Linard_1996-AIHW_System Dynamics Modeling & Aged Care Accomodation

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SYSTEM DYNAMICS MODELLING AND AGED CARE

Modelling the Future - Techniques & Directions

Australian Institute of Health & Welfare Workshop - Feb 1996

Keith T Linard

Senior Lecturer, School of Civil Engineering

University College (University of New South Wales) Australian Defence Force Academy

Keithlinard#@#yahoo.co.uk(Remove hashes to email)

SUMMARY

The longer term pressures from an aging society are very significant. Of particular importance is how wemanage the longer term pressures stemming from increasing demands of the aged for medical, hospital,home care and long term residential care services. At present, about 50% of health and care spending is onthose aged 65 and over. A substantial increase in the proportion of budget outlays for the aged is projected,especially beyond the first decade of the 21st century.

Contributing to this projection will be both the aging of the population and the continuing pressure toincrease aged care costs per head through greater access and usage, and higher quality. Real growth in aged

care outlays will continue at a rate significantly greater than the population growth for people aged 70+ untilthe year 2005. Beyond the year 2005, Australia will experience a rapidly aging population as the babyboomer generation moves into old age. The growth in the population aged 70+ will rise rapidly to a peak of4%pa in the year 2017.

The policy analyst has powerful tools that help predict the raw population demand, in terms of cohortnumbers. Equally important, however, are tools which help identify the likely impact of alternative policylevers on both the supply of and demand for particular services. It is here that system dynamics has a usefulrole to play. In essence, system dynamics models the feedback characteristics of a system and the impactwhich delay plays.

The simulation model, which is the focus of this paper, comprises two main elements, namely a

representation of the physical structure of the aged care system, and the behaviour of the component parts ofthat system. The behavioural assumptions of the simulation model rely heavily upon historical data and

future projections in regard to population, use patterns, age structure, fertility, migration etc.

This paper draws extensively on work1 done, under the authors direction, by the following students in theirmajor assignment for the post-graduate System Dynamics Modelling subject, Master of Management Studiesat the University College: David Bingham, Tarek El-Ansary, Mark Gainsford and John Smeltink. The keyaspects of the model development was done by Mr David Bingham.

Keywords: Aged care; public finance; policy analysis; health economics; system dynamics.

Keith Linard runs the postgraduate system dynamics program at the Australian Defence Force Academy and

lectures in transportation and systems engineering. Former positions include Chief Finance Officer

(Financial Management Improvement), Commonwealth Department of Finance and Director, Evaluation

Methodology, Commonwealth Bureau of Transport Economics.

______________________________________________

1 Bingham, D., T. El-Ansary, M. Gainsford and J. Smeltink, A Simulation Model of Aged, Health and Care Services inAustralia. Unpublished project report towards System Dynamics Modelling subject, MMgtSt degree, November 1995.


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Modelling the Future - Techniques & DirectionsAustralian Institute of Health & Welfare - Feb 1996

1. INTRODUCTION

1.1 Overview of Demand for Aged Services in Australia

Australia, like many other countries, is faced with the prospect of an aging society. That is, anincreasing number of people in the population aged 65 and over. The social implications of thistrend are numerous, however, one of the most significant is the anticipated increase in demand forhealth care and support services and its impact on health budget outlays for the CommonwealthGovernment. This group in society is the dominant consumer of Government funded health andcare resources, traditionally absorbing between 30-50% of Government outlays for these service.

Currently those over the age of 65 are approximately 12% of the population. Over the comingdecades this will increase to 16% of the population as depicted in Figure 1. (This, of course, isbased on continuous of current demographic and policy parameters, especially with respect to the

quantum and composition of the immigration program.)

Figure 1: Proportion of 'Over 65' in the Population

(Powersim simulation)

Corresponding to this increase in the numbers of aged persons will be a proportional decrease in thenumber of working age persons whose productive capacity helps support the elderly. The numberof working-age persons per aged person will drop by 30% over the same period.

Figure 2: Proportion of Working Age to 'Over 65' Population

(Powersim simulation)


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Simulating Aged Health and Care Services

Page 3

There are a variety of social implications of these trends. One of the most significant is theanticipated increase in demand for health care and support services and its impact on health budgetoutlays for the Australian Government.

The increasing consumption of these services is borne not only from an absolute increase in the

number of elderly within the population, but also from an increasing requirement for externalassistance associated with demographic changes within our society2. Such assistance for the elderlyis not restricted to medical services, indeed it comes in many forms, including:

medical care from traditional providers such as doctors, clinics and hospitals; dentistry, optical, chiropody and physiotherapy services; aid with washing, bathing, personal hygiene, cleanliness, dressing and feeding; cooking, cleaning, and laundry services; shopping, household repairs and gardening; social support, including companionship and dealing with authorities. [EPAC Report, 1994,

p72]

The longer term pressures arising from an aging society are predicted to have a substantial impacton the health and medical care outlays for the Commonwealth Government. The real growth inGovernment outlays on aged health care will continue to increase at a rate significantly greater thanthe population growth for people aged 70+ until the year 2005. Beyond the year 2005, Australiawill experience a rapidly aging population as the baby boomer generation move into old age. Thegrowth in the population aged 70+ will rise rapidly to a peak of 4% per annum in the year 2017.These health budget problems are further compounded by the increased pressure on health costs percapita arising from greater access, usage and quality of service provided.

A reference model depicting the anticipated increase in Australias real health expenditure duringthe period 1990-2031 is shown at Figure 3. The fundamental problem facing the Government overthis period is the sufficiency of resources to meet the growth in the need for care of the elderly.

Figure 3: Effects of aging and population growth on Australias real health Expenditure

1990-91 to 2030-31

2 Such changes include the increasing number of elderly living separately from younger generations in privatehouseholds and a reduction in the level of family support from these generations. [EPAC Report, 1994, pp70-71]

10,000

1990-91 1995-96 2000-1 2010-11 2015-16 2020-212005-6 2030-312025-26

Year


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1.2 What is "System Dynamics"?

In a nutshell, the rigorous study of problems in system behavior using the principles of feedback,dynamics and simulation. In more words system dynamics is characterized by:

Searching for useful solutions to real problems, especially in social systems (businesses, schools,governments,...) and the environment.

Using computer simulation models to understand and improve such systems. Basing the simulation models on mental models, qualitative knowledge and numerical

information.

Using methods and insights from feedback control engineering and other scientific disciplines toassess and improve the quality of models.

Seeking improved ways to translate scientific results into achieved implemented improvement.System Dynamics is a methodology for understanding complex problems where there is dynamic

behaviour (quantities changing over time) and where feedback impacts significantly on systembehaviour. It has been applied to social, environmental and regional planning for many years and,more recently, to transportation planning.

It provides a framework and rules for qualitative description, exploration and analysis of complexsystems in terms of their processes, information, boundaries and strategies; thereby facilitatingquantitative simulation modelling and analysis for the design of system structure and control.

Powerful graphics software is now available for Macintosh and PC, which allows the modeller toconstruct a visual and symbolic representation of the model, with a minimum of programmingskills. This graphical approach facilitates knowledge capture and subsequent communication offindings. The software constructs the basic structure of the equations.

These modelling tools are now being used in policy advising areas of State & Federal departments,including Department of Finance. Department of Defence is using them in strategic planning,movements planning, planning for staffing and training, logistics and maintenance planning etc.

2. Purpose of the Model

2.1 Background

The sponsor for the development of this model of Aged Health and Care Services in Australia is theDepartment of Finance. This Commonwealth Government Department forms part of an InterDepartmental Committee (IDC) which is responsible for the analysis of requirements for agedhealth care in the future. The primary concern for the Finance Department is the financial impact ofan aging society on the Commonwealth Budget.

The Australian Government, like other Governments in the OECD, has over recent yearsformulated health care policies to ensure that elderly people, including those requiring care andsupport, should wherever possible continue to live in their own homes, or in a sheltered andsupported environment close to their former community. This is a fundamental shift from the

provision of institutional care, such as long stay hospitals and nursing homes, to greater non-institutional care services such as hostels and community support programs. A direct result for theCommonwealth Government and the taxpayer has been a reduction in the cost of care provision per


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user, given the significant cost differences between institutionalised care and other communitybased programs.3

As part of this policy shift, the Australian Government has established policy and planning targetsdevised to meet the anticipated demand for aged care services. This policy structure is based on a

four tiered structure of care for the aged as follows:

Acute care Nursing Home care, Hostel care, and Home based care through the Home and Community Care (HACC) and Community

Aged Care Package (CACP) programs.

Table 1 outlines the Government targets for restructuring the aged health care system in Australia.The target figures are forecast to account for increasing life expectancies within the general

community.

Table 1: - Government Plan for Allocation of Accommodation of Aged Care

2.2 Aim

The academic objective was to illustrate the strengths and weaknesses of the system dynamics

modelling paradigm by constructing a POWERSIM model that captures both the structural andbehavioural characteristics of aged health care resources and demographics over time.

The specific aim of the model is to determine the adequacy of current aged care

3. Model Outline

3.1 Behavioural Concepts

The Influence Diagram at Figure 4 provides the basis for the mathematical simulation model of theaged care problem. The necessary refinement is incorporated by breaking down the model into sixmodules; firstly a demographic model incorporating the changes in the population over the periodof interest, and sub-models reflecting each of the five tiers of aged health care services.

3 The public cost of nursing home care is almost five times the cost of hostel care. [EPAC Report, 1994, p77]

Time 1987 Present Target

Resource (beds /1000)

Nursing Home 70 53 50

Hostel 30 40 40

CACP 3 10

HACC 6% Real Growth


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Figure 4: Aged Health Care Influence Diagram (Causal Loop Diagram)

3.2 System Boundaries

The model has the following boundaries:

The population is bound by entrants through birth and immigration and losses incurredfrom death;

The flows into each of the health care programs originate from the general population orone of the other programs;

The flows from each of the health care programs arise from death or movement to one ofthe other programs; and

Cost figures are only derived from each of the health care programs.Specific areas not included within the model include:

External factors such as an epidemic or new disease; The capacity of the population to fund health care through levying of asset wealth and

incomes;

The effects of price-responsiveness; The effects of healthy lifestyle programs upon society; Total Government outlays associated with general health care services such as Medicare,

pharmaceutical benefits and hospital costs;

The potential effect of technological advancements in biomedicine, transportation, andcommunication.

3.3 Assumptions

The model assumptions are as follows:

Australian population growth forecasts are based on Australian Bureau of StatisticsSeries A projections for the period 1990-2051 [EPAC Report, 1992, p13];

Births Migration

Population Growth Population Age Profile

Elderly

Sickness & Frailty

Demand for Health Care Services

Health Care Resources

+

Cost

Health Budget Outlays

Budgetary Pressures

Government Health CarePolicy Targets

+++

Deaths

_

+

+

+

+

+

+Supply Loop

Demand Loop

+

d


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Page 7

Net Migration is forecast at approximately 40,000 per annum until the year 2000 and70,000 per annum beyond that period in accordance with ABS Series A predictions;

Selectivity for entry into one of the health care programs are completely random and notbased on any pre-requisite assessment criteria. The real provision of health care servicesis based on an application and consideration by aged care assessment teams (ACATS)

against specific eligibility criteria; The death rate for each of the health care programs are equivalent to that of the general

population;

A queuing system exists for admission to Nursing Home, Hostel, HACC and CACPservices;

Movement between each of the existing health care programs are shown at Table 2; HACC expenditures and per capita costs include spending on frail aged, younger people

with disabilities, and the carers of both. Typical distribution of this expenditure by ageshows that approximately 78% is consumed by people aged over 60 years.

HACC user characteristics forming the basis of model input may include clients of morethan one service and can therefore be counted more than once;

CACP costs discontinue if the recipient takes a holiday (goes back to the community orpopulation steam); enters a hospital or receives alternative short-term residential care,even though their entitlement to CACP is not renounced.

From/To NHomes Hostels CACP HACC

NHomes

Hostels

CACP

HACC Table 2: Movement Between Health Care Programs

3.4 Demographic Model

The basis of the Aged Health Care Model is the demographic model shown at Figure 5. This modelis centred around the Population stock variable, shown as an array to capture the different agecohorts of Australias population (0-100).

Population accumulations within this array change over time in accordance with the following flowvariables:

Inflows as a result of Births within the population; Inflows resulting from Net Migration; The aging process which progresses the population through the different age cohorts;

and

Outflows resulting from Deaths within the population.This model provides the population accumulations which interact with the other sub-models of theAged Health Care system to derive the demand associated with each health care program. Each ofthese sub-models will now be outlined.


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Figure 5: Graphical 'front end' of Powersim Demographic Model

3.5 Acute Care Model

In the event that an elderly person suffers from extreme ill health because of disease or injury theymust be provided with acute care as per the general population. Generally, the only organisation

capable of providing this special level of care is a hospital. In this event the person will temporarilypass out of the aged care system and into the public hospital system. They will remain there untilthey either regain their health or they die. The mechanics of this process are shown in the AcuteCare sub-model shown at Figure 6.

Figure 6: Acute care model (Powersim graphical interface)

The Acute Care array variable captures the population, by age cohort distribution, who utiliseacute care resources for a given time period. The accumulation of people within this variable isdetermined by its inflow and outflow variables, which for the purposes of this model are simplified.


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Entry into acute care is shown as being from the general population, given that it is assumed that anursing home or hostel place is kept open while the person is in hospital. It follows therefore thatthe outflows from the acute care system are also depicted in terms of the general population, whichcomprises of death, movement back to the general population, or a previously held hostel or nursinghome place. For this model, it is assumed that the Population distribution input is equivalent to the

Hospital separation distribution.

The acute care sub-model is primarily aimed at capturing information pertaining to the costsassociated with its provision, as shown by the Acute Cost variable. The result of an elderly personentering the public hospital system is an increase and shift in the cost burden for the Government.The cost increases to at least $215 per bed per day (as of 1991)4 or about $78,500 per bed perannum, which is met by the public health system and mostly funded from Medicare contributions.The current drain on the Medicare system by the provision of acute care for the aged is $1148million per annum5. This equates to about $595 per person aged 65+ per annum, compared to thenational average of $301 per person per annum.

Given the cost of occupying an hospital bed, it is desirable to minimise the length of stay for anaged person within the public health system. It is often the case that the aged person requires a longperiod of convalescence in an institutional environment but not at the level of specialised careprovided by a hospital. This care may instead be available in a nursing home or hostel, therebyrelieving the public health system of unnecessary expense. Currently it is common practice fornursing homes and hostels to provide convalescent care for the elderly. In the event of not beingable to either place an elderly person in institutional based care or to discharge them into thecommunity for convalescence, the hospital must incur high additional expense. However, difficultyarises in anticipating the demand for such care, as there exists a long waiting period for the frailelderly to gain admission into institutional care.

3.6 Nursing Homes Model

The need for the provision of nursing home accommodation has long been recognised as anessential component of the care for the aged. Given the level of assistance that is required in caringfor the frail and incapacitated, institutional care is inevitable. The institutional structure of nursinghome care brings with it the need for specialised facilities and qualified staff, which means that it isthe most expensive form of dedicated aged care. Due to a number of decisions made since 1963,this cost continues to be borne fully by the Commonwealth Government.

The Nursing Home Care sub-model is shown at Figure 7. The Nursing Homes array variablecaptures the population distribution by age cohort utilising Nursing Home type accommodation andservices. The flows into the Nursing Home system come from the following:

General Population; Patients currently being cared for in Hostel accommodation; and Patients within the community currently being cared for through community based

programs (HACC and CACP).

4 Australian Commonwealth Government "1995-96 Budget Statement" Page 3-95Note: Extrapolated from 94-95, estimate uses CPI of 5%5 Estimate based on Medicare Averages and population distribution on information supplied by the AustralianDepartment of Finance


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Figure 7: Nursing Home Model (Powersim graphical interface)

As stated above, patients entering the Nursing Home system are subjected to a waiting periodbound by the availability of free resources denoted in the model as Free Nursing Home Beds.

The number of free resources is governed by the number of Used Nursing Home Beds within thequota of beds available as per policy targets. Consequently, the model captures the accumulation ofthe general population waiting for available resources to be made available in the Wait for NursingHome variable. Where entries are possible, a feeder group is selected at random to provide theflow of people entering the Nursing Home system.

Outflows from Nursing Homes arise only from death. This is based on the assumption that patientsutilising this form of care are sufficiently frail and incapacitated that they are unable to enteranother form of care.

The final area shown in the Nursing Home sub-model captures cost information pertaining to each

of the various categories of Nursing Home accommodation and care services. The Nursing HomeCost array variable captures the cost information for the following categories of Nursing Homecare service:

Category 1 Care at $120.86 per day; Category 2 Care at $110.57 per day; Category 3 Care at $98.85 per day; Category 4 Care at $79.79 per day; Category 5 Care at $68.05 per day.

These categories of Nursing Home care are denoted in the model as numeric subranges 1 through to5.


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3.7 Hostel Care Model

Hostel care is based on the subsidisation of eligible organisations (Religious, Ex-Service,Local/State Government, Charity and Commercial) providing hostel type accommodation for agedand disabled people. The hostel accommodation and services are typically provided for persons

within the community requiring health care assistance, however not at a level equivalent to theservices provided by Nursing Homes. The flows into the hostel come from two main sources:

General Population; and People within the community currently being cared for through the HACC community

based program.

The demand for hostel based care is also bound by the availability of free resources denoted in themodel as Free Hostel Beds. Therefore, the model captures the accumulation of the generalpopulation waiting for resources to be made available in the Wait for Hostel variable. Again,where entry into the Hostel system is permitted a random selection from feeder groups is made.

The outflows from Hostel system consist of the following:

People requiring a greater level of health care assistance moving to a nursing home; People moving to the community based health care programs, HACC and CACP; and Death.

Each of these outflows are indicated as a rate capturing the numbers within the population by agecohort. Except for the death outflow, all outflows are constrained by the availability of sparecapacity within respective care programs. Two exit methodologies have been provided for theHACC and CACP programs. The method used for HACC is simplified, determined by the total exitrate and availability of free HACC resources denoted as beds. The CACP method incorporates thesame data with the addition of an age distribution breakdown for entrants to CACP. The choice ofmethod is dependent upon the availability of age distribution data.

Figure 8: Nursing Home Model (Powersim graphical interface)


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The final area shown in the Hostel sub-model captures cost information pertaining to each of thevarious categories of hostel accommodation and care services. The Hostel Cost array variablecaptures the cost information for the following categories of hostel care service:

Permanent Care at $3.45 per day; Personal Care Low at $25.90 per day; Personal Care Intermediate at $31.20 per day; and Personal Care High at $34.00 per day.

The respite care categories associated with hostel services are not captured because of ambiguitiesassociated with capturing this information separate from the other categories.

3.8 Home And Community Care Program (HACC) Model

The Home And Community Care Program (HACC) helps frail elderly and younger people with

disablilities to live independently in their own homes and engage in the community. The servicesprovided include delivery of meals, home help, home nursing, and transportation. The programalso provides support to the carers of these people, chiefly by periodic relief from their caringduties.

By offering a range of basic support services, HACC enables people to live at home for as long aspossible, where otherwise they would move to a hostel or nursing home. Funding for the HACCprogram is sourced jointly between the Commonwealth and each State and Territory Government.

Figure 9 shows the HACC sub-model. The model does not differentiate between respite ordomiciliary care and is centred around the HACC stock variable which captures population

numbers, by age cohort, in receipt of HACC funding. The inflows to the HACC program consist ofthe general population and Hostel patients. The population inflow is regulated by a waiting listwhich is governed by available HACC resources, shown as Free HACC Beds, as for the NursingHome and Hostel models. A random selection criteria is used as the basis for entry direct from thepopulation and from the other feeder groups. The maximum number of HACC recipients isconstrained by a monetary limit and an established HACC per capita expenditure.

The outflows from HACC are divided into the following streams:

* Patients who die whilst in receipt of HACC services; and* Patients whose condition deteriorates, requiring transfer to a higher level of care, either

to CACP, Hostels, or Nursing Homes.

The basis for exits from HACC into these streams is a transfer rate obtained from historical data foreach care program. These specified rates are selected randomly from the source groups.


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Figure 9: Home & Community Care Model (Powersim graphical interface)

3.9 Community Aged Care Package CACP Model

The Community Aged Care Package (CACP) service exists as a planned and coordinated range ofservices aimed at assisting people with complex care needs. Specifically, the program targets frailaged people who are assessed as requiring significant management of care service provision, areeligible for residential care, and prefer living in their own homes.

Financial assistance provided by the Commonwealth is a subsidy toward the overall cost to the careadministrator of providing services and of establishing and operating the individual programs. Thecomplex care needs may include a range of interacting physical, medical, social and emotionalareas requiring a highly skilled assessment and a comprehensive case management approach. Theprospective recipients will also have a need for assistance with the activities of daily living relatedto personal hygiene, dressing and grooming, meal preparation and consumption, administration ofmedication, transfer and mobility. As well, recipients will generally have a preference to remainliving at home with appropriate and reliable supports; thereby creating a further requirement forongoing monitoring and review of the day to day care needs.

These specific features of the CACP program distinguish it from the HACC program which may beconsidered more mainstream within the general community. Hence, the CACP program issignificant within the overall scheme of aged health care for a number of reasons. In particular, itscapacity to provide assistance to:

* Areas where residential facilities are considered inappropriate approaches to meetinglocal needs, such as some Aboriginal and Torres Strait Islander communities;

* Areas where residential facilities would be difficult to establish or sustain, such as ruraland remote communities with small populations or inner city areas where land costs arecost prohibitive; and

* Areas which do not have an adequate level of existing community aged care alternatives.


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As a pivotal component of the aged care system, CACPs are considered a major area in whichburdens on other higher level forms of care (particularly hostels) may be transferred. CACPs arecurrently being phased in at the rate at which the hostel places would have been introduced.The CACP sub-model as shown at Figure 10 has a similar structure to the Hostel and HACC sub-

models. Flows into the CACP system originate from the general population and persons in receiptof HACC funding. As for the other models the CACP entry is governed by a waiting perioddependent upon the availability of resources. A random selector is used as the basis for selectingpatients from the population and the other feeder groups. The maximum number of CACPrecipients is constrained by a monetary limit, set as Max CACP Beds, reflecting an establishedCACP per capita expenditure. The current level of Commonwealth recurrent subsidy for CACPs isapproximately $25.00 per day multiplied by the approved number of care packages provided by theprogram administrator.

The outflows from CACP are divided into two streams; patients who die whilst in receipt of CACPservices, and patients whose condition deteriorates and require a transfer to Nursing Home care.The basis for exits from CACP into Nursing Homes is a transfer rate obtained from historical datafor exchanges between HACC and CACP programs. The patients are selected randomly from thesource groups.

Figure 10: Community Aged Care Program Model (Powersim graphical interface)

4 User Interfaces

The model offers a number of customised interactive features. In addition to the users prerogativesin regard to manipulating data to examine particular scenarios, the user is able to vary the followinginputs: target nursing home beds, target hostel beds, and target date. This is simply achieved

by adjusting the slider controls to the desired settings, then performing a new simulationcorresponding to the new settings. A fresh run can then be performed by selecting the run optionunder the Simulation Menu. The model will track the performance over time (displayed as graphs)for the new simulation, also displaying the accumulations across the various models.


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Figure 11 below shows slider controls for the some key policy parameters:

Figure 11: Illustration of User Interface for Model

In addition to the above interactive features of the model, two supplementary modules have beendeveloped. The first melds expenditures across all care programs into one auxiliary variable simplycalled Tot_Cost. The second module enables the input of the Target Planning Benchmarks for allcare programs. By manipulating the planning targets and timeframes for bed allocations, the usercan monitor the systems resultant effect upon Max_NH_Beds, Max_CACP_Beds andMax_Hostel

Beds. The two modules are shown below in Figures 12 and 13:

Figure 12: Total Cost Module (Powersim graphical interface)

Figure 13: Policy Variables Module (Powersim graphical interface)


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5 Tests Of Model Structure And Behaviour

5.1 Validation

The initial simulation of the demographic sub-model revealed strong behavioural consistencybetween the population output of the model and observed real-world behaviour. Since the basisof our data input for population stock was 1991 Bureau of Statistics Census figures, covering birth,death and migration rates, we can closely reconcile predictions with present facts.

Owing to the unavailability of key data, complete validation of the aged care sub-models is notpossible. The deficiencies mostly involved patient movements between the various care programs,in particular, HACC and CACP. The development of the model has served to direct theDepartment of Finance officials in relation to gathering this kind of information in a formappropriate to the model. This will enable a more definitive validation process to occur in future

model development. As regards the structural aspects of the model, the authors have been guidedclosely by Departmental officials. This has given the authors an assurance that the model structureadequately reflects the real world connectivities and flows.

5.2 Trial Simulation

As a consequence of the inadequacy (and absence in some cases) of critical data, the behaviouraloutcomes of simulation runs are imprecise. Notwithstanding the lack of data, a trial run showingtypical simulations are presented below (Figure 14) for illustrative purposes.

These simulation results portray the development of the variables: Used_HACC_Beds,

Used_CACP_Beds, Used_Hostel_Beds, Used_NH_Beds over time. Multiple generations are used toreflect three different scenarios. They are to examine the effect of the following actions upon thesystem variables:

No Policy Change Target Nursing Home Beds = 40 per 1000, Target Hostel Beds = 50 per 1000 (aged in excess of

70 years of age); Timestep = 20 years

Target Nursing Home Beds = 40 per 1000, Target Hostel Beds = 50 per 1000 (aged in excess of70 years of age); Timestep = 10 years

Figure 14: Illustrative Simulation Outputs for Alternative Policy Scenarios


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The first action represents a do nothing approach to the problem, whereas actions 2 and 3compare the effects of compression upon the system variables. As well, development of thevariables: Total_Costand Used_Acute_Beds is simulated over a ten year timespan.

With the appropriate refinements and additions of data, such simulations will provide a more

representative portrayal of behaviour. In particular, the process by which costs are accumulated isof interest in the context of shaping future expenditure policy.5.3 Discussion

While the fulfillment of our initial objective of assessing the long term impact of Australias agingpopulation on health care resources was impaired by the availability of data, the model creation anddata acquisition phases of this project were extremely useful in many respects. Principally, ourconsultations with the Department of Finance Officials during the model creation phase wasmutually beneficial in resolving previously obscure relationships between care programs. Byexplicitly establishing the models structural connectivities, an enhanced understanding of the agedhealth care system was obtained.

As well, the information phase and subsequent acquisition of requisite facts, figures and otherhistorical information for the model was invaluable. The understanding of what significant eventshave shaped the present situation with aged health care is equally important in the evaluation ofhow it should be shaped for the future. It also helped contextualise the setting of the overallproblem. The model validation phase also highlighted a need for gathering vital informationrelating to patient transfer statistics on movements of patients between care programs (especiallyexchanges between HACC and CACP programs).

Importantly, the model enables the comprehensive study of what-if? scenarios, like the effect of

reductions in discharge rates for say the acute care stream of aged care. Here, the model signalsCounter-intuitive results, since the number of patients in hospitals would be expected to rise tothe maximum permitted bed capacity. As a result, waiting lists would grow, particularly if doctorsreduce the admission rate in an attempt to ease acute care congestion. In some cases, patients whoactually need treatment and care will be denied it. Hence, patients assigned to waiting lists for acutecare will be forced to remain in the community, but many of them will require domiciliary carewhile they wait. They in turn become another drain on the HACC and CACP services programbudgets. As the waiting list for acute care grows further, more money will have to be expended ondomiciled patients (since it is more inefficient to treat them in the community), leaving less moneyavailable for patients already in care. This will in turn affect the acute care services resulting ineven fewer admittances to hospitals.

It was apparent to us in undertaking the project that overall, there is a consensus of opinion that asteady shift in emphasis from the provision of Nursing Home and Hostel care to greater reliance onHACC will help to ease excessive strain on Commonwealth and States financial resources in thefuture. However, it is the subject of much debate whether such a shift is socially desirable andwhether funding should be flexible enough to ensure that genuine choice can be exercised by theaging community and their carers. Hence, the use of this model as an executive decision-makingtool must be tempered with a sound recognition of the intangibles, such as the impact ofsociological influences upon the systems behaviour.

It was also apparent that waiting lists and other delay mechanisms provide a major source offlexibility to the Government. Clearly, across a diversity of aged care functions, delay is a verynatural way to influence demand and hence to ration a limited amount of resources. Otherstrategies may be worth pursuing, such as reducing the emphasis on curative and restorative


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approaches to care, in favour of preventative approaches. The effectiveness of such strategiescannot be borne out by our model simulation, but are of interest in terms of the intuitivepossibility. Particularly the payback period required for such strategies to deliver significantreturns.

6 Conclusion

This modelling study has provided a formative insight into the aged care resourcing problem.Although the data limitations of the model at this stage precluded its use for tailoring specific policyresponses to the problem, illustrative simulations were presented and they demonstrate therobustness of the models structure, and its fitness for purpose in providing the Governments IDCwith a strategic decision support tool.

6.1 Recommendations for Further Model Development

It was beyond the scope of this study to examine socio-economic and various demographicinfluences upon the supply and demand for aged health services. In addition to other aspectsconsidered relevant and important, the authors recommend students or system dynamicspractitioners address the following points in any future modelling activities:* The effects on Government Budget outlays caused by the introduction of user charging (after

means-testing clients) for all forms of aged care.* The costs and benefits to the Government associated with the introduction of a health promotion

of a particular financial dimension if it is likely to alter life expectancy by a certain amount.

Bibliography

Australian National University (1994), Health Expenditure on the Aged. Will it Break the

Bank?,ANU Public Policy Seminar, Canberra, Australia.

Clare R. & Tulpule A. (1994), Australias Aging Society, Office of EPAC, Canberra, Australia.

Goodman Michael R. & Kleiner A. (1994), Using the Archetype Family Tree as a DiagnosticTool, in The Systems Thinker, Cambridge, MA, USA.

Goodman Michael R. & Kim Daniel H. (1993), The Attractiveness Principle: Trying to be AllThings To All People, in The Systems Thinker, Cambridge, MA, USA.

Gregory R.G. (1994), Some Economic Dynamics of Australian Aged Care Policies, ANUDiscussion Paper, Centre for Economic Policy Research, Canberra, Australia.

Institute of Actuaries of Australia (1991), Funding and Health Care In The Year 2000,Canberra,Australia.

Lannon-Kim C. (1991), The Vocabulary of Systems Thinking, in The Systems Thinker,

Cambridge, MA, USA.

Richardson & Pugh (1992), Problem Conceptualisation and System Conceptualisation.


19/19


19

Senge P.(1994), The Fifth Discipline Fieldbook, Bristol, VT, USA.

Wolstenholme E.F. (1992), A Systematic Approach to Model Creation, Journal of OperationalResearch Society vol 59.

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