When one system saves, another pays: the real cost of delayed aged care reform

New analysis from the Grattan Institute exposes a structural problem that leaders in health and aged care have been warning about for years. When an older person is medically ready to leave hospital but cannot secure an aged care place, the hospital absorbs an additional cost of $6,661 on average. This is not the cost of clinical care. It is the price of a system where slow or incomplete aged care reform simply shifts the burden onto hospitals.

In the push to save money in one part of the system, another part pays heavily.

The hidden cost of delays

Older people who cannot return home safely end up in hospital beds for days or weeks longer than clinically necessary. These delays increase frailty, heighten the risk of complications and make returning home far less likely. Over time, a prolonged hospital stay becomes the trigger for premature entry into residential aged care.

For hospitals, each delayed discharge becomes a direct cost hit. The longer an older patient waits, the more staff time, resources and bed capacity are consumed. For aged care providers, the impact appears later when residents arrive in poorer condition, with higher support needs and reduced potential for rehabilitation.

This is the definition of a false economy. Aged care delays do not save money. They shift the cost downstream where it becomes larger and harder to absorb.

A gap between systems that nobody owns

The drivers of discharge delays are well known. Assessments take too long. Transitional care places are limited. Permanent aged care beds are difficult to secure. Information exchange is patchy at best.

Yet the core problem is not complexity. It is accountability.

Hospitals are funded by states. Aged care is funded federally. The transition sits in no one’s portfolio. When budget pressure hits, both systems optimise internally while the most expensive failures occur in the space between them.

States point to aged care capacity.
The Commonwealth points to hospital inefficiency.
Neither side pays for the consequences. Hospitals do.

The numbers are impossible to ignore

The $6,661 figure is only the beginning. Costs climb even higher when older people are discharged into an aged care facility that is not their usual home, especially first-time permanent admissions. These trends are consistent across Victoria, Queensland, South Australia and Western Australia.

Scaled across thousands of older Australians delayed in hospital each year, the national cost reaches into the tens of millions. These inefficiencies are absorbed into hospital deficits and then quietly corrected with end of year state bailouts.

Meanwhile, elective surgery waitlists grow. Bed block worsens. Emergency ramping becomes routine. Workforce strain intensifies.

Everyone downstream pays for a transition gap that no one upstream owns.

Slow reform is now the most expensive choice

The new Aged Care Act and Support at Home program aim to reduce unnecessary residential admissions and strengthen community care. But none of that fixes the discharge delays hospitals face today. Likewise, states cannot stabilise hospital flow while aged care placements remain uncertain and slow.

Reform on one side will not succeed if the other side drags behind. Aged care cannot improve outcomes when older Australians arrive in declining condition. Hospitals cannot increase efficiency while discharge delays burn bed days and budgets.

At its core, this is not a funding problem. It is a design problem. A system with two parts and no shared responsibility inevitably pushes cost, pressure and risk to the point of least resistance.

Right now, that point is hospitals. And the people most affected are older Australians who should have been home sooner.