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Supported Residential Services: The Department of Human Services' response to advice from Associate Professor Green - August 2001

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2.1       Key Issues Considered

Associate Professor Green identified and then analysed the following key issues in providing his advice to the Department:

Scale and Client Profile

The pension-only sector are commonly small businesses with poor economy of scale (less than 25 beds) providing residential care for younger high need residents (73 per cent under 70 years of age) with a diverse range of care needs at a maximum income of $245 per week per resident ($35 per day) [1] . They tend to operate in largely leaseholder premises, with rent accounting for an estimated 35 per cent of expenditure.

In comparison, pension plus facilities tend to be larger scale (greater than 40 beds) and operate from purpose built facilities, catering for a predominately aged client group (83 per cent over 60 years of age, 49 per cent aged 80 plus) with a fee structure ranging from $300 to in excess of $400 per week [2] .

Business Capacity

The pension plus sector can be differentiated from the pension-only sector on a number of indices including:

  • More sophisticated infrastructure and care models and complex corporate structure, increasingly incorporating the horizontal integration of a number of facilities in differing locations and in some instances the vertical integration of other forms of aged care [3] .
  • Well developed administrative, financial and professional supports.

In comparison the pension-only sector is characterised by isolated services without the opportunity to access a company or network support, low levels of infrastructure and lower levels of generic and specialist business skills.

Nature of Service Model

Overall the pension plus sector is providing a model of aged care consistent with and close to a mainstream model of residential aged care. At the other end of the spectrum the pension-only sector, with its increasingly dependent resident profile and without additional external support services, may be unable to adequately provide for the care and rehabilitation needs of some residents, some of which are considered problematic in other professional, subsidised service systems.

Compliance with Community Standards and Regulations

The combined pressure of operating from older and less appropriate buildings, with the minimum staff requirement and under considerable cost pressures has compromised the quality of care provided to residents in some pension-only SRSs, evidenced by the level of sanctions applied in relation to breaches of Departmental regulations [4] . Clearly, many pension-only SRSs meet community standards and legislative requirements, however, there is ongoing concern about those that continue to experience difficulty maintaining these standards.

Market Demand

Demand for pension-only SRS is high and likely to remain so as a result of closures in this sector and the ongoing referral of people with disabilities into this form of supported accommodation. The increasing number of older people with independent income will continue to drive demand in the pension-plus sector which provides an alternative to Commonwealth subsidised residential care.

In summary, assessed against the 'survival' indicators of financial viability, business capacity, model of care against resident profile, compliance with standards and demand for services it becomes apparent that the two sectors have very different future prospects. Associate Professor Green concluded that across virtually every indicator the pension-only sector can be assessed as being less viable than the pension plus sector, creating the business case for a differential policy response.

2.2       Framing the Solutions

In formulating his advice Associate Professor Green postulated and considered three interrelated threshold questions as follows:

1.        Can Victoria continue to lose the low-cost, supported accommodation provided by pension only SRSs?

Associate Professor Green argues that Victorian will continue to need both supported housing services and residential care services for a predominately younger and middle aged adult population with high level dependency needs. Associate Professor Green contends that pension-only SRSs should be viewed primarily as being in the business of providing low cost accommodation and Government should consider strategies to maintain this housing supply.

Associate Professor Green postulates that the issue of support to pension-level SRS residents should be dealt with separately from the issue of accommodation. He contends that pension-only SRSs can only provide, within the constraints of its existing business model, basic support and supervision for residents and that this support must be significantly enhanced through access to funded support services available to people with similar care needs.

He also found that the 'best practice' models of pension-only SRSs should be supported to continue to provide accommodation and support for low income residents with complex needs.

2.        If there is a continuing demand for pension-only SRSs, but some SRSs are increasingly inappropriate for particular groups of users, are the solutions found in different forms of in-home residential care or in supported housing services or in providing more support packages to residents in SRSs with complex care needs?

Associate Professor Green contends that pension-only SRSs, particularly those operating in high cost, leasehold facilities, cannot provide the required level of care and support services for residents with complex needs at the estimated maximum income of $35 per day.

Across the continuum of care needs, Associate Professor Green acknowledges that some pension-only SRS residents with relatively low dependency could live in more developmental and less restrictive accommodation options, such as supported rooming houses and group living arrangements, and that Government should give consideration to such models in the longer term.

At the other end of the care continuum Associate Professor Green argues that there is a small group of people with very complex clinical and care needs who require very high levels of support. Associate Professor Green contends these residents are inappropriately accommodated in any housing and support models, including pension-only SRSs, and should be relocated to other forms of higher level subsidised care, such as Commonwealth subsidised residential aged care services, psychogeriatric hostels and Community Care Units - all of which provide full time care with clinical services.

He also proposes that prospective residents dependency levels should be assessed before admission to ensure the level of care provided by a particular SRS is appropriate to their needs. In line with this Associate Professor Green proposes the Department consider, in the longer term, developing administrative processes allowing registration of SRSs to include certification of types, and levels and mix of care and support services available to prospective residents.

3.        If the viability of these services will remain a problem, what is the preferred solution: subsidise the service, subsidise the user of the service, or indirect subsidy through other service providers?

In the medium term Associate Professor Green argues that in order to improve the standard of care to current pension-level residents consideration should be given to providing a form of subsidy which enhances the provision of clinical, care and support services directly to the resident. Associate Professor Green is of the firm view that the subsidy should not be given to proprietors on the basis that such an action would not lead to better care, ensure the continued availability of accommodation for people on low incomes or lead to improvements in the viability of pension-only facilities, particularly as most of these services operate from high cost leased facilities.

In framing the proposed responses identified in section 2.3 of this paper Associate Professor Green made the following observations:

  1. Victoria's health and community services require and depend upon a wide variety of supported accommodation services and at this point there is a shortage of supported accommodation across a variety of different service sectors probably as a result of service redevelopment, reduced availability of low-cost housing and increase in the number of people requiring services. It is assumed that the range and quantum of supported accommodation services will need to be increased rather than decreased.
  1. The physical location of low-cost and supported housing is important to residents, and potential residents as well as to the services referring and using supported accommodation services. This assumption means that supported accommodation services, including SRSs or SRS-like services, are required in areas where land and housing costs may be relatively high.
  1. That pension only SRSs as they are currently constituted will continue to be sought as accommodation for adults and older adults whose needs, behaviour or disabilities may present difficulties for other service systems, including disability specific services, mental health services and residential aged care services.
  1. Despite the expectation of continuing expansion of the Commonwealth funded residential aged care program and the State funded supported accommodation programs for various groups of people with a mental illness or other disabilities, the quantum and range of publicly subsidised supported accommodation services will be unable to meet the particular demand currently met by pension-only SRSs into the foreseeable future.
  1. As a result of a number of systemic and policy changes since 1987, the nature of the demand for pension-only SRS accommodation has changed to a younger (under 70 years), less frail population with a greater ranges and level of disability. That change, which has not been fully recognised or acknowledged, will continue and must inform the State Government's response.

In summary, he concluded that Victoria will continue to require low-cost housing options for adults and older adults with ongoing support needs, and their needs will not be met by existing subsidised supported housing or residential services or by the anticipated growth in aged residential care services funded by the Commonwealth.

2.3       Proposed Response

Associate Professor Green's recommended strategies for change, organised as three integrated stages.

Stage 1: Immediate Term

Improving procedures and processes


Stage 2: Immediate - Medium Term

Strengthening program support


Stage 3: Longer Term (five plus years)

(i) Achieving appropriate levels of support


(ii)Moving from residential care to supported housing.

Stage 1          Immediate Term Strategies - Improving Procedures and Processes

The objective of this stage, as identified by Associate Professor Green, is to strengthen the existing Departmental interactions with the industry in order for it to more effectively meet its legislated responsibilities and Government policy objectives across the entire SRS industry.

Associate Professor Green's proposals aim to improve the rigour of the licensing and registration processes across the SRS industry; expand the provision of information to proprietors, prospective residents and their families or referring services; and strengthen Departmental planning processes, particularly contingency planning for SRS closures. Associate Professor Green considers that these proposalswould not require any changes to the legislative or regulatory environment, nor do they direct additional costs to SRS proprietors.


1.1     That in order to undertake more intensive and rigorous screening of applications for registration and renewal of registration, the Department of Human Services consolidate into a single organisational unit, responsibility for the administrative processes currently described in Part 4 of the Health Service Act 1988 as they relate to supported residential services.

1.2     The Department of Human Services develop broader and more accessible information resources to assist proprietors of supported residential services.

1.3     The Department of Human Services develop broader and more accessible information resources for residents and prospective residents of supported residential services, including in particular, information on the care and support needs of prospective residents referred by funded agencies.

1.4     That the Department develop more appropriate procedures to anticipate and respond to changes in the supported residential services industry, including in particular contingency planning to deal with facility closures.

Stage 2          Immediate to Medium Term Strategies -

Strengthening Program Support

The objective of this stage, as identified by Associate Professor Green, is to improve standards of care in pension-only and above pension SRSs through non-regulatory program support development, with the focus on the pension-only sector.

Associate Professor Green's proposals aim to address various functional and service needs through the provision of professional mentoring to SRSs; improve resident access to clinical and personal support services; and provide discretionary assistance to proprietors to facilitate safety and fabric improvements. Associate Professor Green considers that these proposals would not require any changes to the legislative or regulatory environment, nor do they direct additional costs to SRS proprietors.


2.1 The Department of Human Services develop and implement a program of professional mentoring to enhance the business capacity and care skills in pension-only supported residential services.

2.2 The Department of Human Services continue to improve the focus of funded support programs (particularly in the HACC, disability and mental health program areas) on supported residential services residents.

2.3 The Department of Human Services consider developing a capacity for discretionary financial support to selected pension-only SRS for safety and fabric changes resulting from changes in legislative requirements or Departmental policy.

Stage 3          Longer Term Recommendations (Over Five Years)

Associate Professor Green identified a range of longer-term options for consideration by Government underpinned by two objectives, that he notes as not necessarily being mutually exclusive.

The objectives that he identifies as underpinning his proposed options are:

§         To retain the existing SRS model and improve standards of care and service viability by decreasing the level and diversity of resident dependency in SRSs through the changing of admission practices and dependency levels

The possible proposals for achieving this objective include the introduction of new approaches to licensing and registration that specify the level of care and support service able to be provided by an SRS; better and more comprehensive assessment of the dependency levels of prospective residents to avoid inappropriate accommodation in an SRS; and assessment and relocation of highly dependent residents to more appropriate care settings. Associate Professor Green considers that these strategies would require changes to the legislative or regulatory environment but would not impose additional costs on proprietors.


§         To change the model to reduce the current reliance on the pension-only SRS sector as ' accommodation of last resort' for financially disadvantaged people with ongoing support needs, and at the same time, to retain private expertise and privately owned fabric in the wider supported accommodation system through a range of supported housing programs

As part of this objective Associate Professor Green argues that, if in the longer term (despite of the provision of support for residents and proprietors as outlined in the immediate to medium term strategies), it is not possible for proprietors to meet the cost of accommodation and personal care services to a community acceptable standard, and within an affordable fee structure, alternatives to pension-only SRSs must be considered.

Associate Professor Green also argues that Victoria will continue to require low-cost housing options for adults and older adults with ongoing support needs, and their needs will not be met by the existing bed supply in pension-only SRSs, the quantum and range of subsidised supported housing or residential services or by the anticipated growth in aged residential care services funded by the Commonwealth.

Associate Professor Green identified the following long-term options for consideration under this stage:

§         Retain some existing pension-only SRSs as private low cost housing by converting them to supported housing with tenants provided with appropriate levels of support based on assessed need from independent external, subsidised providers.

Develop a range of alternative long term supported housing models for people with complex care needs requiring up to 24 hour care in a non clinical environment and/or increasing the capacity of existing non-treatment disability residential accommodation models.

Increase capacity of existing clinical residential care for people with very high dependency needs.

Expand intensive disability outreach support models linked to affordable housing for people able to live independently in the community.

Associate Professor Green notes that these proposals would involve the structural redefinition of pension-only supported accommodation services from residential care service within the framework of the Health Services Act to supported housing within the framework of the Residential Tenancies Act.

Recommendation 3.1 That the Department of Human Services further research and develop strategies for longer term intervention around the following possible options:

Option (i)

·   That consideration is given to a requiring better assessment of prospective residents'  dependency levels by appropriate agencies before admission to a supported residential service and that residents only be referred to SRSs, if appropriate to the resident's needs.

·  That facility and proprietor registration include recognition of their appropriateness to  provide supported accommodation for people with different care and support needs.

· That consideration be given to relocating very high dependency residents to more appropriate care settings.

Option (ii)

·  That consideration be given to increasing the range and availability of publicly owned fabric for housing financially disadvantaged people with ongoing care and support needs.

· The Department consider development of a supported rooming house program in cooperation with local government and appropriate service providers.

·  Encourage some pension only SRSs to become supported housing rather than residential care, with appropriate support provided for residents by independent, external agencies.

[1] Based on fee of $245 per resident per week (100 per cent of pension plus rent assistance).

[2] In 1998, 20 per cent of all SRS facilities charged $400 or more per week, with 57 per cent charging $300 plus.

[3] Examples of vertical integration include pension-plus SRS integrated with other forms of independent living such as retirement villages or services apartments at one level and subsidised nursing and hostel level residential care at another level.

[4] Over the period 1998 to 2001 there has been 22 prosecutions, and of the 372 individual charges proven 273 related to breaches in pension-only facilities. More significantly, over 70 SRSs have closed since 1998, and most of those were pension-only facilities unable to generate adequate returns and meet required standards.

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Updated 30 August 2001