Beyond the silver surfer to the platinum power wheel
The fundamental change towards consumer-directed care (CDC) that has radically reshaped the aged care sector over the last few years offers great opportunities to the ICT industry above and beyond traditional residential or home-based aged care.
Lynda O'Grady, a former Telstra executive who is now the chair of the Aged Care Financing Authority (ACFA) and independent director of the National E-Health Transition Authority (NEHTA) among other director roles, told the Health Informatics Conference (HIC 2015) in Brisbane earlier this month that ICT companies interested in exploring the huge growth expected in aged care should look to the vast majority of people who will not require personal care but who are interested in using technology to keep active and have fun.
Ms O'Grady has worked with Bond University professor of communication and creative media Jeff Brand to create what they call a “platinum power wheel” framework that concentrates on three “magic elements” of positive ageing: someone to love, something to do, and something to look forward to.
“We tend the focus on 'my person', which is my body, my mind and my medical and health records,” she said. “But frankly, someone to love, a coterie people who are in a community who we are interacting with, is equally important for positive ageing and longevity.
“There’s a lot of research, including by the American Society of Ageing that shows that boomers, that people in the cohort we are speaking about, the over 50s but particularly the over 60s, when researched they call out that their main objective in those later years is simply to have more fun.”
She said Professor Brand's research showed that gamification is likely to provide not just huge opportunities for older people to keep active and healthy and gainfully employed, but will also provide a wealth of commercial opportunities for the ICT industry she said.
Professor Brand is also the author of the Digital Australia Report, the 2016 version of which showed that video games are played by many older people: primarily, they say, to keep their mind active. He is due to publish a new book, Purposeful Ageing for the Digital Economy, early next year.
Ms O'Grady also recommended that the ICT industry use the blue ocean strategy to open up new markets and create new demand, and to be aware that the move to CDC had enormous ramifications for building these new markets.
“Research is showing that there’s a new breed of elder consumer leaders,” she said. “They are more affluent, they are more vocal and educated and most particularly, more demanding.
“They will increasingly assert themselves not as being people who are invisible and voiceless, but from the silver army to a platinum status with buying power and from senior citizens to senior activists.
“So any ICT developer who does not have people, that is consumers and staff, at the centre of the development process, is likely to lose any future battle in terms of successful offerings.”
Ageing population paradigm
As the head of the ACFA, Ms O'Grady was able to reel off a number of statistics on the aged care industry, from the people it cares for to its huge – and growing – assets.
While there are about a million people of government-subsidised aged care and care assistance, either in their home or in residential aged care, the vast majority of older people are living independently in their homes with no specific government aged care subsidy.
And the people who are in residential aged care, of which there are about 180,000, are contributing billions in terms of their day-to-day living expenses but also in residential bonds.
Ms O'Grady said that of those one million consumers of government-sponsored aged care are receiving three different types of services. The most common are the three-quarters of a million people receiving what was formerly known as Home and Community Care (HACC) program, which provides assistance such as Meals on Wheels or subsidised activities.
The second category is Home Care Packages, which require an assessment from an Aged Care Assessment Team (ACAT) and aims to keep people at home for as long as possible by providing nursing care within the home.
The third category is residential aged care, which cares for about 180,000 people in residential facilities.
“Now, in 2013/14 the whole industry recognised revenue of almost $18 billion,” Ms O'Grady said. “Most of that, $12.8 billion, was funded by the Commonwealth with the rest provided by the consumers, primarily consumers in the residential care sector.
“As of the 30th of June 2014, the total assets of the industry were $33 billion. It is a huge industry. That was largely financed by residents by way of their residential bonds. $15.6 billion, or almost 46 per cent of all assets in residential care have been financed by the residential bonds.
“Of the remainder, $11 billion is owned by the [providers] or residual equity, and just over $7 billion by external financiers.”
While the industry is huge, what those figures don't show is that the million people receiving some government-funded care or assistance are a minority. The people in residential aged care are only four or five per cent of the market, she said, and the majority of those are aged over 85.
“At the moment there are three and a half million people over the age of 65, and 70 per cent of them are actually living at home without government subsidised aged care services. Living at home without any money being spent from the aged care system.
What is now looming is the mass of people aged between 50 and 65 who will be entering that target market in the next 20 years. Ms O'Grady said that is estimated to about 4.2 million people.
“In 20 years' time, there will be 6.2 million, or almost another four and a half million people, who won’t be accessing the government-funded or government-sponsored aged care system,” she said.
“That will require a change in paradigm in terms of the provision of all kinds of services outside of those which are funded by the government. There will be a great deal more focus on keeping people in their homes and providing the services needed to keep them enabled, or re-enable them.”
For many years, the role of the government in the aged care system has been to regulate licences, packages and places and to stump up about 70 per cent of the funding required for home, community and residential care.
It will still provide the bulk of the funding, but under the move to CDC, first instigated by the Labor government under its Living Longer Living Better reforms and carried through by the Coalition government, the role of service providers has fundamentally changed.
From July 1 this year, the HACC program has merged with other community-based services to become the Commonwealth Home Support Program.
“The most substantial foreshadowed change is planned to occur in July of 2018, which is likely to see the integration or merging of the Commonwealth Home Support Program with the home care packages,” Ms O'Grady said.
“So effectively that will mean there is one single program, remembering that’s a total of $1.3 billion funding into those two separate programs. There is foreshadowed to be a single, consistent fee policy, with a means-tested contribution from the recipients.”
All of this is now offered on a CDC basis, she said. “The most profound change has been foreshadowed by the recent announcement, which is that from February 2017, packages will be actually allocated to consumers.
“So effectively, instead of the licenses being provided to a home care provider, essentially a consumer will apply for a package, and then they will go looking for a provider who is prepared, able and willing to provide the services that they become entitled to.
“In terms of residential care, the most fundamental change is the change to the accommodation payments. And primarily that was about putting for the consumers at the centre of the universe, with the consumer having visibility of the rate card for the different types of rooms so they could compare them with competitive providers.”
The My Aged Care gateway has also been launched to effectively provide a single government portal where a prospective care recipient can go to identify what services are available, and there is now a My Aged Care record, “which effectively will be one’s individual CRM about you as a care recipient and will register your details, only so far as they contain to the aged care system and your registration and movement through the system”.
There has also been established an Aged Care Sector Committee, which Ms O'Grady serves on.
“The reason that I cite this, is because it is most critical, because it continues the focus on the consumer. At the centre of the aged care industry will be empowered consumers and informal carers who will have full information and discretion.
“And that is designed to motivate much greater innovation and responsiveness from providers in the development and delivery of services, and frankly to underpin and ensure a much more prosperous, robust and diverse industry.”
Opportunities for ICT
CDC means that not only service providers but product providers like ICT developers need to start innovating around the consumer and their informal carers rather than the provider, Ms O'Grady said.
She and Professor Brand have developed the platinum power wheel as a framework for innovation around the consumer, she said.
“It basically leverages the colloquial description of the three magic elements of positive ageing, which are: someone to love, something to do, and something to look forward to.”
While their main objective may be to have more fun in their later years, people in this cohort of over 50s and over 60s also want to retain purpose.
“There’s the tendency to think that when we leave the workforce that we’ve got nothing to do,” she said. “Once we’ve finished our trip around Australia or get sick of playing golf, what do we do? The research similarly shows that over 70 per cent of people want to remain in a productive employment.
“If you want some empirical and quantifiable evidence of what that’s likely to do for the Australian economy, take a look at the excellent research that’s on the Age Discrimination Commissioner's website. It has a piece of modelling done by Deloitte which identifies the value of staying in the workforce an extra five years, including part time, to be up to three per cent additional GDP. So it’s not only good for us oldies, but it’s also very good for society and the economy.
“But we live in the 21st century, a digital era, and there’s a bit of a myth that older people are not computer or digitally literate. Well, that’s simply not factually correct. Not only do we use computers for monitoring our bodies and our minds, but connecting any to many, seeking information from the ubiquitous Mr Google, transactions, net-banking, travel, etc.”
But older people are also interested in fun, which is where Professor Brand's research for the Interactive Games and Entertainment Association comes in. His research shows that more than 50 per cent of over 50s play video games.
“Take a look at his report, because the really important sleeper that’s themed throughout his research, is that gamification is likely to provide huge utility to many commonplace activities including lots of mundane business and work-type activities, from finding what you'll cook for dinner to something more significant.
“So it provides great rewards for the individuals who've got purpose and pleasure, but more particularly provides a wealth of commercial opportunities for the ICT industry.”
Ms O'Grady said she had three messages for ICT companies involved in or looking to enter the aged care market. One is to innovate.
“There is a whole realm of new services which are outside or are not currently contemplated by those proscribed by the funding systems,' she said. “Leverage other industries' expertise to develop those.”
The second is to look for new consumers. “You don’t need to be thinking about just those consumers who are funded by the government. Many of us have the capacity and the demand for lots of other services, which are also provided by the aged care sector now, but many of us will be happy to purchase or acquire, with our own money, if you make the services sufficiently interesting and relevant.”
And third, she said those industries looking to work in the aged care sector to engage with the government and aged care providers more proactively.
“With the greatest respect to all of the software providers who have been providing systems into the industry, it would be true to say that they have been caught short and slow [by CDC], because they weren’t at the front of the development process, working with the government and the providers to ensure that the business models, the software systems and processes, were ready.”
Posted in Aged Care