The CEOs of three providers argue the aged care system and its funding do not incentivise innovation and providing the best outcomes for residents.
Funding in Australia's aged care system is based on the amount of medications or number of showers a resident needs rather than whether they are happy, an inquiry has heard.
The funding structure itself needs to be more innovative, the head of a not-for-profit aged care organisation in Hobart told a royal commission on Tuesday.
"If we look at the way the industry is structured, if I might put it very simply, we are funded for the amount of medications we're giving, how many times we shower someone, what meals we provide," Glenview CEO Lucy O'Flaherty said.
"We're not funded for how happy a resident is and how we've reduced their sleep medication because they're happier and sleeping better.
"That might not seem like innovation but in the funding structure that would be innovative," she said in response to a question about how the aged care system can incentivise good practice.
Jennifer Lawrence, CEO of Perth-based Brightwater Care Group, said it is difficult for providers to be able to afford to do anything innovative.
"I really believe that we should be incentivised for the outcomes we achieve for our clients rather than have to demonstrate disability," Ms Lawrence told the aged care royal commission's Sydney hearing.
"So being able to incentivise providers - and I'm not sure how you would do that - for actually helping people lead a really good life and be as independent and as well for as long as possible, I think would be a great conversation for us to be having."
Group Homes Australia co-CEO Jonathan Gavshon said the organisation, which offers home care facilities for groups of residents in traditional homes in Sydney suburbs, had encountered challenges when it came to funding.
He cited the example of a person who had been advised by a social worker in hospital not to return, saying they could move straight into a residential aged care facility that received a $200 a day fee.
If they wanted to go back into the community or a model like that of Group Homes, they faced a long waiting list with no transparency for a level four home care package at $130-140 a day.
"From a funding incentive perspective it's completely misaligned relative to what might be the best care option for them going forward," Mr Gavshon said.