The importance of R&D investment in aged care

Chronic underinvestment in research and development has reduced innovation within the aged care sector, a new report suggests.

The report from the Sydney Policy Lab and Impact Economics highlights the need to address underinvestment in aged care research and development, with inadequate private investment compounded by falling government spending.

Economic analysis shows only 3.6% of total expenditure in aged care (around $100 million per year) is spent on R&D across public and private sources — significantly less than in other sectors.

In addition, the report found that Australian Research Council funding for aged care-related research has fallen as a share of total funding over the past 20 years. Between 2002 and 2011, 0.4% of the total was directed to aged care; from 2012 to 2023 the proportion was 0.1%.

“With a growing ageing population, we cannot ignore the current weakness of Australian aged care research and development,” said Professor Brendan McCormack, Academic Chair of Sydney Policy Lab’s Australia Cares project.

Two government funds totalling $364 million were established to fund aged care R&D following the Royal Commission into Aged Care — a step in the right direction. However, the Policy Lab report finds additional funding and coordination by government is required to ensure aged R&D appropriately balances clinical, financial and quality of care objectives.

Australian firms privately invest an average of 0.4% of expenditure on R&D, but in residential aged care this figure is just 0.016%. This is much lower than other sectors such as regulatory services, beekeeping, software publishing and oyster farming, which spend about 5% of total expenditure on R&D.

“When it comes to privately funded R&D, the performance of the aged care sector is lacklustre,” said Dr Kate Harrison Brennan, Director of the Sydney Policy Lab.

“If the aged care sector spent as much on R&D as beekeeping we would see an extra $150 million invested every year.”

“Improving the quality, effectiveness and efficiency of care services underpins human flourishing, improved wellbeing and better health outcomes in addition to higher economic growth,” McCormack said.

The research identifies international innovations in care Australia is missing out on, like the Dutch Buurtzorg Model that prioritises ‘humanity over bureaucracy’ with self-managed teams supporting independent living in a community setting for older people.

Apps and investment in social prescribing also have the potential to give people the support they need as they age while mitigating costs.

To begin to address the issues identified, the report makes three recommendations to the government ahead of the May federal budget:

• establishing a coordination organisation for aged care R&D within government;
• developing a joint statement to provide a clear and transparent overview of the shared research and development objectives between the government, care recipients and the aged care sector;
• increasing government funding to reflect the relational nature of care services and support R&D across different organisational types and locations.
   

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