When families decide to move an older person into permanent residential care, they also face a series of difficult financial choices.

Under Australia’s aged-care system, residents may pay for accommodation through a refundable lump-sum deposit, daily payments or a combination of the two. The decision can involve hundreds of thousands of dollars; frequently, it involves whether to sell the family home.

One significant question mark inflects many of those choices: how long the resident is likely to remain in care.

The question is difficult for any individual to answer. But recent work by Dr Mengyi Xu, Senior Lecturer in the School of Risk and Actuarial Studies at UNSW Business School, and Dr Gaoyun (Sophie) Yan, a Research Fellow with the UNSW Centre of Excellence in Population Ageing Research (CEPAR) and the UNSW Ageing Futures Institute, provides a clearer picture of the patterns associated with length of stay, with a new online calculator making those findings easier for families and other users to explore.

The research, Length of stay in residential aged care: Patterns and determinants from a population-based cohort study, was published last year in Insurance: Mathematics and Economics, under Dr Xu’s previous affiliation with Purdue University and in collaboration with CEPAR. It analysed administrative data covering people first admitted to permanent residential aged care in Australia between 2008 and their final discharge or 30 June 2022.

The Length of Stay Calculator for Long-term Aged Care, developed from the statistical model used in the paper, allows users to enter a small number of characteristics and see how the estimated median length of stay changes across different types of facilities.

The tool is not intended to predict exactly what will happen to any one person. Its purpose is to provide a benchmark that can make an otherwise opaque part of residential aged care easier to understand.

A typical stay of a little over two years

The study found that the median length of stay was 27 months – that is, half of the people in the cohort stayed in permanent residential aged care for less than 27 months, and half stayed longer. But there was substantial variation around the median, including a smaller group of residents who remained in care for much longer.

Age and gender were among the factors associated with length of stay. Younger residents generally stayed longer, while women tended to have longer stays than men. “What was particularly interesting was that characteristics of the facility also mattered,” said Dr Xu. “Residents in not-for-profit facilities and in smaller facilities tended to have longer stays, even after accounting for other observed factors.”

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According to the study, residents in not-for-profit nursing homes had a median stay that was eight months longer than that of residents in privately owned facilities, and residents in facilities with fewer than 60 beds had significantly longer stays than those in facilities with more than 60 beds.

The researchers found less variation across different parts of the country. Median stays were relatively consistent across areas with different levels of remoteness and across most states and territories.

These findings do not mean that a facility’s ownership structure or size directly determines how long a resident will stay. “We would interpret these as associations rather than evidence that the facility characteristics themselves cause people to stay longer,” Dr Xu said. A longer average stay in a particular type of facility does not necessarily mean the facility itself produces longer stays; the people entering those facilities may differ in ways not fully captured in the data.

The researchers were also interested in the way residents move through the system. Rather than looking only at a person’s final episode of care, the study followed their complete residential-care history, including transfers between facilities. This matters because someone may spend time in several facilities during their overall period of care. Treating each episode separately, or focusing only on the final facility, can underestimate the total time spent in residential aged care and obscure the relationship between length of stay and facility characteristics.

By capturing those transfers and accounting for residents whose final discharge was not observed within the available data, the study provides a more complete picture of lifetime use of permanent residential care than an analysis based on a single admission or final episode.

A financial decision made early

The research has immediate relevance for families making substantial financial decisions soon after admission.

Under the accommodation payment arrangements introduced through the Living Longer Living Better reforms, residents may choose between a refundable accommodation deposit, a daily accommodation payment or a combination of both. The choice must generally be made within 28 days of admission.

“If a resident is expected to have a relatively short stay, a family may place greater value on retaining financial flexibility rather than immediately selling the family home to fund a large up-front payment,” Dr Xu explained. “This may also reduce the pressure to sell a major asset quickly, potentially under unfavourable circumstances.”

Length of stay is only one consideration among many. Health, family circumstances, available assets, interest rates and the terms of the accommodation agreement all matter. But without some sense of the likely duration of care, it’s harder for families to weigh those options.

This conundrum prompted the researchers to try to shed light on what they call a “black box” in permanent aged care. "The main motivation was to help older people and their families make better-informed financial decisions when entering permanent residential aged care,” Dr Yan said. “Accommodation costs can be substantial. Funding this payment can sometimes require the resident and their family to make major financial decisions, including whether to sell the family home.”

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The researchers say better information about length of stay can also inform broader retirement and family financial planning, such as decisions about how much liquidity to retain, whether and when to sell assets, and how to approach bequests or other financial commitments. “More broadly, aged care has received heightened public, policy and media attention in Australia, increasing the need for better evidence and greater transparency around residential care,” Dr Yan said.

“Understanding length of stay is important not only for residents and their families, but also for the aged-care system,” she added. “Reliable information on how long people remain in residential care can inform service utilisation, resource allocation and planning for future demand.”

Making the model easier to use

The research paper explains the statistical model and the relationships identified in the data, but those results are not necessarily easy for a general reader to interpret or apply. That is where the calculator comes in.

Users enter characteristics such as age and gender, then select different facility characteristics, including organisation type and service size. The calculator, designed and developed with assistance from research assistant Kaihao Yi, presents the estimated median length of stay for those combinations. “The calculator translates the fitted model from the paper into a user-friendly tool,” said Dr Yan. “We aimed to present the results in a way that is both easy to use and easy to understand.”

"Understanding length of stay is important not only for residents and their families, but also for the aged-care system"

GAOYUN (SOPHIE) YAN

The main intended users are older people entering permanent residential care and their families, particularly when they are comparing facilities or considering the financial implications of different expected lengths of stay.

The researchers also see potential uses beyond individual planning. A dedicated provider-facing section allows aged-care organisations to explore expected length of stay for different resident profiles and facility characteristics, which could support operational and capacity planning. Financial advisers may also find the estimates useful when discussing accommodation funding, liquidity and retirement planning with clients.

The calculator is an updated, public-facing extension of the research rather than a separate prediction system. It makes the model available in a form that users can engage with directly, without needing to understand the underlying statistical methods.

A benchmark, not a promise

The researchers are careful to point out what the calculator cannot do.

The study follows people first admitted to permanent residential aged care in 2008. While the long follow-up captures more complete care histories, the estimates reflect an earlier cohort rather than people entering care today, they explained.

The calculator also draws on a limited set of demographic and facility characteristics and does not account for factors such as detailed health status or specific medical conditions, the researchers noted. And because the study used area-level indicators rather than individual measures of socioeconomic status, the estimates may not reflect a particular resident’s financial circumstances or access to resources.

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For those reasons, the estimates should be understood as informative benchmarks rather than precise individual predictions. “More broadly, we hope the research and calculator can make permanent residential aged care less of a ‘black box’ for older people and their families,” Dr Yan said.

“Residential aged care is often something people only engage with when the need arises, so better information about how long people may stay can help them know more about what to expect. The project does not attempt to solve the broader issue of aged-care costs, but it can help make one important part of the planning problem – how long people may remain in care – more transparent.”

That added visibility may give families a better starting point for conversations that are difficult enough without having to begin in the dark.