. A host of information about the facilities and services available at the selected organizations as well as about the characteristics of a sample of their patients, residents and clients was provided by the matrons, owners, co-ordinators or administrators of these organizations. In addition to basic demographic data, detailed information was collected on levels of physical dependency and use of medical, paramedical and n u r s i n g services, p rev ious fo rms of accommodation and use of long-term care services, current forms of accommodation and possible forms of accommodation in the future.

Most of the results from our survey indicated that the size of the “marginal” group - those for whom other forms of long-term care could be realistically considered as alternatives - was relatively small. Almost half of the nursing home patients surveyed were dependent in all six of the activities of daily living enumerated in our study - bathing (shower or tub), dressing, going to the toilet, transferring, continence and feeding. By contrast, just over two-thirds of the hostel residents and just over one-half of the domiciliary care clients were completely independent in these six activities.

Apart from some transitory movements within combined nursing home-hostel complexes, there appeared to be relatively little movement of nursing home patients of more than one year’s standing back to either hostels or private homes supported with domiciliary care services. No more than one in seven of these nursing home patients had come direct to them from private residences. The transitory stage had typically been spent in a general hospital. Only 8.0 per cent of the domiciliary care clients surveyed had previously lived in a nursing home and only 2.5 per cent had previously been resident in a hostel. In addition, while there was some evidence of patient movement between nursing homes, it was mainly confined to the private sector and any experimentation was typically brief.

Most of the aged people surveyed were


therefore long-term recipients of care; approximately one-half had received care for more than two years. For the vast majority of nursing home patients surveyed, the matron assessed their prospective stay as “indefinite”. If discharged from their present nursing home, i t was thought that they could only be appropriately cared for in another nursing home or in a hospital. The survey clearly showed that very few of these nursing home patients were on the margin in the sense that they would be acceptable for admission to a hostel or could be cared for in a private home supported by the present range of domiciliary care services.

T o what extent institutionalization had increased physical dependency was not clear from our survey but the dependency rating of new entrants was’not markedly better than that of thosf. admitted earlier. The role of domiciliary care services in preventing, or at least delaying, admission to nursing homes was also not clear because such services did not exist when many of the nursing home patients surveyed last resided in the general community. Other aspects of our survey methodology, such as our choice of dependency mbsure, our reliance on the opinions of matrons and so forth as well as our inability to exclude non-aged clients of the domiciliary care services, are open todebate. The need for this type of s b e y work to be expanded, or replicated in other States is, however, clear. Our survey results show that generally held beliefs about the appropriate pattern of care for the aged in Australia may not always be correct. Conclusions and Possible Policy Implications

The policy-makers have an unenviable task. To maintain existing standards of care over the next few decades, there must be a substantial diversion of community resources to support the increased number of-aged people in Australia.

One possible response to this situation would be for the authorities to reduce the number of institutional beds per capita and expand the funds available for domiciliary care services and the provision of hostel accommodation. Such a response would certainly constrain the budgetary costs of caring for the aged. But we consider that such a response would be inappropriate. Our 1978 survey of long-term care facilities in Adelaide showed that few of the persons then in nursing homes would not have been there had they, at the time of their admission, been offered a place in a hostel, or been offered the most extensive domiciliary care services available if they opted to remain in a private residence. The study by White, Muirhead, Douglas et a1 confirms this finding.20


Accordingly, we see such a response as leading to a more severe rationing of access to institutional care.

Extended availability of the present form of domic i l ia ry care services a n d hostel accommodation would enhance the quality of life of a wide range of aged persons. But the services needed to avert (or delay) the admission of frail aged women to nursing homes would have to be much more intensive than the present pattern of services. Whether or not the additional services needed would be less costly than nursing home care is an open question.

There has been no appropriately designed Australian test of this issue, so we conclude with an outline of a proposal which, at little cost, could shed some light on the question.

We suggest that an Aged Persons’ Placement Agency (APPA) be established in one of the capital cities, with a staff of, say, one social worker and one aide. The APPA would be authorised to approach suitable nursing home patients (as approved by the doctor or assessment team whocertified their need for that type of care) with offers of alternative forms of care. The offer would be for a return to the patient’s own home, a relative or friend’s home, a foster home, a boarding house or a hostel. In each case, the transfer would be supported by the provision of appropriate domiciliary care services. The direct operating costs of,the APPA (by and large the salaries of the two persons) would be met from public funds. All transfers from nursing homes would have to be self-funding, in that the APPA would receive the appropriate Commonwealth nursing home benefit as well as the uninsurable patient contribution, and from this sum i t would have to pay the costs associated with the alternative form of care.Z1 If the costs of alternative forms of care are cheaper than nursing home care, the APPA will receive a flood of proposals from relatives and friends, from public bodies (such as controllers of domiciliary care services and hostels) as well as from patients. Any cost savings could even be shared between the APPA staff, the providers of alternative forms of care and the patients.

Such an experiment would reveal invaluable information about aged persons’ preferences as well as about comparative costs of care. The experiment itself would involve a trivial cost - certainly much less than that of conventional cost-effectiveness or cost-benefit studies. Instead of revealing what people say they could do if only they were provided with additional funds, the experiment would reveal what people would do with existing funds.


References

1. House of Representatives S tanding Committee on Expenditure : In a Home or at Home : Accommodation and Home Care for the Aged, (the McLeay Report), October, 1982, p. 1.

2. Australian Bureau of Statistics : Australia’s Aged P o p u l a t i o n 1982, July, 1982, Catalogue No. 4109.0.

3. Commission of Inquiry into the Efficiency and Administration of Hospitals (the Jamison Inquiry) : Volume 2 : Supplement, December, 1980, p. 613 (citing a speech by Dr. G. A. Broe, Australian Geriatric Society, August, 1978).

4. The history of this debate is well summarized in the McLeay Report, October, 1982.

5. An Address by the South Australian Minister of Health (the Hon. Mrs. J. Adamson) to a Seminar arranged by the South Australian Health Commission for Members of Hospital Boards at the Royal Adelaide Hospital, 20th August, 1981.

6. Committee on the Care of the Aged and Infirm (the Holmes Committee): Report 1977.

7. Doobov A. : Relative Costs of Home Care and Nursing Home and Hospital Care in Australia, Commonwealth Department of Health, Monograph Series No. 10, 1980.

8. Howe AL : Report of a Survey of Nursing Homes in Melbourne, Department of Geography, Monash University, Working Paper No. 10, 1980.

9. Comparative cost analysis isessentially cost- e f fec t iveness ana lys i s . T h e m o r e comprehensive technique of analysis is that of cost-benefit analysis. This involves the identification of all the relevant costs and benefits (tangibleor otherwise, now or in the future) associated with several alternatives, expression of these costs and benefits in terms of a common numeraire (money) and the calculation of benefit : cost ratios.

10. Opit ILJ: “Domiciliary Care for the Elderly Sick - Economy or Neglect?”, Brztzsh Medzcal Journal. 1977, 1, pp. 30-33.


11. Wager R.: Care of the Elderly - A n Exercise in Cost-Benefit Analysis Commissioned by the Essex County Counc i l , London: Institute of Municipal Treasurers and Accountants; 1972.

12. Gerson LW a n d Hughes DP: “ A Comparative Study of the Economics of Home Care”, International Journal of Health Services, 1976. 6 : 4, pp. 543 - 55.

13. Bennett C and Wallace R: Alternative Forms of Care for the Aged and Handicapped, National Institute of Labour Studies. Working Paper Series No. 39, June, 1980.

14. Mooney GH: “Planning for the Balance of Care of the Elderly”, Scottish Journal of Political Economy, 1978,25 : 2. pp. 149 - 64.

15. Fordyce JD. Mooney G H and Russell EM: “Economic Analysis in Health Care”, Health Bulletin, January, 1981,39: l .pp.21

16. Refshauge C: “Health Services in the Private Sector : Nursing Homes in the Sydney Metropolitan Area”, National Hospital and Health Care, 1975, 1 : 4, pp. 23 - 25.

17. Rizzo C et a1 : A Study of Nursing Homes i.n New South Wales, Division of Health Services Research, Health Commission of New South Wales, 1976.

18. Rowland DT: Sixty-Five N o t O u t : Consequences of the Ageing o i Australia’s Population, Institute of Public Affairs (N.S.W.), 1981. p. 8.

- 38.

19. Howe AL: Op. cit., pp. 107 - 8. 20. White PS, Muirhead TC, Douglas RM, et al:

Home He lp as a Compofient of Domiciliary Care Services, Adelaide: Butterfly Press; 1979.

21. Nursing home patients are required to contribute seven-eighths of the standard single rate pension plus supplementary assistance (or itsequivalent) towards therost of their care and accommodation. This contribution is uninsurable. Similar arrangements exist for “nursing home type” patients in private and public hospitals in most States and Territories throughout Australia .


Documents

AT THE MARGIN OR ON AVERAGE: SOME ISSUES AND EVIDENCE IN PLANNING THE BALANCE OF CARE FOR THE AGED IN AUSTRALIA