RSM Australia

Economic impact of COVID-19 on the Aged care and health sectors

The coronavirus will put immense pressure on the Australian aged care and health sectors. Given older people are most at risk from the virus, Australia’s aged care facilities have urgently put in place controls to avoid the spread of the virus ahead of a potential outbreak.

According to a health study undertaken in China to assess the risks involved with the disease, people aged over 80 have a 14.8% chance of dying from the virus. One in six Australians (around 16 per cent) are aged 65 or over, making this proportion of the population more at risk.

Coronavirus remains a key global health threat to both Australia and abroad, and according to the Australian Government’s Australian Health Management Plan for Pandemic Influenza (the AHMPPI), the Australian health sector is well prepared to respond to a pandemic.

The pandemic plan announced as part of the stimulus package by the government is aimed at enabling hospitals to prepare to a ‘surge capacity’, including fever clinics for early detection of the virus. The health sector emergency plan for the virus includes a series of asset_36.pngresponse escalations, from preventative self-isolation to enforced quarantine, up to the closure of public places, schools, cessation of public transport and enforcing of people to work from home. 

Given Australia is considered to be one of the best health systems in the world, with an annual budget of $185.4 billion in 2017/18, the health care sector should be prepared and able to respond effectively and efficiently. To place that into perspective, Australia has a budget of around $7,485 per person, compared to around $930 for China. The World Health Organisation (WHO) has responded with a $US675 million response plan, with the greatest concern being the spread of the virus to countries with weaker health sectors. Countries with weaker health systems are expected to experience a more prolonged and severe outbreak.

The largest concern facing the Australian health sector is its ability to maintain a normal health system in the face of an outbreak. With most hospitals already running at capacity, waiting lists for non-urgent treatments are expected to be further delayed into the second half of the year. With a classification of the coronavirus now considering it a pandemic, the Australian health sector has initiated its emergency response plan to contain the outbreak.

The Australian Government’s $17.6. billion stimulus package which includes a $2.4 billion direct injection into aged care, has been aimed at vulnerable communities such as pensioners and low-income households, to enable them to better respond to an outbreak. Low-income families and pensioners are anticipated to receive an additional one-off $750 payment, in an attempt to reduce the economic and social effects on vulnerable communities.  The aged care sector will receive $101.2 million for further training of aged care workers in infection control, support residential and home care providers to hire more staff. The Aged Care Quality and Safety Commission will also receive extra funding to help providers improve their infection control.

There is also a new Medicare service that has been set-up for individuals in self-isolation or quarantined at home which will receive $100 million in funding. A further $170.2 million will be spent on a Medicare-funded and bulk billed pathology test for COVID-19 – funding will be provided to aged care facilities as well to conduct pathology testing.COVID-19

Further concerns have been raised about the potential impacts on vulnerable communities, including isolated communities, low socioeconomic communities, and Indigenous Australians. In Wuhan, the centre of the initial global outbreak, the virus adversely affected low-income families and highlighted a social divide. Low-income households were less able to afford taking time off work or leave the infected areas and therefore were more likely to contract the virus.

The novel coronavirus outbreak represents a significant risk to Australia, both socially and economically. It has the potential to cause high levels of morbidity and mortality and to disrupt communities. The national health sector action plan (AHMPPI) has officially started, noting that the response to the novel coronavirus outbreak is now into the ‘Action’ phase. The effects of this outbreak will ultimately depend on the duration and severity of the outbreak in Australia. However, given the health and aged care sectors ability to cope with these types of large scale events, the effects are not anticipated to be long term at this stage.


If you have any questions or require further information or assistance in preparing your organisation for the potential impacts of COVID-19, please contact us today.

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