THE DEMENTIA EPIDEMIC: ECONOMIC IMPACT
AND POSITIVE SOLUTIONS FOR AUSTRALIA
Prepared for

ALZHEIMER’S AUSTRALIA
byCanberra
March 2003

Disclaimer and Acknowledgements
This report was prepared by Access Economics for Alzheimer’s Australia, funded by anunrestricted grant from Janssen-Cilag and Pfizer who had no part in the direction or findings
contained in this report. Access Economics would like to acknowledge with appreciation thecomments, previous research and expert input from:

Professor Henry Brodaty
Academic Department for Old Age Psychiatry, University of New South Wales
Euroa Centre, Prince of Wales Hospital
Ms Anne Eayrs
National Policy Officer, Alzheimer’s Australia
Mr Richard Gray
Director Aged Care Services, Catholic Health Australia
Dr Anna Howe
Consultant
Professor Anthony Jorm
Director, Centre for Mental Health Research, Australian National University
Mr Lewis Kaplan
Chief Executive Officer, Alzheimer's Australia New South Wales
Ms Lynette Moore
Executive Director, Alzheimer’s Australia Victoria
Ms Virginia Moore
Dementia Services Consultant, Brightwater Care Group, Western Australia
Mr Alan Nankivell
Executive Director, Alzheimer's Australia South Australia
Mr Glenn Rees
National Executive Director, Alzheimer’s Australia
Ms Barbara Squires
Director, Centre of Ageing, Benevolent Society
Dr Michael Woodward
Director, Aged and Residential Care, Austin and Repatriation Medical Centre
Dr Robert Yeoh
President, Alzheimer’s Australia
The analogy of the receding tide on piii is drawn from Jorm (2001), paraphrased, in turn drawn from
Gavin Andrews (St Vincent’s Hospital, Sydney). Photo from www.williamjosephgallery.com. The fifth
epidemiological transition is detailed in Broe (2002).
While every effort has been made to ensure the accuracy of this document, the uncertain nature of
economic data, forecasting and analysis means that Access Economics Pty Ltd is unable to makeany warranties in relation to the information contained herein. Access Economics Pty Ltd, its
employees and agents disclaim liability for any loss or damage which may arise as a consequence ofany person relying on the information contained in this document.

© Alzheimer’s Australia, 2003.

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

CONTENTSEXECUTIVE SUMMARY........................................................................................................................................ IV
1.

DEMENTIA – THE EXTENT OF THE EPIDEMIC ......................................................................................... 1

1.1

EPIDEMIOLOGY AND AETIOLOGY ...................................................................................................................1

1.1.1
1.1.2
1.1.3
1.1.4
1.2

TREATMENT AND MANAGEMENT .................................................................................................................10

1.2.1
1.2.2
1.2.3
1.2.4
1.2.5
1.2.6
1.2.7
1.2.8
1.2.9
1.3

Worldwide prevalence ...................................................................................................... 31
Current prevalence in Australia ........................................................................................ 31
Projected prevalence in Australia ..................................................................................... 32

HEALTH AND SOCIOECONOMIC IMPACTS IN AUSTRALIA ...............................................................................33

1.4.1
1.4.2
1.4.3
1.4.4
1.5

Quality of care .................................................................................................................. 10
Prevention and early diagnosis ........................................................................................ 13
Pharmacological management......................................................................................... 15
Natural / alternative treatments ........................................................................................ 18
Other medical and surgical interventions ......................................................................... 19
Psycho-social interventions.............................................................................................. 20
Caring for families and carers........................................................................................... 24
Care in the community ..................................................................................................... 25
Residential Care............................................................................................................... 28

PREVALENCE.............................................................................................................................................31

1.3.1
1.3.2
1.3.3
1.4

Diagnosis ........................................................................................................................... 1
Types of dementia.............................................................................................................. 3
Aetiology ............................................................................................................................ 7
Mortality.............................................................................................................................. 9

Disability........................................................................................................................... 33
Socio-economic status and rurality................................................................................... 33
Employment ..................................................................................................................... 34
Use of medical services ................................................................................................... 34

INTERNATIONAL COMPARISONS .......................................................................................................................35

1.5.1
1.5.2

North America .................................................................................................................. 36
Europe.............................................................................................................................. 38

1.6

SUMMARY OF CHAPTER ONE.......................................................................................................................39

2.

THE DEMENTIA BURDEN FOR AUSTRALIAN PEOPLE ......................................................................... 42

2.1

DIRECT HEALTH COSTS ..............................................................................................................................42

2.1.1
2.1.2
2.1.3
2.2

INDIRECT FINANCIAL COSTS........................................................................................................................45

2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.3

Direct costs in 1993-94 and 2002..................................................................................... 42
Projections of direct costs ................................................................................................ 44
Home and community care costs ..................................................................................... 44
Lower workforce participation of people with dementia .................................................... 45
Family and carer costs ..................................................................................................... 46
Cost of welfare payments................................................................................................. 48
Modifications and aids...................................................................................................... 48
Summary of financial costs .............................................................................................. 49

THE BURDEN OF DISEASE ...........................................................................................................................50i

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.

COMPARISONS, CONSTRAINTS AND SCENARIOS ............................................................................... 52

3.1

COMPARISONS WITH OTHER DISEASES........................................................................................................52

3.1.1
3.1.2
3.1.3
3.2

CONSTRAINTS TO SERVICE DELIVERY .........................................................................................................55

3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.2.6
3.3

Comparisons of prevalence.............................................................................................. 52
Comparison of financial costs .......................................................................................... 53
Comparison of disease burden......................................................................................... 54
Medical and hospital services........................................................................................... 55
Pharmaceuticals............................................................................................................... 56
Research.......................................................................................................................... 57
Home and community care .............................................................................................. 58
Residential care................................................................................................................ 61
Health financing and cross-cutting access issues ............................................................ 65

SCENARIO ANALYSIS OF VARIOUS INTERVENTIONS ......................................................................................67

3.3.1
3.3.2
3.3.3
3.3.4

Pharmaceutical interventions ........................................................................................... 68
Support for family carers .................................................................................................. 73
Research resulting in a ‘cure’ ........................................................................................... 74
Summary of scenario analysis.......................................................................................... 75

4.

OPTIONS AND CHALLENGES .................................................................................................................. 76

4.1

SETTING THE SCENE ..................................................................................................................................76

4.1.1
4.1.2
4.2
4.3

National Action Plan for Dementia Care........................................................................... 76
Aged care reforms and the Two Year Review.................................................................. 77

THE FUTURE VISION ...................................................................................................................................79
STRATEGIES AND RECOMMENDATIONS .......................................................................................................80

4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
4.3.6
4.3.7
4.3.8
4.3.9
4.3.104.3.11
4.3.12

Prioritisation of dementia.................................................................................................. 80
Research.......................................................................................................................... 82
Prevention and early intervention activities ...................................................................... 82
General practice............................................................................................................... 83
Other medical and acute care services ............................................................................ 83
Pharmacotherapy ............................................................................................................. 83
Home and community support services ........................................................................... 84
Families and carers .......................................................................................................... 84
Strengthening community services provided though Alzheimer’s Australia...................... 85
Residential care................................................................................................................ 85
Cross-cutting issues ......................................................................................................... 86
Health financing................................................................................................................ 87

METHODOLOGY.................................................................................................................................................. 88
BRODATY TRIANGLE ......................................................................................................................................... 93
GLOSSARY OF COMMON ABBREVIATIONS .................................................................................................... 94
REFERENCES...................................................................................................................................................... 96ii

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

The receding tide
The next epidemiological transition
A century ago, Australia’s birth rate was much higher, but few people survived to old age. With better
sanitation, the dangers of the past – infectious diseases and childbirth – became far less serious threats
to our health. As the tide of infectious diseases receded, the rocks that were always there were
exposed – systemic degenerative diseases such as cardiovascular disease and cancer. But, gradually,
even these problems are receding as we see the benefits of prevention programs and the better
treatments possible with new technologies, particularly new surgeries and drugs. As the tide recedes
further, the new rocks to be revealed are the neuro-degenerative diseases that strike the brain mostoften in old age. It is predicted that the neurodegenerative disorders will over the next two decades
replace the systemic disorders as the major causes of both death and disability. Managing thechallenges presented by these diseases, most notably dementia, will be the overwhelming priority ofhealth care in the 21st century.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

EXECUTIVE SUMMARY
Australia needs to move towards more positive public awareness of dementia, encouraging thecommunity to view this disabling condition with more optimism and hope. We have a long way to go inunderstanding its causes and best treatment practices. Managing the dementia epidemic presents hugeand growing challenges in terms of prevalence, costs and burden of disease. However, with appropriate
research, funding and prioritised coordinated strategies for home-based, community and residentialcare, it is possible to minimise these burdens, enhance the quality of life of many Australians withdementia and their families and carers, and move forward this century with world class models of careand prevention, until a cure is found.
The dementia epidemic has arrived. In Australia there were over 162,000 people with dementia in 2002,
including 6,600 under 65 – with ‘younger onset’ dementia.
□ The prevalence of dementia is growing rapidly – reaching the 500,000 mark around 2040.
□ Dementia is more common than skin cancer, yet with significantly less investment in public healthinitiatives.
In Australia, dementia already costs $6.6 billion - $5.6bn in real economic costs and $1bn in transfer
costs.
□ Direct health costs: Dementia is the most expensive mental health item in Australia, costing$3.2 billion in 2002, dominated by residential care costs ($2.9 billion). By the end of the decade,these costs will nearly double. In addition, home and community care costs are also rising steeply;
currently $175m of Federal community services program money is spent on people with dementia.
□ Real indirect costs: These are dominated by carer costs ($1.7 billion) valued at replacement cost,
together with the lost earnings and mortality burden of patients ($364m) and the cost of aids andhome modifications ($120m).
□ Transfer costs: $592m of tax is foregone each year for people with dementia and their families andcarers. Carer payments represent another $324m, while additional welfare payments total $52m.
o By mid-century, dementia costs may exceed 3% of GDP, from nearly 1% today.
The socio-economic and disability burden of dementia is severe.
□ 98.5% of people with dementia are disabled and use medical services more than the age-average.
□ People with dementia have lower than average incomes and are under-represented in theworkforce – 2.3% compared to the Australian average of 8.5% for people over age 65.
□ Dementia cost over 117,000 years of healthy life (disability adjusted life years or DALYs) in 2002,
and severe dementia has the highest disability weight of all conditions, equal with severerheumatoid arthritis and higher than terminal stage cancer.
□ Dementia is the second largest cause of disability burden in Australia after depression, and will
become the largest by 2016, continuing to outpace other chronic illnesses.
Dementia costs more years of healthspan than any of the national health priority areas.
Strangely, the enormity and priority of the dementia epidemic have not yet been acknowledged innational policy making. Dementia has links to recognised national health priorities including
cardiovascular disease, diabetes and depression, and it is the mostly costly area of mental health.
A national strategy to realise the vision, is long overdue.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
A national strategy must address current constraints to delivery of services for dementia, including:□ General practitioners (GPs) are generally poor at diagnosing dementia and could be assisted
through greater access to specialists services (eg, memory clinics) and education and training
programs, which could assist in diagnosis and ongoing support and management. Early diagnosis
means the person and the family benefit from drug treatments, support and planning.
□ Acute care: Average length of stay (ALOS) is prolonged and there is a lack of understanding about
dementia in acute facilities, which could be addressed through broad-based training and awarenessprograms, as well as capital needs such as dementia-friendly and secure environments.
□ Early access to cholinesterase inhibitor (CEI) drugs through the Pharmaceutical Benefits
Scheme (PBS) is impeded by an overly rigid definition of acceptable benefit, the exclusion of people
with non-Alzheimer dementia, and a cost-cutting approach that ignores the economy-wide benefitsof pharmacotherapy as investment in wellness.
o Comparative static cost-benefit analysis across the whole population of people with dementia
shows that, by deferring institutionalisation for one year and delaying progression of illness,cholinesterase inhibitors can save up to $49,219 per entry avoided (a 7:1 return on investment)
plus a 13% increase in healthspan.
□ Research is severely underfunded, yet there is scope for huge savings from investment in researchfor cause, prevention and care.
o $1 is spent on research for each $342 of the total costs of dementia (0.29%).
□ Despite welcome growth in home and community services, there remains unmet need resulting
from barriers to access that would be eased by continued additional funding in each of the major
programs. The lack of dementia-specific expertise needs to be addressed.
□ In terms of support for families and carers, new innovative models should be implemented, inparticular for respite care. Often the respite care that is available is inappropriate for people withdementia, and as a consequence there is a sub-optimal take-up rate (64%) of residential respite
places. There need to be incentives to encourage increased employment participation for families
and carers.
□ There is a need for substantially expanded dementia and person-centred care education andtraining across the care sector, for families and carers and care workers. New models of care need
to be trialled and utilised.
□ Better use could be made of the services of cost-effective community organisations such as Carer
Associations and, in particular, Alzheimer’s Associations, which are limited due to funding
constraints. Additional funding is required for programs such as the Dementia Education Support
Program (DESP), the Early Stage Dementia Support and Respite Program (ESDSRP) and theCarer Education Workforce and Training (CEWT) project to deepen penetration rates and easecarer burden.
□ Within existing residential care, there are multiple issues. Some of these include:o the descriptors in the Resident Classification Scale (RCS) currently do not accord well withassessments of Aged Care Assessment Teams (ACATs) or with appropriate placement ofpeople with dementia, and need to include behaviour and environmental aspects;o sustainable pricing needs to be addressed within the context of the current federal Residential
Aged Care Pricing Review, in particular capital costs for high care and recurrent costs for low
care facilities;
o current staff-to-resident ratios, staff training and nursing and care staff remuneration appear
inadequate for quality dementia care;o firmer accreditation and monitoring of standards are required with tighter restrictions placed on
chemical and physical restraint practices and more emphasis on person-centred care;v

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
o planning ratios do not make provision for dementia-specific care;o better access to appropriate care is required for people with dementia with serious psychiatric
symptoms, as well as those with serious mental health problems who develop dementia;
o cluster housing campus models are needed that can cater well for a range of different needs asa person ages, with facilities appropriate to various ‘groups’ (eg, people with younger onset
dementia for whom co-residence with older people is inappropriate) and various stages ofdementia.
□ Access for different groups of people with special needs must be addressed, including:o people with younger onset dementia;
o people from culturally and linguistically diverse backgrounds;
o indigenous people; ando people in rural and remote areas, including better use of new information technologies indelivering services.
□ Long term intergenerational planning including better insurance or savings vehicles is needed tofinance future growth in dementia prevalence, care and costs.
A national vision is needed which acknowledges the challenges of the dementia epidemic, and that
responds with a broadly scoped and positive agenda for future action to meet those challenges. A key
premise of the vision is a commitment to increasing healthspan for Australians with dementia throughprevention, care and cure. This commitment must come from all stakeholders though a nationally
coordinated strategy. Quality chronic care models must be utilised to maximise returns from healthresources that are becoming increasingly scarce as the demographic transition proceeds. Dementia
must be prioritised.
□ At present, although significant sums are spent on dementia care through the aged care system,
there remains inadequate recognition of and planning for the special needs of dementia care inmainstream community and residential care. Strategic coordination of dementia does not fit
completely comfortably within either the aged care or mental health portfolios.
□ Whatever decision is taken on the most effective point of coordination, it is clear that a whole ofgovernment approach is needed. This is because dementia care is so broad ranging, covering
aspects of aged care, community care, residential care, medical services, psychiatric and specialist
services, pharmaceuticals, workforce and housing.
Apart from prioritisation, five pillars of a future national strategy for dementia should involve:
1) a significant investment in research for cause, prevention and care;2) early intervention through improvement in diagnosis, and the provision of cost-effective
pharmacotherapies;3) comprehensive provision of support, education and respite services – in place in thecommunity as far as is optimal;
4) quality residential care, appropriately financed, that are centred on the person with dementia
and their family/carer; and5) provision for special needs, including people with younger onset dementia, people withbehavioural and psychological symptoms of dementia (BPSD), people from culturally andlinguistically diverse backgrounds, indigenous Australians and people in rural and remoteareas.
Detailed strategies and recommendations are provided in Section 4.3.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
If, starting today, we embark on such positive strategies, Australia can lead the way in effectively andsmoothly managing the dementia epidemic.
Advances in medical science cannot be predicted but the probability is that the total costs of dementia
care will rise significantly to the middle of this century to 3% of GDP given the demographic ageing of
the population. However, the current returns from expenditures on medication and carer support can be
expected to reduce the total costs to government substantially below what they might otherwise havebeen, through delays in admission to residential care. Every year residential care is delayed saves theGovernment $30,632 per entry avoided. And the quality of life of people with dementia, their families
and carers will be enhanced through these interventions. It is for these reasons we have to tackle theconstraints to services and invest in research.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

1. DEMENTIA – THE EXTENT OF THE EPIDEMIC
1.1 EPIDEMIOLOGY AND AETIOLOGY
Dementia is a progressive and disabling condition, primarily of older persons, that can bring turmoil andanguish to those involved. The progression of dementia over many years is often categorised as mild
(early stage), moderate (middle stage) and severe or advanced (late stage), before the person dies.
Different people may have different symptoms at various times, depending on the parts of the brain
affected and the characteristics of each individual. That said, symptoms can be broadly classified(Burns, 2001) as:
1. Cognitive impairment: Symptoms include problems with memory (amnesia), speech orunderstanding of language (aphasia), a failure to carry out physical tasks despite having intact
motor function (apraxia), and failure to recognise objects or people despite having knowledge of
their characteristics (agnosia).
2. Psychiatric and behavioural features: There may also be any of a range of psychiatric symptoms– such as depression, delusions1, hallucinations (visual and auditory) – and behaviours such as
wandering, incessant walking or agitation. A number of behavioural features derive from a person’s
response to the confused situation in which they find themselves, such as repetition, following,
crying or “confabulating”2.
3. Dysfunction in activities of daily living (ADL): In the early stages of dementia these can take theform of difficulties with shopping, driving or handling money. In the later stages more basic tasks areaffected such as dressing, eating and bathing.
1.1.1

Diagnosis

There are as yet no known biological markers for dementia, so clinical diagnosis is based on medical
and psychiatric history; neurological and physical examination; tests (mainly blood tests) to rule out
other conditions and record baseline levels of cholesterol etc; a ‘baseline’ evaluation of the person’s
ADL functionality, thinking and memory (such as the widely used Mini-Mental State Examination –MMSE3 – or Abbreviated Mental Test Score); and a caregiver interview or questionnaire.4 Magnetic
resonance imaging (MRI), computed tomography (CT) and positron emission tomography (PET) reveal
any brain atrophy (shrinkage) or evidence of stroke, and distinguish other brain disorders (eg, tumour,
bleed) that may be more treatable. Scanning technology involving radiology, electroencephalography,
blood and cerebrospinal fluid may in the future be able to identify characteristic plaques, tangles andother markers of dementia, formerly identifiable only in autopsy (Alzheimer’s Association US, 2002a)5.
Genetic testing presents serious ethical implications for families and clinicians (Black et al, 2001 p4, 21).
Black et al (2001) provide a good current summary of diagnostic processes and issues in Australia.
1 Examples are that a carer is ‘trying to poison me”, “trying to put me away” or “stealing my money”.
2 Confabulating may involve providing an answer that may not be true, but could be, since the real answer is unknown – eg,“What did they give you for dinner?’ Answer: ‘Fish, I hate fish!’ Reality: Lamb and vegetables.

3 MMSE tests orientation (time of year and current location), ability to absorb and retain information (delayed recall of thenames of three objects), level of attention, ability to calculate (count backwards from 100 by 7s) and competence in
responding to instructions (“Take a piece of paper in your right hand, fold it in half and put it on the floor.” MMSE scores areusually around 18+ for mild illness (maximum is 30), 10-18 for moderate illness and less than 10 for severe illness. It can bepoor at detecting very mild dementia and has biases in relation to education and culture.
4 For example, IQCODE (Informant Questionnaire of Cognitive Deficits in the elderly).
5 A team at the Brigham and Women’s Hospital, Boston US, achieved high accuracy in diagnosis of AD with single photon
emission computed tomography – SPECT (Neurology, June 1998). The National Institute of Aging in 2002 reports a powerful
new imaging technique, multiphoton microscopy. Advances with functional MRI are reported in Black et al (2001, p19-20).

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Differential diagnosis and assessment by a specialist is important, in particular distinguishing dementia
from “normal” memory and cognitive impairment of ageing, and from other disorders such as delirium,
major depression, drug abuse, amnestic disorder, anaemia6 and others. It is also important todistinguish between the different types of dementia, which can have different features of onset,
treatment and progression, often measured by the Clinical Dementia Rating Scale or Alzheimer's
Disease Assessment Scale - Cognitive Subscale (ADAS-Cog). Diagnoses by trained doctors are 80%90% accurate. Internationally recognised diagnostic criteria for dementia are:
□ DSM-IV: Impairment in memory and at least one of the following: agnosia, apraxia, aphasia or
executive functioning impairment.7 Cognitive deficits are severe enough to interfere withoccupational/social activities and represent a decline from previous level.
□ ICD-10: Decline in both memory and thinking, of a degree sufficient to impair function in daily living.
To tell? And how to tell…
“I don’t know if June knew she had Alzheimer’s. She may have had an idea because her brother andsister had it. We never sat down and talked about it. Later when I did refer to dementia, it was a bit hard
to know how much she was taking in. I think she felt it was all part of being old. She once said to me
that she had retired, like I had.”‘Jack’8
A survey of 281 GPs in the UK found that only 39% would inform their patients of a diagnosis ofdementia, compared to 95% who would inform them of a diagnosis of terminal cancer (Black et al,2001). Reasons for not telling include emotional distress and other negative impacts for the person andtheir family, fear of incorrect diagnosis, a judgement that there is no benefit in the person knowing, or arequest from the family or carer not to tell.
However, there is no evidence that this information has long-term negative effects – rather, thediagnosis may help explain confusing symptoms. Moreover, people have a right to know about their own
health, and information is likely to bring the best health outcomes in terms of ability to become informed
and supported, to know what to expect, to make plans and strategies for managing the illness andassociated disability, to facilitate access to services including medical treatments and community
services, and to enhance the relationships between the person, their families and carers and healthprofessionals. Indeed, the earlier that these processes begin, the better.
In telling a person about a possible diagnosis of dementia, many skills are required. There may besuspicions and questions early on and, before compelling evidence is accumulated, the possibility ofdementia is canvassed. Primary care professionals need to be truthful about what is happening, about
the possibility of and reasons for both a correct or incorrect diagnosis, and provide sufficient verbal andwritten information and referral so that the person and their family can understand and adjust to theimplications and options available. It may be beneficial for the person and a significant family member tobe informed together. Sufficient time should be allowed to respond to emotional reactions, which are
likely to include shock and grief that need to be expressed in healthy ways. Compassion needs to be
exercised, a team approach adopted, and written information, support, counselling and referral offered.

6 Other common physical tests include liver and kidney function, vitamin levels in the blood, thyroid function and blood

glucose levels (diabetes). The physical examination may include checking pulse and blood pressure, and for any signs ofstroke, chest or heart abnormalities or abdominal lumps.
7 Executive functioning – the ability to think abstractly, plan, initiate, sequence, monitor and stop complex behaviours.
8 A number of quotes in this document are extracted from personal stories collated in Hampson (2000). Where these arecited in this document they are sourced to the original storyteller.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.1.2

Types of dementia

There are numerous diseases that cause dementia. A fuller list is provided in Wimo et al (1998, Table
1.1.2, p6). The most common types are outlined below, noting that they can occur together.9
Alzheimer's disease (AD), the most common of the dementia disorders (comprising 50-70% of cases),is progressive, degenerative and currently incurable. The shrinkage or atrophy of the brain due to nerve
cell loss can be seen during life on a brain scan, as pictured below.
PET scans: Dementia involving AD10

A person with dementia
may appear healthy on
the outside, but on theinside, irreversible
brain damage isoccurring.

However, it is post-mortem analysis that confirms a diagnosis of AD, due to two key observations:□ neurofibrillary tangles within the nerve cell body. One theory assigns a causative role to the proteintau, which helps organise and stabilise a cell’s internal ‘skeleton’, but which is deformed in AD,
eventually aggregating into the tangles. This is a growing area of research.
□ abnormal (senile) plaque deposits between nerve cells, containing the protein beta amyloid (Aβ).
This is a prime area of research, to understand the abnormal processing of amyloid precursor
protein (APP) which yields the Aβ fragments.

Areas affected by AD
A Cerebral Cortex
B Basal Forebrain
C Hippocampus

Alois Alzheimer, a German psychiatrist and pathologist, first published his findings on these ‘tangles andplaques’ in 1907. They occur consistently in people with AD and, interestingly, have also been observed
9 The following sections utilise information from Burns A, Purandare N, Mann D and Bagley H, of the Personal Social

Services Research Unit, North West Dementia Centre, University of Manchester, NHS Executive North West, UK, 2001.

10 Images here and below courtesy of the National Institute on Aging, National Institute of Health, US, www.nia.nih.gov.

Illustrator: Lydia Kibiuk.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
in older people free from dementia. The ‘tangles and plaques’ disrupt normal electrical conduction of
messages within the brain. A nerve cell chemical acetylcholine is also deficient in AD. Symptoms of AD
can include:□ gradual memory loss
□ decline in ability to perform routine tasks□ disorientation to time and space□ impaired judgement, abstract thinking and physical coordination□ difficulty in learning and concentration□ loss of language and communication skills□ changes in personality, behaviour and mood (up to two thirds of people with AD have depressive
symptoms and about 20% exhibit aggression, more common in men)□ hallucinations (experienced by 16%) and delusions (false beliefs), often paranoid (30%)□ loss of initiative□ altered sleep patterns, eating disturbances and screaming.
Cummings (2001) lists the prevalence of neuropsychiatric symptoms that commonly accompany AD asagitation (60% to 70% of people), apathy (60% to 70%), depression (50%), anxiety (50%), irritability(50%), delusional disorders and psychosis (40% to 50%), disinhibition (30%) and hallucinations (10%).
The symptoms and behaviours of AD, as well as the decreased functionality in ADL, can be physicallyand emotionally difficult for families and carers to manage, requiring person-centred care skills, ongoingtraining, understanding and support.
“It is one of the truly heart-warming things about Alzheimer’s that so many partners and offspring quietly
take on another’s chores and devote themselves, quite selflessly, to the care of someone they love.”Hampson (2000), p54
Disease progression: Onset of AD is insidious and the disease lasts for 3-20 years (an average of 8)
from diagnosis although average length of time from diagnosis may be increasing as people are now
presenting earlier in the illness (previously diagnosis was made on average 2–3 years after onset ofsymptoms11). The first phase is typically around three to four years, characterised by mild symptoms ofmemory loss and disorientation requiring some assistance and surveillance (30% of diagnosed AD
sufferers have mild disease). As the disease progresses, more difficulties with daily functioning occur
and assistance with daily living is increasingly required. Moderate disease occurs in a further 40% of
diagnosed AD cases. In the final years the disease is severe (the remaining 30% of diagnosed cases),with communication and movement problems and incontinence requiring high levels of specialised care,often in a nursing home setting.12 Death is often attributable to pneumonia or infection.
Vascular dementia (VaD), accounts for a further 20-30% of cases of dementia. These people appear
to develop dementia from a narrowing of the arteries supplying the brain. The lack of blood can lead tomany small areas of damage to the brain, each too small to be noticeable as a ‘stroke’ but collectively
devastating in their effect. VaD is itself divided into sub-types:□ arteriosclerotic – reduced oxygen supply to the brain (chronic ischaemia);□ acute onset – following strokes;
11 Brodaty H and Lie

D, “Symptomatology: Functional Capacity and Behaviour” in Wimo et al (1998), p34.

12 When institutionalisation is required depends on marital status, caregiver availability/burden and disease severity. Galasko

et al (1995) found that about half the people developed severe symptoms within three years of onset, and two thirds withinseven years.

4The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ multi-infarct dementia – gradual onset following a number of mini-strokes (transient ischaemic
attacks) in the outer brain (cortical areas);□ subcortical or Binswanger’s disease – demyelination (loss of the covering sheath of nerve fibres)
affecting multiple sites in the deep white matter of the brain; and□ mixed cortical and subcortical VaD.
Like AD, VaD also results in symptoms that include impairment of memory, new learning, recognition,fine motor movements and planning and, since it is quite common for both VaD and AD to occur
together (mixed dementia) it may be difficult to separate the two. VaD can be distinguished if there is:□ abrupt onset eg, following a stroke□ stepwise decline – severe worsening, then stability, then further deterioration□ patchy cognitive deficits eg, in memory but not so much in language□ less personality change and more insight into memory loss than in AD, where it is lost early□ more severe mood swings and more common depressive symptoms, hallucinations and delusions□ focal neurological signs and symptoms (eg, weakness or loss of sensation in part of the body)□ fluctuation in functioning – ‘good’ days and ‘bad’ days
□ nocturnal confusion□ presence of vascular risk factors such as hypertension, diabetes.
Disease progression: As with AD, average survival is around eight years, although the course of VaD
can be highly variable. In the early stages there may be only minor cognitive problems such as problem
solving, planning and memory. There may be long periods of stability with abrupt stepwise worsening.
Disease progression is more amenable to control by addressing the severity of underlying vascular risk
factors. Cause of death is ultimately usually stroke or heart attack, or an associated chest infection.
Dementia with Lewy bodies (DLB): Lewy bodies are abnormal brain cells found in all parts of anaffected person's brain, the hallmark of this type of dementia. DLB can be quite common (10% of alldementia), and has sub-types such as Diffuse Lewy Body Disease, Cortical Lewy Body Disease, Lewy
Body Dementia, Senile Dementia Of Lewy Type, and Lewy Body Variant of Alzheimer's Disease. DLB is
similar to AD with ongoing loss of memory, language and reasoning, and often the presence of AD-type
senile plaques although seldom with significant neurofibrillary tangles. DLB, however, progresses much
more rapidly than AD, and frontal lobe and visuo-spatial impairments usually occur earlier. Other
features that differentiate DLB from AD include: motor traits of Parkinsonism, visual hallucinations,systematised delusions, REM disturbance, marked daily fluctuations, and falls and syncopal episodes(sudden loss of blood pressure resulting in fainting). In some families, DLB can be inherited.
Brain of a person with DLB
The diagram on the left shows the loss of nerve cells in the
midbrain region where the substantia nigra is located (where
dopamine is made), which also occurs with Parkinson’s disease. In
both diseases, the dark-brown pigment called neuromelanin is also
lost so the substantia nigra appears abnormally pale. Shrinkage ofthe brain is particularly seen in the temporal lobe, parietal lobe andcingulate gyrus. Lewy bodies can be detected by immunochemical
staining for the protein ubiquitin. The protein alpha synuclein is amajor component of Lewy bodies.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Fronto-temporal [lobe] dementia (FTD): also discovered by Alzheimer, in 1923, and commonly
named after his colleague Arnold Pick (‘Pick’s disease’). It occurs in 1 in 5,000 people, but with earlier
onset (even as young as 30-40), so is the second most common dementia of under-65’s. Illness
duration is longer – 10-15 years, with family history an important risk factor. Psychological testing andbrain scanning (showing loss of tissue in the front parts of the brain) enable differential diagnosis.
Symptoms are largely personality and behavioural changes, including restlessness and loss of
inhibitions resulting in unsocial attitudes and actions eg, sexual disinhibition. Behaviours become
repetitive and ritualistic, such as hoarding and food fads, with apathy and reduced or inappropriate
speech as the disease progresses. Final stages include muteness. Post-mortem can show tangled
bundles of proteins in nerve cells, similar to those of AD, as well as rounded ones called ‘Pick bodies’.
Parkinson's disease, a progressive disorder of the nervous system, results from loss of theneurotransmitter dopamine in the brain. Dopamine is a chemical involved in communication between thenerves that control voluntary movements such as walking, talking and writing. It can take many years for
Parkinson's disease to result in dementia, and indeed it may not always do so.
Huntington's disease: Huntington's disease is a hereditary disorder of the central nervous systemaffecting about 1 in 10,000 people. It often strikes in mid-life (ages 30-50) but ranges from 2 to 80, andruns a relentless degenerative course over a period of 10-25 years. Unusual jerking or twisting
movements of the body (‘chorea’, its distinguishing characteristic) accompany the onset of dementia
with cognitive and emotional elements. Other symptoms later on are muscle rigidity, and impairments tospeech and swallowing (choking on food becomes a concern). Mortality is often from complications
such as heart failure or aspiration pneumonia. There is now a presymptomatic blood test available
although taking it is the prerogative of at-risk individuals. Cell death in Huntington's disease may becaused by a ball of protein that forms in the cell nucleus, with current research exploring possible drug
treatments to prevent the accumulation of protein in cells.
Creutzfeldt-Jakob disease, is one of a group of disorders called human spongiform encephalopathies
that, until recently, were extremely rare, with an incidence of about 1 in 2 million, onset normally
between age 50 and 70 and with rapid deterioration. People may quickly pass from dementia symptoms
into akinetic mutism (catatonic state) and die within 6 to 18 months. Recently a variant of CreutzfeldtJakob disease has arisen with younger onset (mostly people under 30), transferred to humans fromanimals with Bovine Spongiform Encephalopathy (‘Mad Cow Disease’). In most instances the disease
appears without any apparent obvious cause, although there are very rare inherited forms, such as
Gerstmann-Straussler Syndrome (characterised by ataxia – loss of balance – and dementia with death
after 3-5 years) and Fatal Familial Insomnia, as well as a transmissible form (once common in a Papua
New Guinea tribe known as Kuru) and a few other medically induced cases. In most instances a definite
diagnosis can only be made through post mortem, characterised by:□ swelling and loss of nerve cells, producing a widespread spongy change throughout the brain□ an increase in the size and number of brain cells, called astrocytes□ abnormal prion protein deposits between nerve cells, sometimes in large plaque accumulations.
Because of the long and variable latent period during which the disorder can be ‘incubating’ it ispresently uncertain as to the extent to which iatrogenic Creutzfeldt-Jakob disease, especially the newvariant form, might increase in future years. About 100 cases of the new variant have been confirmed in
UK, where the risk is possibly highest.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Younger onset dementia
Harvey (1998) reports epidemiological data and bottom-up costings for pre-senile dementia conductedby the Dementia Research Group in the UK. Specific findings, supported in other research, were that:□ AD and DLB were less common in younger onset dementia, while FTD was more common;□ prompt and accurate diagnosis is critically important in younger people because there is more
likelihood that they are working, have children at home, have heavier financial commitments, havean inheritable form of dementia, and have difficulty obtaining a diagnosis and receiving care;□ the earlier treatment is commenced, the greater the possibility of recovery;□ neuro-imaging was under-utilised, which should be addressed through better primary care training;□ high levels of non-cognitive (psychological and behavioural) symptoms were identified in thispopulation;□ individual packages of care services were required, which were often unavailable or underutilised byyounger people (eg, community psychiatric services), with informal (family) carers filling the gap;
□ levels of caregiver distress and burden were higher – over half of family carers were considered tohave formal psychiatric illness, including depression, indicating that assessment and ongoingtreatment of the family carer should be linked to that of the person with dementia;□ lower use of community services led to a lower estimate of financial costs for this component but
shifted the burden to higher utilisation of institutional care – one third of the participants (under 65)
were in institutional care compared to 15% aged between 65-74 (the requirement for residential
care increases with age after age 65);
□ residential care was estimated to have twenty times the direct costs of community care;□ costs increased slightly with increasing severity of disease, in part masked by the jump in costs ofinstitutionalisation (people in residential care were in all disease severity groups);□ the study did not consider indirect costs, although concluding that these were also likely to be higher
for younger people, due to the greater economic impact of work sacrificed for both the person andtheir younger carer;□ dementia in younger people was thus found to have higher direct costs than in older people –£7,189 to £7,868 (A$20,636 to A$22,586) per patient per annum;□ average cost of AD was second-lowest while VaD, FTD and alcohol-related dementia were highest(the latter most costly);□ enhanced coordination, communication and training of community resources commenced in
response to the study, in order to better address the behavioural issues, reduce carer burden anddistress and hence delay institutionalisation and provide more cost-effective care overall;□ more epidemiological (‘bottom-up’) studies of younger onset dementia need to be done, as there
are so few with which to compare.
1.1.3

Aetiology

The causes of dementia are not well understood, although certain risk factors
may be significant.

Dementia is
not a ‘normal’part of ageing

Age: Age is the most well-accepted risk factor, with the likelihood of dementia
increasing from around 1 in a 1000 for people under 65, to 1% for people in their early sixties to wellover 50% for people in their nineties.
Family history: Genetic factors contribute to dementia risk, particularly for certain types of younger
onset AD. A clear inherited pattern of AD exists in less than 10% of cases. Several genes have been
identified on chromosomes 21 and 14 in the familial type of AD. In the more common sporadic type,
people with the e4 form of a gene for a protein called apolipoprotein E on chromosome 19 (APOE-ε4)7

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
tend to have a higher incidence of AD than the general population.13 In some cases of FTD, there ismutation of a gene on chromosome 17 that makes tau, inhibiting the protein’s function and causing it tobundle up into tangles and Pick bodies. However, about half of cases do not have these changes in tau
protein, although there are strong familial indicators for this type of dementia. In Creutzfeldt-Jakob
disease, the prion gene is located on chromosome 20, with inherited forms the result of mutations in thisgene, causing a 50% chance of children inheriting the disease from an affected parent. For Huntington's
disease, there is a ‘genetic stutter’ - a stretch of DNA repeated over and over at one end of a gene on
Chromosome 4. Much more work needs to be done to fully understand how genetics influences theincidence of AD. In addition, there is growing concern that genetic testing (eg, for the e4 allele) may leadto misunderstanding and that insurance companies or employers may misuse positive test results.
Gender: Over the age of 80, women are at slightly higher risk of AD, while men may be at higher risk of
VaD. The Boston University School of Medicine Multi-Institutional Research in Alzheimer’s Genetic
Epidemiology study showed that by age 93, female risk is 13% higher than male risk. There is someevidence that higher risk in women may be due to post-menopausal hormonal changes.
Cardiovascular risk factors, stroke-related and atherogenic causes contribute to VaD and there isincreasing evidence that they also contribute to AD – including high blood pressure (severe systolichypertension), narrowing of the arteries (atherosclerosis), irregular heartbeat (atrial fibrillation),
ischaemic heart disease and attacks (myocardial infarction), diabetes, high saturated fat and LDLcholesterol intake and smoking.14 On-pump coronary artery bypass graft surgery may contribute to VaD.
Education and employment: One hypothesis is that higher levels of education or a lifetime of mental
activity may increase the brain reserve by increasing the synaptic density in the neo-cortical associationcortex (Stern et al, 1994). Other studies suggest that specific occupational exposures may increase AD
risk, such as manual work (Fratiglioni et al, 1993) and exposure to organic solvents (Kukull et al, 1995)
or electromagnetic fields (Sobel et al, 1995 and 1996), for example in occupations such as carpenter,electrician, machinist, sheet metal worker, typist or welder. If further research strengthens this evidence,and the link is not just socio-economic, there would be further rationale for preventive workplacemeasures such as shielding and separation.
Other possible risk factors: Psychiatric illness (especially depression) may also contribute to AD, as
may previous thyroid diseases, head trauma, excessive alcohol intake, or aluminium (eg, in drinking
water)15. Free radical damage to neurons (oxidative stress), probably the most significant cause of
biological ageing, may contribute to dementia (Christen, 2000). Inflammation, involving cytokines andprostaglandins, may be another contributing factor to AD, primarily because beta-amyloid is an
inflammatory protein (C-reactive protein is a marker of inflammation associated with AD)16. Glycation isa process central to aging, where advanced glycation end products (AGEs) are formed that may also bepart of AD, as they have been found in the neurofibrillary tangles. There has also been the hypothesisthat the immune system may gradually attack the brain as we age. Some brain disorders that cause
13 ApoE is a transport protein in lipid metabolism with three major isoforms – e2, e3 and e4 on chromosome 19. It is the e4

allele that is associated with increased risk of AD (e2 is thought to reduce risk). This is another area of research, as is thelink with Down’s Syndrome; nearly all people with Down’s Syndrome (trisomy 21) who live into their 40s develop AD.
14 A few studies have shown reduced incidence of AD among light smokers (fewer than 10 cigarettes per day), but increased
incidence among heavy smokers (more than 20 cigarettes per day). Nicotine causes acetylcholine transmitter release and isthus theoretically of benefit in AD which has reduced acetylcholine levels.
15 If AD is a possible long term outcome of head trauma, there is even more justification for public prevention activities suchas compulsory seat-belts, helmets and restrictions on boxing. Aluminium, mercury, copper and other metals found in thebrain tissue of people with AD may not cause AD, but result from the disease process. Further research is needed to clarify
the roles of these metals in dementia. For more detail, see Alzheimer’s Australia (2002b).
16 A recent study on CRP as a marker (or playing a causal role) is in Ann Neurol 2002,52: 168-174.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
symptoms similar to AD are caused by slow viruses. However, a virus specific for AD has not been
identified. There has been some evidence of lower prevalence rates for AD in some developing
countries and in rural areas, although the evidence regarding ethnic and cultural influences is unclear.
Possible protective factors that may reduce the risk of developing AD, include:□ Use of pharmacotherapies: The use of anti-inflammatory drugs (eg, in treating arthritis) – including
both steroids and non-steroidal anti-inflammatory drugs (NSAIDs) – has shown a protective effectfor dementia, triggering research on inflammation as a possible element of dementia pathology.
Pooling data from many case-control studies show that people with prolonged use of antiinflammatories have around half the risk of AD, and it is being trialled as a preventive therapy inhigh-risk individuals in the US. Taking statins, the most widely used cholesterol-lowering drugs, may
reduce dementia risk by as much as 71%.17 Oestrogen may well have a protective effect (up to 30%
reduced risk), although there is contradictory evidence regarding postmenopausal hormone
replacement therapy as the link may be educational and socio-economic. Further research is being
undertaken in this area, such as the Women’s Health Initiative Memory Study, a large US trial.
□ Diet: Recent studies have found that high intakes of antioxidants from food – vitamin C, vitamin E,
and beta carotene, for example — may guard against AD.18 Other studies have identified fish andseafood, wine and Ginkgo biloba consumption as having a potentially protective effect.19 Morerecently, a Boston University study corroborated other evidence that the risk of contracting AD
nearly doubles in people with high levels of the amino acid homocysteine (also a risk factor for heartdisease), suggesting that consuming more folic acid and vitamins B6 and B12, which can reducehomocysteine levels, may also guard against AD (see also Section 1.2).
1.1.4

Mortality

The dementia specific mortality rate is twice the rate of people without dementia – 2.4 (1.4-4.4) per 100
person-years, controlling for co-morbidities and socio-demographic factors. In Australia the crude
mortality rate reported in 2000 was 19.1 per 100,000 (3,655 deaths), 26.3 for women and 11.8 for men,or 15.4 and 12.4 age-standardised respectively20. Age-standardised rates for people 85 and over are
much higher at 982 for women and 641 for men per 100,000. 70% of people over 75 with dementia die
within five years.21 Death certificates grossly under-report dementia as the cause of death, often citing
instead respiratory infection. AD is estimated to be the fourth leading cause of death in developed
nations (after heart disease, cancer and stroke).22 The number of deaths from dementia in Australia by
age and gender is shown in Table 14 (Section 2.2.1), under-estimated for the reasons above.
Dementia shortens life even in the very old. Iris Murdoch, prominent British novelist and lecturer,
described her decline as “sailing into darkness”. Her husband and carer, John Bayley, comments on
her death: “She is not sailing into the dark: the voyage is over, and under the dark escort of Alzheimer’s,
she has arrived somewhere. So have I.”Bayley (1998)23
17 “Statins Associated With Lower Dementia Risk”, Harvard Medical School Family Health Guide: Chapter Update - Brain and

Nervous System, available on www.health.harvard.edu, October 2001 update.

18 “Dietary Antioxidants May Decrease Risk of Alzheimer's Disease”, ibid, August 2002 update.

19 For example, British Medical Journal (fish), October 2002, the UK Alzheimer’s Society (ginkgo), October 2002, and Journalof Neurology (wine) November 2002 articles cited in Alzheimer Europe (2002).

20 AIHW (2002a), p36-37, for this and the next sentence.
21 Wimo et al (1998), p24.

22 Life Extension Foundation (2002).
23 Bayley’s book was made into a Miramax film, Iris, starring Judi Dench, Kate Winslet and Jim Broadbent. It sensitively

depicts Bayley’s life with Murdoch “from their first meeting at Oxford through their struggles with Murdoch’s heartbreaking
decline as Alzheimer’s disease eroded one of the keenest minds in contemporary literature” (http://video.go.com/iris/)

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.2 TREATMENT AND MANAGEMENT
Although there is no cure, there are ways to reduce risk factors, treat and manage the behavioural andpsychological signs and symptoms of dementia (BPSD), and improve quality of life for the individual andfamily carer, through:□ promoting an understanding of what is quality dementia care;□ prevention and early diagnosis/intervention;□ psychosocial approaches including support, counselling, education and memory loss programs;□ use of medications (pharmaceutical and natural) to treat cognitive decline and memory loss;□ medical and surgical interventions;□ the availability of appropriate community services, including respite; and□ residential care services, including dementia specific services.
The progression of dementia, the variety of causes and differences in individual circumstances prevent
any mechanical approach to treatment but the model of severity by types of care for patients with BPSD
(see the “Brodaty Triangle” diagram after the Methodology section) illustrates the different levels ofmanagement that need to be in place.
1.2.1

Quality of care

Henderson and Jorm (1998) summarise quality care principles as:□ accurate assessment of the resident’s needs and functioning□ knowledge of the staff about dementia□ individualised care
□ activities that are tailored to the individual□ appropriate attitudes of staff□ communication skills□ use of the physical environment24□ support for the family carer.
Rosewarne et al (2000) also emphasise the need for residential care facilities to own and practise aperson-centred care philosophy, from senior management down, and apply it to day-to-day practices,care planning, behaviour management, staff appraisals, personal care routines, communication withrelatives and activity programming. Features of quality care outlined below include the need to:□ redefine problems and understand behaviours of people with dementia – ie, focus on the person
and not just target the behaviours;□ plan and implement specialised activity programs – to stimulate interest and encourage activities
designed to address specific psychosocial needs and preferences;□ personalise the care – emphasising intimate knowledge of who the resident is – their history, family
connections, values and current circumstances;□ give staff ownership and care responsibility - build staff-resident relationships by subdividing large
numbers of residents into small working groups, for whom designated care teams are responsible;□ create domestically scaled social environments – cluster house designs, with kitchen-dining focus
areas, have been successful in creating a homelike environment and building social interactions;
24 For example, ample space for safe walking.

10The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ provide flexibility of care routines and practices – a relaxed organisational environment using
strategies that focus on timing, routines and needs of residents, preventing resistive responses;25□ cultivate professionalism of care and support of staff – create a culture of doing something
innovative, progressive and worthwhile, rather than a task-oriented ‘completion of jobs’ approach;□ include relatives in the life and care of the resident – expend effort to maintain continuity in theresident’s life through encouraging ongoing contact with family and others who can provide
undivided personal attention.
Person-centred care philosophy
Care is about the person behind the illness, and entering into their world. A fundamental premise is thatall people are entitled to the best possible quality of life, with dignity, in comfortable surroundings andwith the assurance that he or she has personal worth and is valued by others. ‘Challenging’ reactions
and behaviours may be environmentally provoked and are rarer in a calm environment with trained staff
who are understanding and take a personal interest in the residents and who promote a feeling of
security. Sherman (1999) is an excellent book for carers, written from many years’ experience as anAustralian carer in a residential setting and also caring for her husband, Bill, who had dementia. The
book is rich with personalised examples of care that is full of skilled insights into the reasons forbehaviours, patience, respect, wisdom and humane strategies for sensitively helping people.
For example, people with dementia may be prone to agitation, wandering, suspiciousness, inappropriate
language or screaming, sexual disinhibition, apathy, self-injury, combativeness, repetitious demands orresistance to maintaining hygiene. In each case there is a need to seek the reason underlying thespecific behaviour, and then as far as possible to meet the need - listening, responding, gently
prompting, providing reassurance, company, respect, praise, etc. The following checks can also help:□ environmental modifications, such as limiting noise and glare from windows to reduce confusioncaused by over-stimulation, putting calendars and clocks in many rooms, or playing soft music□ providing predictable but stimulating routines with structured times for daily activities and, if
insomnia is a problem, cutting down caffeine, getting regular exercise and avoiding daytime naps
□ explaining tasks beforehand, for example "Peter, I’m going to help you put on your shirt now"□ providing reassurance without challenging or contradicting accusations or misperceptions□ redirecting attention and use of light-heartedness and humour “The man in the mirror is taking his
clothes off – you put yours on and he’ll put his back on too!”□ dignified precautions to help prevent wandering/intrusions/”attacks” eg, disguised doors, signs□ recording behaviour patterns including frequency, timing and strategies that work with that person.
Modelling: The three women who sit near the outside door are irritated by Bob, who no longer knows,
and is beyond learning, how to manipulate handles and knobs. Several times a day he tries to go into
the garden. Gripping the handle, he rattles the door. The women call to him to stop. ‘Go away, go away’
they tell him, as he becomes infuriated when the door fails to open. For the next day of two the nurse
quietly opens the door for him. ‘There you are, Bob, you can go out now’, each time turning to thewomen to say, ‘He has forgotten how to open the door. He can’t help it, you know.’ From then on, one orother of the women opens the door for Bob, explaining to anyone who cares to listen, ‘He can’t help it,
he’s forgotten.’ Staff praise them for their caring attitude.
Sherman (1999)

25 Rosewarne et al (2000, p66) describe this as “Flexibility and resident-centred care is a product of staff attitudes andorganisational predisposition, a more even allocation of direct care hours throughout the day, multi-tasking approaches,
resident-staff assignment models and a willingness to give more control to residents, or refrain from exerting control when
not really necessary.”

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Establishing connection

A key to providing quality
care is to provide effective
Normal connection
connection (different from
communication, which canIncreased
Increasing egocentricity
be passive) between theeffort to
as external world shrinks
maintainto immediate
person with dementia andconnection
environment of perhaps athe caregiver (either
metre diameter
formal or informal). This is
illustrated in the diagram
at left. As dementia
progresses, there is an
Personwithincreasing egocentricity ofcaregiverdementia
the person – their capacity
to connect to the world becomes increasingly smaller. Conversely, this means that any caregiver has toprovide greater effort to establish and maintain connection. Connection involves caregiver time andskills, and thus is intimately related to costs of care in terms of dollars as well as emotional burden that,in turn, relates to financial costs in terms of carer support levels, staff turnover and training.26
Alzheimer’s Australia (2003) provides an excellent summary of the philosophy, care environment andkey elements of quality dementia care. Current accreditation standards could be enhanced further topromote these aspects of quality dementia care. At present, the stated aims of standards andcertification are to “provide a high quality of personal care to every resident, to have a safe building andto be committed to protecting their resident's rights”27. Standards cover all aspects of residents' needsfrom health and personal care and safety to a range of lifestyle matters including independence, privacy
and dignity. Accreditation standards focus on:□ identification and compliance with all relevant State and Territory legislation, regulation, professional
standards and guidelines (including those issued by Nurses Registration Boards); and□ maintenance of an adequate number of appropriately skilled staff to ensure that the care needs ofresidents are met, with an obligation of providers to ensure that the staffing skills mix reflects current
resident care needs, and arrangements for the ongoing development of staff skills.28
Accreditation is granted through the Aged Care Standards and Accreditation Agency, with some 3000
residential aged care services currently accredited nationwide. Under the Aged Care Act 1997, theCommonwealth pays residential care subsidies – 75% of the cost of care for residents – only if
accreditation standards are met, with sanctions imposed for non-compliance29. Monitoring involves
scheduled visits and spot checks. The complementary certification process focuses on improving thephysical environment in residential facilities, which led to over $800m in capital investment between
1997 and 2001 when first phase accreditation was completed. Under the 1997 Act, a service must be
certified to be able to charge accommodation bonds or accommodation charges or receive concessional
resident supplements. All new buildings must meet privacy and space requirements while existingbuildings must meet these no later than 31 December 2008.

26 Diagram and concept courtesy of Virginia Moore, Dementia Services Consultant, Brightwater Care Group, withacknowledgement also of Perrin and May (2000).

27 DHA, Residential Care Standards and Accreditation, available on www.health.gov.au/acc/rescare/standard.htm

DHA, Residential Care Manual - Chapter 11 - Accreditation and Quality of Care, Sep 2002, available on
www.health.gov.au:80/acc/manuals/rcm/contents/11accrq3.htm
29 At the time of writing, 5 facilities Australia-wide had sanctions imposed, 2 in QLD, and 1 in each of NSW, SA and TAS.
28

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.2.2

Prevention and early diagnosis

Prevention and research: Prevention of dementia can involve either elimination (not yet possible) or,
as for other chronic diseases of ageing, postponement of onset till later in the lifespan. The best chancefor disease elimination is possibly related to stimulating an immune system response that destroys Aβ(see Section 1.2.2).
Postponing onset: Addressing contributing medical or psychological factors (eg, cardiovascularfactors, reducing head trauma) is important as either preventive or treatment measures – for example,
cessation of smoking, balanced diet, regular exercise, modest intake of alcohol, controlling bloodpressure and cholesterol30 (eg, through statins, cholesterol-lowering drugs and reduced salt intake).
Reducing stress may also be important. The preventive value of NSAIDs, oestrogen, antioxidants, antiplatelet treatment and reducing homocysteine through increased folate are discussed in the following
sections.
Research: A number of dementia research activities are funded through the National Health andMedical Research Council as well as other public and private interests, although these are limited (seeSection 3.2.5). There is scope to substantially increase research in prevention, treatment and cure:□ understanding of the biomedical causes of dementia;□ measures that can prevent or postpone the onset of dementia;□ new pharmacological therapies to slow and reverse disease progression (these may be just aroundthe corner);□ epidemiological (population-based) medical and public health research31;□ effective models of care for people with dementia.
“Alzheimer’s research is advancing at an accelerating pace. Recent discoveries support the notion that
we may soon be able to delay the onset of the disease and allow people with Alzheimer’s disease tocontinue functioning independently for longer periods.”
US Alzheimer’s Association
Prospects for indicated prevention: Indicated prevention is one step before early intervention, where
people have minimal symptoms foreshadowing disease. Researchers have proposed the existence of astate of Mild Cognitive Impairment (MCI) – memory impairment beyond that expected for their age andeducation – which may be an indicator of high risk (10-15%) for developing dementia (Black et al, 2001).
Jorm (2002) states that:“It is only a matter of time before some drug is developed which actually slows progression. If sucha drug were very cheap and had no side effects, we might want to give it to everybody above acertain age as a [selective] preventive measure. However, if it were expensive and had side-effects,
as is more likely to be the case, it could be reserved for people with minimal symptoms, forexample with MCI.”

30 The Syst-Eur trial showed that people aged 60+ with systolic hypertension and randomly receiving anti-hypertensive drugs

had 50% reduced incidence of dementia (AD and VaD) after two years. Another large trial underway is the PROGRESS trial,with results expected soon. Statins may reduce stroke risk by 29% and there is also evidence they lower the risk of dementia(Jorm, 2002).
31 This research, together with awareness campaigns, has enabled diseases such as lung, skin and breast cancer to be seen
as conditions with preventable elements subject to a public health approach.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Trials of such preventive interventions are already occurring, including for example one trial in the US
comparing the effects of vitamin E and donepezil (Aricept) in preventing the development of AD in
people diagnosed with MCI.
Early diagnosis and intervention helps those involved have more control over the disease and theirlives. By early use of pharmacotherapies and by learning strategies to help cope with the many changes
brought on by dementia, people are more able to live meaningful, productive lives for longer periods.
Being able to recognise symptoms and obtain an accurate diagnosis early means:□ Drug and medical treatments can be commenced which
benefit people most in the early to moderate stages;
Early diagnosis means□ Reversible conditions (such as depression and delirium)
the person and the family
can be treated, improving the prognosis;
can benefit from drug
□ Financial and legal plans can be made, with the full
treatments, support andagreement of the person with dementia;
planning.
□ The individual and family can adjust better to the diagnosis,
understand the illness and learn how to cope better throughadequate counselling and education.
Pipher (1999) observes that taking a pragmatic, uncomplaining approach, as many older people(particularly males or people of English origin) may do, may not be helpful – their “stoicism is now called
denial”. Hampson (2000) observes that “denial is a major issue in the delay of diagnosis of dementia,
and even after diagnosis”. Many family members cannot come to terms with dementia or feel that it isstigmatised. Initially it can be harder to accept because of the lack of tangible “proof”. For others, theproblem may be convincing the family doctor that something is wrong, when dementia symptoms are
diagnosed as stress, tiredness, depression or ‘old age’. Even though this may be ‘comforting’, several
years later the symptoms become too severe to ignore and precious time has been lost.
However, many GPs remain uninformed about advances in dementia assessment and diagnosis, havedifficulty diagnosing dementia and do not refer the person with dementia on to community support
services, although steps are being taken to address these problems (see Section 1.2.4 on GPs and3.2.1 on cost-effectiveness of early intervention).
“I still consider myself fortunate. I believe my early diagnosis led me to accept the disease more easily
because I still retain powers of reasoning. It has allowed Mavis and me to become educated about thedisease and to complete all the legal documents while I am still in possession of my faculties. Together
we can make important decisions about my future treatment. My wishes can be discussed in a rational
way without either of us becoming upset. For these reasons I urge the medical profession to make anearly diagnosis and allow Alzheimer’s sufferers the time to make their own decisions.”‘Phillip’
Another important benefit of early intervention is the positive impact for the caregiver. A recent US study
demonstrated that the well-being of the caregiver and care recipient are closely related, and in particularthat the risk of clinical depression for the caregiver was higher if either the care recipient was depressedor agitated, or they themselves were in poor health. Early interventions for the person with dementia
were thus found to also increase the level of health of the caregiver. Black et al (2001, p11) also point toevidence that early diagnosis can improve the health and coping skills of the family carer and delay
institutionalisation.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.2.3

Pharmacological management

Anticholinesterase32 (anti-dementia) drugs: The chemical that breaks down acetylcholine is blockedby drugs called (acetyl) cholinesterase inhibitors or CEIs. They work best in the mild to moderate stagesof AD – by the later stages so few cells are left that make acetylcholine, that even if their breakdown isprotected there are still not a lot carrying messages. Evidence is also growing that they may be effectivein VaD and dementia with Lewy bodies, and that use in later stages may also be beneficial. The
situation is very much a moving feast. Numerous trials indicate that consistent prolonged use of thevarious anti-dementia drugs delays the progression of symptoms of dementia in the majority of people
for nine to twelve months on average and possibly longer (see Section 3.3.1). There may be some
improvement in clarity of thought, ADL functionality, mood and behaviour. The current drugs do not
result in halting the progression of dementia, although studies are looking at the effectiveness of
combination treatments to this end.33 Side effects (which vary with each drug) may include nausea,
vomiting, cramps, fatigue and loss of appetite, and are minimised if the dose is gradually increased,
often settling down with time. There are four cholinesterase inhibitors currently available in Australia.34□ Tacrine (“Cognex”) was approved for marketing in Australia by the TGA in 1995, but two
successive applications for a PBS listing were refused. Its use is thus uncommon in Australia.
□ Donepezil (“Aricept” by Pfizer) was approved for marketing in 1998, but an initial application for
PBS listing was turned down, ostensibly for cost-benefit reasons. The efficacy and tolerability of
Aricept has been established, with Cochrane review concluding: “In selected patients with mild or
moderate Alzheimer's disease treated for periods of 12, 24 or 52 weeks, donepezil produced
modest improvements in cognitive function and study clinicians rated global clinical state morepositively in treated patients” (Birks, Melzer and Beppu, 2003). Results showed improvement frombaseline ADAS-Cog and Clinician's Interview-Based Impression of Change measures. Since then,Aricept has undergone extensive trialling against placebos and other drugs and in other contexts
showing, for example, that people with moderate to severe AD may also benefit from treatment.35□ Rivastigmine (“Exelon” by Novartis) was approved for marketing in 2000 and both it and donepezil
became available on the PBS from February 2001, after subsequent applications. Cochrane review
concluded that: “Rivastigmine appears to be beneficial for people with mild to moderate Alzheimer's
disease. In comparisons with placebo, improvements were seen in cognitive function, activities ofdaily living, and severity of dementia with daily doses of 6 to 12 mg” (Birks, Grimley Evans,
Iakovidou and Tsolaki, 2003). Longitudinal studies of ambulatory patients with mild to moderate ADsuggest the gain on placebo may be an average 4.9 units (from 23 at baseline) after 26 weeks on
the ADAS-Cog from 6-12mg Exelon daily.36□ Galantamine (“Reminyl” by Janssen-Cilag) was approved for marketing and PBS subsidy from
1 November 2001. Cochrane study concluded: “This review shows consistent positive effects forgalantamine for trials of 3 months, 5 months and 6 months duration…. There is therefore evidence
for efficacy of galantamine on global ratings, cognitive tests, assessments of ADLs and behaviour.
This magnitude for the cognitive effect is similar to that associated with other cholinesterase
32 Also known as cholinergic drugs, cholinesterase inhibitors, anti cholinestrators.

33 For example, donepezil has been shown to improve aspects of cognitive functioning and on ADL in persons with AD(Saine et al, 2002). However, Phase III trials are showing that combination therapy of memantine and donepezil elicit asustained improvement in cognitive function. See “Forest Labs’ Drug Combo Effective in Alzheimer’s Study” Monday 9
December 2002, Dow Jones report (New York).
34 Medscape’s “New Treatments for Alzheimer's Disease: Pharmacokinetics of ChEIs” Drug Benefit Trends, provides aconcise comparative summary of the mechanisms of these drugs, usage, and side-effects. See also Alzheimer’s Association(2001b), including dosages, for this section and the prescribing information following.
35 See Birks, Melzer and Beppu (2003 Cochrane Library) and www.aricept.com, for product information.
36 See www.exelon.com for product information.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
inhibitors including donepezil, rivastigmine, and tacrine” (Olin and Schneider, 2003). Recent trials
suggest galantamine may slow decline in cognitive function (memory, learning and problem-solving)by 12 to 18 months in mild to moderate patients who take 24-32mg daily consistently over three
years ie, 50% delay in disease progression.37 Reminyl is subsidised on the PBS to a maximum of
16mg/day.
The full cost of CEI drugs to government in Australia in 2002 is approximately $160 per month. Rules for
obtaining subsidised Aricept, Exelon and Reminyl through the PBS are complex. People must have adiagnosis of probable mild to moderate AD confirmed by a specialist (MMSE score of at least 10), with abaseline cognitive measurement (ADAS-Cog) if the MMSE is 25 or more. A diagnosis of VaD ordementia with Lewy bodies precludes the subsidy. Continuing to receive the subsidy depends on the
results of reassessment within or after the first six months, which must show cognitive improvement ofat least 2 MMSE points (or of at least 4 ADAS-Cog points if this was required). The subsidy thencontinues to be available until the doctor identifies that AD has moved into the severe stage, withreassessment every six months. The initial authority application (including test results), and the firstongoing authority (also including test results) must be in writing; there is no access to telephone, fax oremail approval.38 There are special provisions for people who have language difficulties affecting thetest results eg, indigenous people, people from non-English speaking backgrounds and people withintellectual disabilities or illiteracy. PBS data shows around 18,500 Australians were using Aricept,
Exelon and Reminyl in December 2002, some 16% of those with mild and moderate dementia or 23% of
those with mild and moderate AD. There thus appears scope for increasing application to the target
group.
Aspirin and blood-thinning (anti-platelet) agents: These reduce the risk that blood will clot andproduce a stroke, as well as having anti-inflammatory properties (see footnote 43). Cochrane review
stated that: “Aspirin is widely prescribed for patients with a diagnosis of vascular dementia; in one study,
completed by geriatricians and psychiatrists in the UK, 80% of patients with cognitive impairment (withvascular risk factors) were prescribed aspirin” (Williams, Rands, Orrel and Spector, 2003). Although
they form the mainstay of treatment to slow the progression of VaD, there is a division of opinion on
their effectiveness. One side-effect of aspirin is increased risk of bleeding, particularly for high-risk
people (eg, with duodenal or stomach ulcers).
Other medications: A variety of drugs are used to manage symptoms of depression (eg, insomnia),
restlessness, hallucinations, hostility and agitation, and can help the involuntary movements andemotional disorders for some people with Huntington's disease.
Other existing new or upcoming drug therapies for dementia include:□ future amyloid-based treatments: research into amyloid processing has identified some potential
therapeutical applications:• stimulating an immune system response that destroys Aβ. Although the first immunotherapy toreach trials – the Alzheimer “vaccine” – was disappointing (Chapman, 2000), new ones underdevelopment show promise in preventing and possibly reversing AD39

37 See “Study shows benefits of reminyl may be sustained for at least three years for patients with alzheimer’s disease” onwww.janssen-cilag.com/news/detail.jhtml?itemname=c_02_news_jul02 See www.reminyl.com for product information.

38 International Psychogeriatric Association, 2001 and www.health.gov.au/pbs/index.htm

39 Clinical trials of AN-1792, the investigational “Alzheimer vaccine” being developed by Elan Corporation and Wyeth

Pharmaceuticals, were stopped in January 2002 after 15 participants developed symptoms of brain inflammation. However,new findings in late 2002, reported in Nature Medicine and Nature Neuroscience, by two groups of researchers provide
evidence that the concept underlying the vaccine is promising and that modifications may be possible to make it safer. The

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
•

□

□
□

□

□

□

secretases – are inhibiting enzymes that break up APP, thus reducing levels of Aβ by affecting
its cleavage and metabolism. These are a promising area of research currently at the clinical
trial stage.40• p53 inhibitors – the protein p53 helps damaged cells to die, thus defective p53 allows cancer
cells to grow. In very recent research, new compounds are being developed to inhibit p53 in thebrain, keeping cells alive longer and protecting the brain from Aβ.41
memantine, available in the EU and undergoing Phase III trials in the US, is a non-competitive Nmethyl-D-aspartate antagonist that blocks the action of glutamate (glutamate can over-stimulate thenervous system and become toxic to nerve cells). Memantine has had positive response in theClinical Global Impression of Change and the Behavioural Rating Scale for Geriatric Patients(BGP), particularly the 'care dependence' sub-score. It is very promising, particularly in combination
therapy.42
hormone replacement therapy – oestrogen and progesterone supplementation continue to beinvestigated, though opinion is mixed (Fillit, 2002) – see possible protective factors (Section 1.1.3).
anti-inflammatories – including preventive effects of long term use of NSAIDs (Zandi et al, 2002)43,
ibuprofen, Cox-2 inhibitors. Anti-inflammatory drugs may warrant future trials, although they canhave potentially dangerous side effects so preventive benefits may only outweigh risks in very highrisk individuals.
possible new acetylcholinesterase inhibitors – research is continuing in the hope of improved antidementia drugs which may further slow the progression of dementia – one such (metrifonate),
seemed promising but was withdrawn after a number of adverse effects. More recently, phenserine,
a third generation acetylcholinesterase inhibitor with dual action, reducing APP and Aβ formation,
has possible potential to further slow progression of AD and other dementia.44
MAO-B inhibitors (anti-oxidants) – notably selegilene (Eldepryl or Deprenyl), a drug approved foruse in Parkinson's disease, which may have a long-term helpful effect on memory in mild tomoderate AD through a number of pathways – reducing free radical damage, anti-apoptotic(reducing programmed cell death as per p53 below) protecting cells from the toxic effects of Aβ andincreasing nitric oxide production which increases cerebral blood flow (Life Extension Foundation,2002).
nerve growth factor (NGF) supplementation – stimulates neuronal cell growth, survival and repair,
and is a promising area of research, with trials now underway.45

study showed 60% reduction in plaque formation in mice, using an antibody that blocks the CD40-CD40L protein. Because
there was also a reversal in established plaque formation, this research holds hope as both a prevention and a cure.
40 Secretases are the same category of enzymes targeted by the protease inhibitors that have revolutionised AIDS therapy.
Researchers led by Dr Michael Irizarry at Massachusetts General Hospital concluded their mid-2002 tests showed “clear
support for beta-secretase activity as an important target for therapeutic intervention” Arch Neurol 2002; 59:1367-1368.
41 Journal of Medicinal Chemistry, 7 November 2002, cited in Alzheimer Europe (2002).
42 “Ebixa” (by Merz) is a trade name for memantine released in October 2002 in the UK.
43 This study was of 3,227 over-65s in Cache County, Utah, and found that long term use (more than two years) resulted in
45% the incidence of dementia in non-users, with even greater protection for longer term users, and provided the use occurs
well before the onset of dementia. Aspirin compounds showed the best results, but these were strong also for ibuprofen,
naproxen, diclofenac, nabumetone, sulindac and oxaprozin, as well as histamine H2 receptor antagonists (H2RA). Noninflammatory pain relievers used as controls had no effect on dementia risk.
44 See for example, National Institute of Ageing www.nia.hih.gov and “Phenserine shows potential to slow or stop
progression of Alzheimer’s disease”, April 4 2002 on www.seniorjournal.com
45 There are now trials of NGF proteins on humans, also for stroke, spinal cord injury and other nerve-damaging conditions(Gustilo et al, 1999). Experiments on rats have shown that NGF promoted growth of new synaptic connections in a part ofthe brain called the hippocampus, which could help restore memory loss and potentially reverse AD.

17

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ nimodipine, a calcium channel blocker, can be of some benefit in the treatment of patients withdementia, cerebrovascular disease, or mixed AD and cerebrovascular disease; however, its shortterm benefits probably do not justify its use as a long-term anti-dementia drug (López-Arrieta, 2002).
□ piracetam, a derivative of gamma-aminobutyric acid, also used in Europe for the treatment ofmemory loss and other cognitive defects. Piracetam has beneficial effects on the fluidity ofmembranes from the hippocampus of people with AD (Muller, Eckert et al, 1999). In a Hungarian
study, MMSE scores increased, with particular improvement for memory, concentrationpsychomotor speed and depressive symptoms (Tariska and Paksy, 2000).
□ aminoguanidine could be of value in reducing AGEs in AD, but requires large clinical trials if merit is
to be established (Ramamurthy et al, 1999).
□ nefiracetam may be useful in AD due to its ability to stimulate nicotinic acetylcholine receptors(Nishizaki, Matsuoka et al, 2000).
□ metanicotine, which is less toxic than nicotine and causes nearly the same acetylcholine release, iscurrently under clinical studies for use in AD.
1.2.4

Natural / alternative treatments

Many natural, traditional or alternative treatments are used with dementia46, including:□ acetylcholine support – eg, lecithin (phosphatidylcholine)□ antioxidants – Ginkgo biloba (see below), Vitamin C, Vitamin E, Acetyl-L-carnitine, N-Acetyl
cysteine; some studies show Vitamin C may be protective but evidence for Vitamin E is more mixed.
□ anti-inflammatories – essential fatty acids including omega-3 and omega-6, docosa-hexaenoic acid,eicosa-pentaenoic acid, gamma linolenic acid and S-adenosyl methionine (SAMe).
□ homocysteine reduction – Vitamin B12, Vitamin B6, folic acid, SAMe (particularly if depressive
signs); trials are now underway exploring the effects of increased folate on VaD.47□ nervous system support – methylcobalamin (the neurologically active form of vitamin B12),
phosphatidylserine, inositol, Vitamin K, idebenone, melatonin (particularly if there is insomnia) andtryptophan.
□ Early morning sunlight exposure – for people who suffer sleep disorders and night wanderings as aresult of damage to the pineal gland (which produces melatonin), together with a strict routine ofsleep, meals and social activities.
□ AGEs inhibitors – Vitamins B1 and B6, carnosine.
□ herbal treatments – huperzine A, kut, curcumin (tumeric).
Of these, Ginkgo biloba, derived from the leaves of a Chinese tree, has recently come under new
scrutiny for its anti-inflammatory, anti-oxidant and anti-platelet properties. A 2002 British review of 33
clinical trials since 1976 concluded: “Overall there is promising evidence of improvement in cognition
and function associated with Ginkgo. Our view is there is need for a large trial using modern
methodology to provide robust estimates of the size and mechanism of the treatment effects.”

46 More detail on alternative treatments, as well as pharmacotherapies, is provided in Life Extension Foundation (2002).

47 Homocysteine is a by-product of a wide variety of chemical reactions in the body, possibly associated with AD as well as

VaD.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia“I decided not to use Aricept because it is far too expensive. I wanted to see how good the herbal things
are, and so far they are doing a wonderful job. I take ginkgo biloba and vitamin E, 1000mg/day. They
have been crucial, and I have noticed the effect. I also take fish oil, aloe vera, lecithin, B complex andvitamin C. These have all helped me immensely. There is a fellow at my early onset group who hasdementia and had been virtually housebound for three years, very disoriented and confused, lost all his
confidence. I noticed he had started to slur his words. I told his wife to get him into the ginkgo andvitamin E. That was about six weeks ago. I saw him at a meeting recently and the improvement wasincredible… To talk to him you wouldn’t know he had dementia, and he had actually been down toSydney for a little holiday – on his own!
‘Cathy’1.2.5

Other medical and surgical interventions

General practice: The GP plays a key, long term role recognising, assessing, planning, managing,referring, coordinating and supporting the person with dementia, and their family carer. The GP’s role isvery important from the early stages of the diagnostic process (especially differential diagnoses),through relationship and life planning, learning strategies, prescribing medications, co-ordinating referralto specialists and to community care, arranging admission to hospital and attendance at nursing homes.
As the illness progresses, the family or carer will seek the GP’s advice more on behalf of the individual –so there are in effect two patients, not just one.
However, surveys showed that, in 1998, only about half of GPs were able to recognise mild dementia
and about 70% were able to identify moderate dementia (Creasey and Brodaty, 1998). Many GPs find it
difficult to differentiate between depression in older people and dementia. One key difference is thatpeople suffering from depression are more aware of the problem and more likely to complain about
symptoms (Blackmun, 1998).
In 1998, Australian psychogeriatrician Professor Henry Brodaty developed a questionnaire to help GPs
make early diagnoses of dementia (see Section 3.2.1). Feedback from GPs has been very positive, and
it is hoped that the questionnaire will assist a higher rate of early diagnosis in the future. Moreover, with
better treatments and tests now available, GPs may now be more interested and able to diagnose AD.
GPs may also not be as effective as desired in acquiring up-to-date information on dementia anddementia care, understanding the family’s and carer’s role and accessing a range of local support
services available at different times. “Shared-care” initiatives, aimed at spreading information between
GPs and other aged care professionals, are under way to help inform and resource GPs for ongoingcare.
Because most people with dementia are elderly, they may also suffer a number of other disorders,which need to be treated by the GP alongside dementia (unless the illness is very advanced and an
express desire not to treat at such an occurrence was documented when the person had mental
capacity). In many cases this requires the GP to be up-to-date on the most recent pharmacotherapies,
their subsidisation arrangements and their interaction with other drugs for concurrent ailments of ageing.
“Please remember this: If we want GPs to play a central and continuing role in the care andmanagement of their patients who have dementia, they need to be trained in the role and remunerated
accordingly.”
Alzheimer’s Australia (2001a)

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Specialists: Specialist neurologists, psycho-geriatricians, psychiatrists, physicians in geriatric medicine
and other consultant physicians are important in undertaking initial assessments of people for diagnosis,
as well as ongoing assessments and treatment of people with dementia, including prescription of
medications, management in wards and nursing homes, and so on. There may be a battery of cognitiveand behavioural tests, for example the Dysfunctional Behaviour Rating Instrument, to assess eachmajor cognitive and behavioural domain as well as functionality in ADL. Tests for depression anddelirium may also need to be conducted, for example the Geriatric Depression Scale. Caregiver input or
direct observation are important in assessing functionality, as overstatement of abilities can be an issue.
Occupational therapists can assist in functional assessments.
A neuropsychological assessment takes 45 minutes to two hours and possibly longer for people withmild dysfunction. Strategies need to be put in place to avoid anxiety, which can affect test performance.
Computerised instruments are now an alternative to paper-based tests, requiring less assessor time andenabling a more accurate recording of time spent, although people need to be comfortable with the useof computers. Assessors need to consider factors that may influence test performance.
Other specialist therapies can include those listed in Section 1.2.4 under “specific therapies” andpossibly surgical intervention (see below), while the disproportionate use of specialist services is shownin Section 1.4.4. Specialist involvement in memory clinics is noted in Section 1.2.8.
Hospitalisation: As with other older people, acute care services are occasionally required by people
with dementia, whose average length of stay (ALOS) is four times that of people without dementia(DHA, 2000). Part of the reason for the long ALOS may be that individuals are awaiting entry to long-run
facilities, triggered by the event which led to the stay in acute care – a fall, for example. Acute care
hospitals are not always well equipped to cater for the special needs of dementia patients, however.
Surgery: Two controversial potential surgeries are in the experimental stage, a shunt for cerebrospinal
fluid and a more radical omentum transplantation.
□ Shunts: A shunt can help drain the Aβ protein fragments away and increase the flow of
cerebrospinal fluid (CSF). Dr Gerald Silverberg, a Stanford US neurosurgeon, published results48
showing that experimental shunts in a small trial had slowed disease progression, with safe overalloutcomes. An expanded, multi-centre, controlled clinical trial is now underway (Allen, 2002;
Barclay, 2002; Ajmani, 2002).
□ Omentum transplantation - Dr. Harry S. Goldsmith, at the University of Nevada School of
Medicine, places part of the omentum – a biochemical-rich membrane of fat and blood vessels in
the abdomen – directly on the brain. This is claimed to improve symptoms in people with AD,
although further research is warranted to explain how (and how effectively) this surgery works.
1.2.6

Psycho-social interventions

Counselling and psycho-education: Appropriate counselling through all stages of dementia
progression is very helpful for the individual and the family. Psycho-education can help the person andtheir family learn to manage certain symptoms - such as cognitive behaviour therapy to address
misbeliefs (delusions) - and can help prevent secondary morbidity such as depression or anxiety.49
Because of the strong emotional impact of a dementia diagnosis, particularly younger onset dementias
48 Neurology (2002) 52:1126-1127, 1139-1145, 22 October.
49 For example, in treating depression resulting from moving Ms W to the confining environment of nursing home following

the independence of hostel accommodation, medication and hospitalisation were not helpful. Identifying the source of the
problem, loneliness, and organising a volunteer companion a few hours a day, resolved the depression.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
where there may be the additional stress of the knowing that children may be at risk, family counselling
and/or participation in support groups can be very helpful. Personality changes can be very difficult for
spouses and families; for example, flat affect and low motivation that can be perceived as loss of love.
The problem-solving approach
Each problem is as unique as each person. There is no single tolerable solution and contributing factors
may include the person’s background, environment, habits, reactions and feelings. There are threesteps in planning the problem-solving approach:
1. Defining the problem
2. Assessing the person in the situation
3. Planning a strategy to solve the problem.
Miss Perkins causes a commotion each evening when she refuses to shower. After consulting hersister, we restore her lifelong routine of showering in the morning and dressing ‘ready for work’. The
problem is solved.
As a sales manager, Mr Grant frequently ate in expensive restaurants. At the day centre, having nomoney to ‘pay’ for his meal and leave a tip for the ‘waitress’ distresses him. He eats little. His wife
supplies him with some coins, restoring his dignity – and his appetite.
In her broken English, Mrs Berger repeatedly tells staff: “I worried … going to ask me leave … nowherego.” If a member of staff accompanies her to her room, points to her name on the door and opens
cupboards so that she can see and touch her clothes, she is content for a few hours. On the other hand
if she is ignored or told she is mistaken, she becomes agitated, noisy and demanding. She goes to herroom, picks up the flexible shower hose in her bathroom and sprays around the room shouting, ‘Not
mine, not mine.’
Sherman (1999)
Specific therapies: Physical, occupational and speech-language therapies can assist with specificproblems – for example, an occupational therapist can help maximise independence while identifying
necessary modifications in the home or in driving. Diversional, reminiscence, validation, music,
movement/dance and craft therapies may be useful to calm, comfort and occupy people with dementia,
particularly when they involve loved ones. Swimming and hydrotherapy can also bring peace andquality of life. Massage, aromatherapy, light therapy, laughter, companionship and warm touch (fromchildren or pets as well as other adults) may also be beneficial.50
Professor Faith Gibson, a leading proponent of reminiscence therapy in Northern Ireland, notes thatpeople with dementia can have very good long term memories and that tapping into these provides ameans of affirming and including people with dementia and enabling them to “shine, perform, get things
right, rather than being constantly confronted with their shortcomings.” Tools include old photographs,
family albums and personal mementos, compiling ‘this is your life’ books with family and friends,
questions about and listening to tales of the past, and so on.
Validation therapy affirms the utterances of a person with dementia through an interested or warm
response, rather than ignoring or minimising them. For example, a word or behaviour may be constantly
repeated, indicative of an unresolved worry. By validating the concern and asking sensitive questions
about it, the therapist may be able to trace the source of the problem and allow relief, even closure.

50 For a recent study on the benefits of aromatherapy see Alistair et al (2002).

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia“It is intuitively reasonable to expect that a life which involves the presence of others, which isstimulating through variety of experience during the day, and which calls for personal initiative or selfexpression, will be preferable for persons with dementia…. There is no evidence as yet that a
psychosocially enriched environment brings about any lasting benefit to cognitive function, but it does
promote the quality of life of patients, and is of considerable importance in maintaining high standards ofnursing care.”Henderson and Jorm (1998)
Music therapy has also been recommended to increase melatonin in the blood, as well as helping
people to relax (Kumar et al, 1999). Musical ability and enjoyment may remain intact, as with long term
memory, even into late stage dementia, and bring great joy and shared experience.
As a child, I recall visiting my grandmother and great aunt who both suffered from dementia. By thetime they were eventually placed in nursing care in Adelaide, neither could recognise me nor hold aconversation. My great aunt would count agitatedly for hours, while my grandmother went through avery aggressive stage, which may have been due in part to her frustration at losing language skills.
However, both would become calm and contented if my mother and I began to sing with them. As
though there was no problem, they would join in with gusto to songs in English and, in the latest stages,
in their native tongue, continuing to sing peacefully even after my mother and I had left to go home.
The author
Multicultural issues: Although people from non-English speaking backgrounds may have been fluent
in English, studies show that the most recent language is lost first for people with dementia. Sometimes
a mix of native and second languages is used for a time. Translation may be of little help, but it canbring joy to a person to hear their native language spoken or played on tapes. It is estimated that 25%
of Australia’s population aged over 60 are post-war migrants, and 25% of them have a non-English
speaking background. 12% of people in residential care are from culturally and linguistically diverse
backgrounds, with a variety of cultural customs, traditions and values. The composition of this group willcontinue to vary, from Eastern European, now at their age peak, to those from Southern Europe, theMiddle East and Asia, who will peak later. These Australians have equal right to access affordable,
quality dementia assessment and care services, which can only be available for them if specialist
resources are developed to promote access. There is some evidence that people from some nonEnglish speaking backgrounds may present later to services such as memory clinics, even if there is abilingual specialist available.
Peak community bodies: Community organisations such as Alzheimer’s Australia and Carer
Associations are able to help meet a wide range of needs, including for information and resources about
understanding and managing dementia (libraries, pamphlets and electronic links), counselling (phone
and face-to-face), support groups and membership benefits, programs for people living with early stage
dementia and for management of BPSD51 and so on, referral services, family carer education, training
and support (through courses and seminars in community, hospital and residential settings), advice on
issues like driving, legal and financial planning for future health care needs, including preparing advancedirectives such as a living will, power of attorney, consent to participate in clinical trials, palliative careand so on. Peak community bodies are also of key importance in advocacy and promoting publicawareness, as for example 57% of adults are unaware of the links between cardiovascular risk factors

51 For example, the Alzheimer's Association’s Safe Return Program, an identification program for memory impaired adults.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
and dementia.52 Peak bodies also deliver services such as mobile respite and federal programs.
Alzheimer’s Australia manages the following national programs:
1. The Carer Education and Workforce Training Project: CEWT provides competency based
training and educational resources to families and carers and respite care workers.
2. The Dementia Education Support Program: DESP provides a basic level of support, education,and short term counselling to people with dementia and their families and carers. Through the
National Dementia Helpline (1800 639 331) this core program provides a key access point to
information, referral and counselling for people with dementia, their families and carers as well asother service providers.
3. The Early Stage Dementia Support and Respite Program: ESDSRP (usually referred to as the‘Early Stage’ program) provides people in the early stages of dementia and their families and carers
with information, education, counselling and support.
4. The National Dementia Behaviour Advisory Service: NDBAS is a national telephone service
designed to assist families and carers and respite care workers manage behaviours of concern.
“The course brought together people suffering from the same problem and there was an openness
among us. Carers and sufferers were counselled in separate groups. People were able to discuss theirproblems without embarrassment. Many realised for the first time that they were not freaks and that they
were not alone. We saw our problems and frustrations mirrored in others. As our familiarity grew, there
was more chatter, laughter and, on some occasions, tears. At the end of the six weeks ourunderstanding of the disease had increased and so had my confidence in my own ability to deal with it.”
‘Phillip’“I continued my membership with the Alzheimer’s Association and became part of a small, local support
group. We met each month under the guidance of a professional social worker. We became a very
close, caring group. We used to discuss very frankly what each member was going through. There wasalways someone who had already experienced a particular phase and could enlighten the others. We
managed to see the lighter side of Alzheimer’s and would tell each other about any amusing events –like the time Marjorie put the left-over roast through the dishwasher instead of back in the fridge. Ourgroup continued to meet for eight years, after which everyone in the group apart from me had either losttheir relative or placed them in care.”‘James’Churches also provide a range of community services and support. Boden (1998) and others also point
to the peace found in personal faith. Hampson (2000) states that: “Faith can play a critical role for a
person with dementia, and the opportunity to talk about God or faith may offer immeasurable comfort
and be life-affirming.”“Everyone is going to ‘the other place’ eventually; I want to do what I can to make my life as positive as
possible. My friends have been terrific. The Christian community has been absolutely wonderful.
Everybody says to me, ‘You’re so peaceful’. It’s having God in my life that has made me that way.
That’s what gives me strength.”‘Cathy’52 For details of this North American and European survey, see “Two thirds associate dementia with the ageing process”,
www.NewsRx.com 23-9-02.

23

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.2.7

Caring for families and carers

Carers Australia estimates there are at least 2.3 million Australians (one in every five households)
providing care for family members or friends with a disability, chronic condition or who are frail aged.
Nearly 20% (450,900) of these are ‘primary’ carers for people at home with severe or profounddisability. 70% are female and 90% are aged 60-69. Conservative estimates show that the ‘invisible
workforce’ saves the economy $16 billion annually and is the major provider of community careservices, delivering 74% of all services to people needing care and support (compared to the HACC
Program, worth $1.1 billion in State and Federal funding, which meets only 9% of this need).
Most primary carers (78%) are of workforce age (aged 18 to 64 years) yet paid work is usually notpossible - 59% are not attached to the workforce. Over one-half of all full time carers reported incomesof less than $200 per week, while also experiencing the increased expenses of looking after anotherperson. 40% of primary carers have been providing care for a decade or more, and 68% for more than 5
years. 43% care for a partner, and 21% for a parent, and most primary carers (54%) said that they
provided care either because alternative care was unavailable or too costly, or because they consider
they have no choice. Carers suffer from generally worse physical health, tiredness, stress, back/muscle
problems, depression, anxiety and lack of respite.53 For carers of people with dementia, specificadditional stressors may also include:□ difficult behaviours and symptoms, most commonly incontinence and the need for constantsupervision – days can be full of frustrations are repetitive chores;□ broken sleep;□ the emotional involvement of the carer, for example, mourning the loved one’s former competencies
and the loss of future hopes and plans;□ ambiguities about their role as a carer – how long to continue, how and where to seek help,(perceived) lack of support from other family members, “mistakes”/”failure” when there is no clear
definition of “success”, the impact of caring on the carer’s life (“taking over”);□ impacts on the carer’s relationships, eg. strain on marriages for carers of parents; and□ social isolation – friends disappear, it can be difficult to leave the house and social events are rare.
“The greatest cry I hear is that people feel they have no friends. Friends stop coming. I try to encourage
people to keep going. Even if they just sit. Quite often there are things you can do to help.”‘Jack’
Stressors tend to be lower, the better the quality of the past
relationship between the person with dementia and their familycarer. Professional carers – service providers – can also,
needless to say, experience considerable burnout and stress.
Counselling, regular medical checks, education, information,
support and respite services are essential for families and carers,
result in improved health outcomes for families and carers andpatients, and reduce or delay the demand on (more costly)
community and residential services. Carer programs are outlinedin the previous section. Costs and benefits of dementia carers
programs are elaborated further in Section 3.3.
Above: Bill helps his wife Dianewith a card game.
53 Sources: AIHW, Australia's Welfare: 1999 Services and Assistance; Carers Australia, Caring Costs, 1998, Australian

Bureau of Statistics, Disability, Ageing and Carers: Summary of Findings, 1998. Cited on Carers Australia website.

24

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia"It presents a challenge to a family to come to accept that this downhill course is pretty inevitable, andyet may be slow, and that the caregiver's needs almost certainly will increase as time goes on," said Dr
Williams, a geriatrician who formerly headed the National Institute on Aging. "And yet, the person who's
affected may still be functional in a number of ways and may still get some enjoyment out of things they
enjoyed earlier," he noted. "It's a challenge to spot the things they still can get pleasure from… A former
housekeeper can contentedly fold the same laundry day after day. President Reagan's biographer
reported that he enjoyed scooping leaves out of his swimming pool. Once he completed the task, Secret
Service agents accompanying him would surreptitiously add more and he'd keep going.”
Rotstein (2000)
1.2.8

Care in the community“Ageing-in-place” – bringing services and care to older people in their homes rather than moving them tothe services – has become a guiding social principle in most Western countries, including Australia
since the 1985 Aged Care Reform Strategy, due both to concern for cost efficiencies as well as thegeneral premise that most older people prefer to remain in their own homes as long as they are able.
Aged Care Assessment Teams (ACATs) – multidisciplinary teams linked with regional aged care teams
and located in public hospitals (inpatient and outpatient areas) and community health centres – assess
and identify the physical, medical, psychological and social needs of older people and their families andcarers, linking them to appropriate support services (eg, specialised rehabilitation services) andmanaging comorbidities. ACATs generally include a combination of a geriatrician, nurse, social worker,
occupational therapist and physiotherapist. They assess around 185,000 people a year, making
recommendations about whether the appropriate care setting for each individual should include
additional community services and support, and which ones – a rising component in recent years asshown in Chart 1 - or whether they are eligible for Commonwealth-funded hostel (low-care)accommodation or entry to a (high care) nursing home, these being fairly constant at 43-44% of
recommendations. Moving to special dwellings such as hostels of various forms (group housing for
supported independent living) or residential nursing care may become desired as needs grow for
greater security, access to services and living comfort. The search for options between the extremes(home-based, nursing homes) is producing a spectrum of diverse alternative arrangements along thecare continuum.54
Chart 1: ACAT assessment rates and recommendations for services, Australia
25 ,0 00

H ig h c a re /n u rs in g h o m e
L o w c a re /h o s te l

20 ,0 00

23%

15 ,0 00

23%

C A C P s /C O P s

21%
22%

21%

21%

10%

10 ,0 00
5%

5 ,0 00
2%

199 4

199 7

20 00

Source: Access Economics derived from appendix data in AIHW (2002a), Table A31.1

54 See Johansson, Chapter 1.4 in Wimo et al (1998).

25

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
A range of support services is available in the community, both privately and publicly, including homecare, adult day care, day hospitals, and education and respite services for families and carers. The
definition of community care is imprecise but includes personal care, health, accommodation and social
services for people with dementia and their families and carers, provided outside of formal institutions.
The Department of Health and Ageing definition is:“Community care describes a diverse range of services. Its main aim is to enable people toremain living in their own home and community. Community care is provided under a variety of
programs that are funded by both Federal and State Governments. Community care isaccessed by a variety of people including: older people, younger people with disabilities, carers,
people with mental illness, people with acquired brain injury, people with chronic illness andpeople with dementia. Most community care programs charge their clients a fee for service.
The fee is often quite minimal.”55
Memory clinics, first developed to provide outpatient services for people with mild dementia, are auseful and important solution to coordinating dementia assessments and supporting the person withdementia, the family carer and the GP. Some of these are State-funded, including 14 Cognitive
Dementia and Memory Services (CDAMS) in Victoria since 1997. CDAMs are multidisciplinary clinics
including a specialist geriatrician, nurse, allied health professional and/or social worker and have accessto psychologists, psychiatrists, counsellors and other allied health professionals. Memory clinics havemarked acceptability amongst doctors, people with dementia and their carers, and are especially usefulin improving assessment, with some randomised trial evidence for positive impacts on carer health.
Community support services, such as Meals on Wheels, can be particularly important for single people
living alone with dementia. Publicly provided community assessments for singles can makerecommendations and help with issues such as home modifications (eg, enclosing upper storey
balconies), reminder alarms, lowering hot water temperature, removing electrical items from wet areas,
introducing a daily dose box for medication, changing bulbs and labelling essential items. It may be
more difficult with singles for families to identify the right time to move into residential care. Children wholive elsewhere and phone or visit daily may not be on call to treat a fall or emergency immediately,
precipitating an earlier entry into residential care than might be possible if co-located.
In Australia around half those diagnosed with dementia live in the community, assisted by a number ofFederal and State/Territory home-based and community care programs. Most notable is the Homeand Community Care (HACC) Program, whose services - in order of magnitude - include centre-based
services, domestic assistance (home help with cooking/meals, cleaning, errands, transport, home
maintenance and modifications), personal care, social support, home nursing and respite care (in-home
respite is growing in popularity as the dislocation of day centre care can exacerbate disorientation forthe person with dementia). HACC provided 25.3 million hours of service to some 583,000 people
including delivery of 8.4 million home meals in FY2001-02. The average age of HACC clients is 71.6
years, 66% are female, 93% are pensioners and 52% have a carer available to assist them. Up to one
in five HACC clients may have some form of dementia.
Community Options Projects (COPs) provide case management and individually designed service
packages, of which about 16% are for people with dementia. Community Aged Care Packages(CACPs) were introduced in 1992, where a case manager provides a package of services to enable theclient to continue to live in the community. Of the 24,100 people who receive CACPs, 26% have mild
dementia and a further 9% have moderate to severe dementia.56 These are like low level residential
55 See www.agedcare.org.au/factsheets/factsheet3_communitycare.htm

56 Data sources, also for HACC figures are AIHW (2002a) and DHA (2002a). The latter also states that ‘up to 5% of existing

low level residential care places may be converted to CACPs’. 1,150 new CACPs were released in 2002.

26

The Dementia Epidemic: Economic Impact and Positive Solutions for Australiacare, but in the home, and are growing rapidly and also emphasising dementia. Extended Aged Carein the Home (EACH) packages commenced in 1998, and are like high level care in the home and,following trials, were granted additional extension funding in 2001-02 and 2002-03 Budgets. Other
Federal programs (some delivered through or in conjunction with Alzheimer’s organisations, see
Section 1.2.5 on Peak Community Bodies); include:□ DESP - the Dementia Education and Support Program ($1.4m budget), including a helpline;□ the Carer Information and Support Program ($2m), for all carers;□ NRCP - the National Respite for Carers Program ($87.6m), including over 100 community respite
services for families and carers of people with dementia, plus three education and support
programs:o CEWT - the Carer Education and Workforce Training Project ($1.1m)o the Early Stage Dementia Support and Respite Project ($1.5m)
o NDBAS - the National Dementia Behaviour Advisory Service ($0.4m)□ PGUs - Psycho-geriatric Care Units ($3.5m), with States; and□ Dementia Support for Assessment Program ($1.1m): rural and remote assessment and counselling.
Although fees are charged for community services, inability to pay does not preclude access. However,
because demand outstrips supply, waiting lists are becoming problematic. More funding is required torelieve the supply constraints in services that are provided through the formal sector.

% with dementia needing assistance

Chart 2: Informal and formal caregivers for people with dementia in households
60%

Informal
50%

Formal

40%
30%
20%
10%
0%
Child

PartnerOther
relative

FriendFor-profit
org'n

Gov't
org'n

Privatenonprofit

None

Source: Access Economics based on ABS special data request, 1998.

Care from the informal sector, however, still exceeds that provided through programs. Chart 2 shows
the proportion of people with dementia in Australian households who need assistance, who have carersof various types in both sectors (the percentages are not additive). Over half have a child as a carer,
while around 40% depend on a partner, on a for-profit organisation and on government. Around 5%
report having their care needs unmet.
Chart 3 shows the proportion of people with dementia in Australian households who need assistance, by
the area of the need as supplied by the informal and formal sectors (again the percentages are notadditive). Mobility assistance is the greatest need, required by over 80% of people, although therequirement for assistance with property maintenance, health care, transport paperwork, meal
preparation and housework are also very high (required by over 70% of people needing assistance).

27

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

100%
80%
60%
40%
20%
Communication

Self careHouseworkMeal
preparation

Paperwork

Transport

Health Care

Property
maintenance0%
Mobility% with dementia needing assistance

Chart 3: Informal and formal types of care for people with dementia in households

Source: Access Economics based on ABS special data request, 1998.

1.2.9

Residential Care

Even with the provision of the best home services, for most people there comes a time when thetransition to residential care is deemed appropriate. Entry into residential care is better predicted bycarer factors than by patient factors, possibility precipitated by an adverse event (eg, an accident or
illness) or by carer burnout. It can be a difficult time for the individual and the carer(s), in terms ofconfronting the terminal nature of dementia as well as the grief and other emotional and family
upheavals that often transpire. Relinquishing full time care of a loved partner of many decades can betraumatic, with mixed feelings of not being able to continue any longer, together with feelings ofdesolation, guilt or failure and thoughts that the marriage is over (didn’t their vow say “in sickness and in
health?”), that they have deserted or been deserted by their spouse without consent or that they will beperceived to be abandoning them, and fears that either they or their loved one will be unhappy, uncaredfor, lonely or alone. The family (particularly in some cultures) may not agree about the decision to place
the loved one in care, the timing of the move, or the particular accommodation, which can cause familystress.
As well as the emotional distress of placing a loved one in residential care, there are also welldocumented problems in gaining access to appropriate residential accommodation (see Section 3.2),
and another key issue at the time of transition to residential accommodation is frequently money.
Weekly fees are means tested and limited to a proportion (85%) of the single age pension rate plus any
income tested fee, and 16-40% of places must be for concessional residents, depending on the region.
However, there may be extra fees for certain therapies and the family home may need to be sold to pay
for up-front costs (notably accommodation bonds), particularly if the desired accommodation provider isan Extra Services Provider (ESP).57 Many families and carers (partners or children), seek levels of
quality care that can be very financially challenging, either because they are unaware of the full costs, orthey feel bereft or guilty for placing their loved one in care, or simply because they want really goodquality care for their loved one. Prudential protection (insurance) for the charges and bonds, either
through Medicare or private health insurance (PHI), might help to alleviate problems that sometimes
arise in this regard.
There are two major divisions of residential care – low care facilities (formerly called hostels) andhigh care facilities (nursing homes). High care facilities focus on the provision of continuous,

57 A maximum of 12% of places may be extra services places.

28

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
intensive nursing care, while low-care facilities focus on personal rather than nursing services andaccommodate less impaired residents.
For some families, great leaps must be made to accept the idea of changing from home help toresidential care, and from hostel to nursing home care. Hostels provide downsized independent living;
they are homes away from home. They may offer comfy armchairs, bridge games and shopping
expeditions. A nursing home is more hospital-like, perhaps with grey lino, crocheted rugs and walking
frames. Hostels lie somewhere between a retirement village and a nursing home. Some complexes
provide all three levels of care… The quality of hostel accommodation ranges from Spartan to five-star.
Hampson (2000), p223.
Residents with dementia may be supported in either:□ mainstream facilities, where residents with dementia and those without (frail aged) are integrated,with no separate, locked or partitioned areas;□ separated accommodation, where separation is achieved via dementia-specific wings attached to amainstream facility (with little or no contact with frail aged residents), dementia-specific units colocated on the same site as a mainstream facility, or in stand-alone dementia-specific facilities(operating quite independently).
A small proportion of people with dementia are accommodated in psychiatric hospitals and, increasingly,
psycho-geriatric units. Chart 4, based on Gibson et al (1999) shows the distribution of people withdementia in various care settings – half in the community, one third in nursing homes, one in eight in
hostels and 4% in other facilities.
Chart 4: Care settings in Australia, % of total people with dementia
Nursing homes
33%

The community
50%

Hostels13%
Supported
residential
services
3%

Psychogeriatricfacilities
1%

Source: Access Economics based on 1996 data from Gibson et al (1999).

There are currently 144,100 residential care places in Australia, of which 6,300 were released in
January 2002. The occupancy rate is 97% and the average age of residents is 83.2 years. About 64%
of high level care residents enter from hospital, 26% from low level care and 10% direct from thecommunity. ALOS is 36 months with 35% staying less than 1 year and 22% staying more than 5 years.
Dementia-specific care: At least 60% of Australia’s nursing home residents and 30% of our hostel
residents have dementia. Moreover, more than 90% and 54% respectively have an obvious cognitive
impairment (Rosewarne, 1997).58 Chart 5 shows the distribution of residential services, with mainstream
nursing home beds dominant (nearly four in five beds). Moreover, dementia areas in mainstream
58 Levels of cognitive impairment for those in nursing homes were 10% none, 22% mild, 27% moderate and 41% severe,

while for hostel residents they were 46% none, 35% mild, 17% moderate and 3% severe.

29

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
facilities account for another 15% of beds. Overall, however, only 5% of hostel and 6% of nursing homebeds are dementia-specific - mainly wings and co-located units.
Chart 5: Types of residential care services for people with dementia in Australia
Mainstream
beds
79%

Stand-alone
dementia units
1%
Co-located
units
2%

Dementiaspecific wings
3%

Mainstream,
dementia area
15%

Source: Access Economics based on 1996 data from Gibson et al (1999).

Table 1 summarises care settings for people with dementia in Australia in 1996, based on Rosewarne etal (2000). This shows a slight fall since 1996 in the relative number of Commonwealth-funded high careplaces, reducing the proportion of residential care in the total from 50% to 47.9%.
Table 1: Living arrangements for people with dementia, Australia, 1999
Commonwealth

Number
Per cent

Low-careNumber
Per cent
Hi-careNumber
Per cent

State
PrivateTotal living in
PsychoSupported
LowHigh
geriatric
residential Residential
The community
All
care
care
facilities
servicescarepersons
18,26845,0002,000
4,000
69,26875,260 144,528
12.6%
31.1%
1.4%
2.8%
47.9%
52.1% 100.0%
Dementia-specific beds
Mainstream beds
Co-located Stand-alone
Mainstream Mainstream with a
Wings
units
units
Total
only
dementia area
Total
1,696
2.6%

1,044
1.6%

392
0.6%

3,132
4.8%

52,26380.1%

9,851 65,246
15.1% 100.0%

2,625
3.5%

875
1.2%

825
1.1%

4,325
5.8%

61,23281.7%

9,356 74,913
12.5% 100.0%

Source: Rosewarne et al (2000).

Dementia specific residential facilities have been very positive developments in the last two decades ofaged care in Australia. In the mid-1980s, large suburban houses were renovated and adapted, and earlymodels emerged such as Aldersgate Village in South Australia and the CADE units of the NSW
Department of Health. In the 1990s, many ‘homely’ dementia facilities sprung up, provided by Anglican
Homes, Hammond Care, Frontier Services, Catholic Health providers and others. Capital costs werehigher (due to single rooms, ensuites), but the capacity to charge entry loans for most residents
addressed this issue. Ongoing staff costs, however, were a real problem, to which the Commonwealth
Government responded with the Aged Care Act (1997) and single Resident Classification Scale acrosshostels and nursing homes. However, the decision later in 1997 (policy on the run) that noaccommodation bonds would be charged to nursing home residents is substantially reducing the
incentives to invest in dementia specific care (see Section 3.2.2).
30

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.3 PREVALENCE
1.3.1

Worldwide prevalence

As age advances, the risk of developing dementia rises sharply. Worldwide, the frequency of AD among
60-year-olds is about 1% after which the prevalence doubles about every 5 years, to around 2% at age
65, 4% at 70, 8% at 75, 16% at 80, and 32% at 85. It is estimated that as many as two-thirds of those in
their nineties suffer from some form of dementia.59 Table 2 shows the rising prevalence of dementia by
age-group over 60, for different continents, based on meta-studies to date.60
Table 2: Prevalence of dementia by age and continent
Age group
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95+

Europe0.4 – 1.0
0.9 – 1.4
2.1 – 4.1
4.6 – 14.6
9.6 – 27
20.4 – 38.3
28.3 – 57.3
42.3 – 55.8

North America
0.2 – 0.3
0.8 – 0.9
1.3 – 2.0
3.6 – 6.3
8.9 – 12.7
16.3 – 29.7
40.4 – 74.3
58.6

Asia
0.3
1.0 – 2.4
1.5 – 7.0
10.8 – 15.1
16.3 – 38.9

Africa0.9
0.7
9.6

Source: Wimo et al (1998), p14.

Prevalence is thus very dependent on the age structure of the population. Alzheimer’s Disease
International (ADI) reports that in the year 2000 there were 18 million people in the world with dementia
compared with 11 million in 1980. By 2025 ADI projects there will be 34 million with dementia of whom
25 million (71% of the total) will live in the developing world. Because developing countries are not so
far along in their demographic transition, by 2025, there will be twice as many people with dementia inthe developed world as in 1980, but there will be four times as many people with dementia in thedeveloping world.61 Where does Australia fit, now and in future?
1.3.2

Current prevalence in Australia

Over 162,000
Australians in 2002
have diagnosed
dementia, 0.8% of
the population.

Table 3 shows the national estimated prevalence of diagnosed
dementia in 2002, by demographic cohort. The actual level (including
a significant number of mild to moderate cases not diagnosed) is likely
to be much higher (see Methodology). It is noteworthy that current life
expectancy at age 65 for women is now 85 years, and for men is 82 years, and increasing.
Table 3: Prevalence of dementia in Australia, by age and gender, 2002 and 1993
Age group
0-24
25-64
65-74
75-84
85+
Total

Males 2002
‘000
%
4.3
0.2%
12.1
1.9%
20.7
5.7%
19.1
22.8%
56.3
0.6%

Females 2002
‘000
%
2.3
0.1%
7.6
1.1%
34.1
6.8%
62.0
33.6%
106.0
1.1%

Total 2002
‘000
%
6.6
0.1%
19.7
1.5%
54.8
6.3%
81.1
30.2%
162.3
0.8%

Total 1993
%
0.1%
1.2%
6.0%
23.4%
0.6%

Source: Access Economics, based on ABS special data request and international meta-analyses (see Methodology). Notestandard error may be relatively higher for the 25-64 age groups. Prevalence under age 24 was not statistically significant.
59 Life Extension Foundation (2002).
60 Differences between continents are due to methodological differences between studies, possible ethnic variations,variation in diagnostic criteria, different survival rates and different geographical distribution of vascular risk factors.

61 ADI website.

31

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

Table 3 shows that in 2002 there were 162,300 Australians with diagnosed dementia of whom over
106,000 were women. Half of those with dementia were 85 years of age or older, and a further third
were 75 to 84 years. Of those 75 or older, prevalence rates were higher for women than men, while inyounger age groups, prevalence was slightly higher amongst males. The higher prevalence for womenin the age group over 85 years is partly attributable to the greater longevity of women who survive to an
age where the likelihood of dementia becomes extremely high. Similarly, in the 75-84 age group, thedistribution for men is likely to be skewed more to the younger end than it is for women.
A comparison with the 1993 data, derived using the same methodology, is also of note, as theprevalence has increased in all cohorts. This is partly due to increased longevity (particularly in theoldest cohorts) as well as increase in diagnosis (across the spectrum) over the past decade.
Another key issue is the significant number of younger people who have dementia, 6,600 in 2002 aged
under 65 (see Table 3). The impact on younger people can be even greater as they may be morefinancially exposed and have more children, family and career responsibilities. The services they need,from diagnosis to residential care, are likely to be difficult to get or unavailable – because dementia careis still bound to aged care (Freeth, 1994).
A final point is in relation to indigenous Australians. Because fewer Aboriginal and Torres Strait Islander
people reach old age, there are fewer cases of dementia in these communities, in absolute numbers.
However, the age-adjusted prevalence of dementia may in fact be higher in these communities than in
the Australian population as a whole – one study showed as many as 10% of indigenous people over 65
diagnosed with dementia, and another 10% with suspected dementia. Alcohol abuse andcerebrovascular disease were found to be important causes of dementia, which are largely preventable(Henderson and Jorm, 1998; Pollit 1997).62
1.3.3

Projected prevalence in Australia

Prevalence of dementia is forecast to grow rapidly overthe coming decades due to population ageing. The
projections in Chart 5 are based on ageing alone.
There is downside risk if new treatments, including
pharmaceutical therapies and lifestyle changes, preventor postpone dementia.

Over 580,000 Australians will
have dementia by mid-century,
2.3% of the population.

Chart 6 : Projections of dementia prevalence and population growth, Australia, 2002-2051
400% increase over 1998

350
300

Dementia growth250

Population growth

200
150
100
50
2002

2011

2021

2031

2041

2051

Chart 6 shows projections of the prevalence of
dementia to 2051.
By mid-century, theAustralian population is forecast by the ABS to
increase by 36%. The prevalence of dementia,
however, based on current prevalence rates bydemographic cohort, will increase nearly
fourfold, to 581,300 people. Prevalence willreach the half-million mark around 2041.

Year

Source: Access Economics projections.

62 1% of people in residential care are indigenous Australians.

32

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.4 HEALTH AND SOCIOECONOMIC IMPACTS IN AUSTRALIA
1.4.1

Disability

The disability burden of dementia is severe – 98.5% of people with dementia are classified as disabledcompared with 19.3% of all Australians according to the definitions of disability in the 1998 ABS Surveyof Disability, Ageing and Carers (see Methodology Section). Moreover, as Table 4 shows, 99.8% of
those with dementia who are disabled have specific restrictions, compared with 87.4% of disabled
people generally. Even more telling, 94% of people with dementia who have restrictions are classified
as having “profound” core activity restrictions, compared with the average of 19%.
Table 4: Disability associated with dementia
ProfoundSevereModerate

Mild

Total

All with
specific
restrictions*

60
158
380
538

4
92
506
598

0
53
608
660

0
93
939
1,032

64
396
2,433
2,828

64
480
2,676
3,156

93.9%
39.8%
15.6%
19.0%

6.0%
23.3%
20.8%
21.2%

0.0%
13.3%
25.0%
23.3%

0.2%
23.6%
38.6%
36.5%

100.0%
100.0%
100.0%
100.0%

99.8%
90.6%
86.9%
87.4%

People with core activity# restrictions
People (‘000)
Dementia
Subtotal mental/behavioural
Subtotal physical
Total with a disability% of total**
Dementia
Subtotal mental/behavioural
Subtotal physical
Total with a disability

All withdisability
64
529
3,081
3,610

#Core activities comprise communication, mobility and self-care. * Includes schooling and employment restrictions.

** First
five columns are relative to the total number of people with core activity restrictions; sixth column is relative to all those with adisability. Source: Access Economics, derived from ABS (1999), Table 10 for 1998.

1.4.2

Socio-economic status and rurality

People with dementia tend to have lower incomes. Over 70% of people with dementia have income inthe lowest two quintiles – that is, compared with the lowest 40% of the general population (Table 5).
The distribution between those in capital cities and those in rural and remote areas, however, is roughly
similar (Table 6).
Table 5: Income of people with dementia
Income quintile
Lowest 20%
Second 20%
Third 20%
Fourth 20%
Highest 20%
Total% with dementia
in quintile
6.0%
64.2%
23.1%
5.3%
1.5%
100.0%

Source: Access Economics based on ABS special data request, 1998.

Table 6: Urban-rural distribution of people with dementia
Capital city
Balance of State
Total% with dementia
62.8%
37.2%
100.0%% of total
63.9%
36.1%
100.0%

Source: Access Economics based on ABS special data request, 1998.

33

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
1.4.3

Employment

People who have dementia are under-represented in Australian employment. Table 7 shows that only
2.3% of those aged over 65 who have dementia are employed, compared to 8.5% of the population as awhole. The sample of those employed with dementia was too small to permit a statistically significant
subset to establish absenteeism rates relative to the population as a whole. It is more possible toremain employed for a time if the illness is in the early stages, if the work environment is supportive, if
tasks are familiar or repetitive and if supervision and occupational health and safety arrangements areadequate. Inadequacies in the latter for self-employed people may necessitate earlier retirement forthem. For many employed people, workmates may be the first ones to notice changes pre-diagnosis in
gradual onset cases of dementia.
Table 7: Proportion of people aged 65+ employed, with dementia and total
All Australians
Australians with dementia
Employed
8.5%
2.3%
Not employed*
91.5%
97.7%
Total
100.0%
100.0%* Includes those not in the workforce and those looking for work.
Source: Access Economics, based on ABS special data request, 1998.

Christine Boden was 46 years old when diagnosed with younger onset AD, formerly a federal
government senior executive. She writes: “After the final diagnosis by the second specialist in midSeptember 1995, I faced the task of seeking retirement on medical grounds… My battles with thesuperannuation company epitomise the misunderstanding about Alzheimer’s as a killer disease… Thesuggestion that I return to work for retraining [in a lower level job] appalled all the medical people
associated with my case, as well as my department and … the Alzheimer’s Association. We all knew atleast the basics of Alzheimer’s: that the first capacity to be lost is holding a job and that, in particular,
learning any new tasks is almost impossible for someone with the disease. And here was thesuggestion that I should not only continue to try to hold a job, but learn a completely new one, with awhole range of new tasks, new places to find, new colleagues to recognise! … It would mean driving
through heavy traffic… remembering a whole list of issues, learning (or rather coping with theembarrassment of never remembering) so many new things. I became very distressed… with continualmigraines again, and rapidly increasing confusion… The specialist warned that stress would
exacerbate the progress of the disease.” Four months later, when the board agreed to retire Christine,
she was “speechless with relief”.
Boden (1998), p41-44.
1.4.4

Use of medical services

People with dementia go to the doctor more frequently than the average Australian, and also more thanothers their own age. Table 8 reflects that 36.6% of those with dementia visit their GP in a fortnight,
significantly more than the average for all Australians of 21.0%, and slightly more than those over 65(35.6%). For specialist visits, the difference is even more pronounced, with more than double theproportion of those with dementia (9.2%) visiting a specialist in a representative fortnight compared tothe average 4.1% of Australians, and a third as much again as the average of those their own age.

34

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Table 8: Proportion of people with dementia visiting the doctor, 1998
People withAll
dementia Australians
Visited GP in last 2 weeks
36.6%
21.0%
Visited medical specialist in last 2 weeks
9.2%
4.1%

Australians
over 65
35.6%
6.9%

Source: Access Economics, based on ABS special data request and ABS (1997), Table 14 for last two columns.

Epidemiological studies have confirmed the higher utilisation of health services, and hence higher direct
health costs, of people with dementia compared to those without, adjusted for age, gender, location andco-morbidity. Gutterman et al (1999) found that:□ hospital stays were twice as long on average and emergency department costs 2.5 times greater;□ hospital, medical and pharmaceutical costs were 1.5 times higher (not including nursing homecosts), although pharmaceutical costs and outpatient costs were not significantly different;□ 75% of the disparity was linked to greater inpatient care.
1.5 INTERNATIONAL COMPARISONS
The dementia epidemic is worldwide. In demographic terms,
Australia is quite “young” among developed nations – the“oldest” countries being in Europe and, particularly
Scandinavia where although the proportion of those aged 65
is already over 15%, the growth of this age-group isstabilising (below 1%). In comparison, Australia, with only
12.5% of the population over 65, has the 65+ cohort growing
at 1.8% p.a. and the 85+ cohort growing at 4.6% p.a., as ourlongevity is one of the highest in the world. Thus, Australia’s
demographic transition is occurring relatively markedly.

“While Australia isrelatively young in aninternational context, it isexperiencing acomparatively rapid rate of
population ageing.”
Gibson et al (1999)

Chart 7: People over 65 receiving home-based services and residential care, internationally25
Residential

20

Home-based

15
10
5
Japan

Spain

Italy

Germany

IrelandFranceAustralia

UK

Netherlands

SwedenDenmark

0

Source: Gibson, Benham and Racic (1999) for the year 1995.

The projected rapid growth of dementia prevalence depicted in Chart 6 is occurring throughout thewestern world. However, the extent or type of care provided is not closely related to the stage of35

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
demographic transition, as Chart 7 shows, although the Nordics still lead the way. The levels and mix ofhome-based and residential care services provided varies greatly, with Australia in the middle of therange.
The proportion of national income spent on public programs for the aged is slightly more strongly
correlated with the stage of demographic transition, as shown in Chart 8. For a “young” country,
Australia is spending close to the OECD average on the health and long-term care for the aged, aged
pensions, early retirement and other expenditure for the aged.
Chart 8: Age-related expenditure, % of GDP by OECD country, 2000
Denmark
SwedenBelgium

Percentage of GDP

FinlandNetherlands
New Zealand
NorwayCanadaAverage
Australia
UK
Japan
USA
Austria
Hungary
Korea

-

5

10

15

20

25

30

Source: Access Economics derived from appendix data in AIHW (2002a), Table A4.2.

1.5.1

North America

In the US, the number of people with AD is forecast to increase from 4 million in 2002 to 14 million by
mid-century. Dementia care costs are also increasing rapidly, with the total direct and indirect cost of
AD alone estimated to exceed US$100 billion each year – US$25,000 per person with dementia on
average.
This figure includes care expenses and lost earnings both of the person and family members.63 Morethan 70% of people with AD in the US live at home and almost 75% of the home care is provided byfamily and friends (valued at US$34,518 pa in 1990 by Rice et al, 1993 – see Chart 9). The remainder isformal sector care costing an average of US$12,565 per year, which families pay almost entirely out-ofpocket (neither Medicare nor most private health insurance covers the long-term care most peopleneed). Half of all nursing home residents in the US suffer from dementia. The average cost for nursing
home care is US$42,049 per year but can exceed US$70,000 per year in some areas of the country.
The person or their family provide a further US$5,542 in additional goods and services while theresident is in care. Leon et al (1998) showed annual costs of caring for a person with mild, moderate orsevere AD to be US$18,408, US$30,096 and US$36,132 respectively, with 21% of the total costs being
for informal care (half the Rice proportion). The average lifetime cost per person was estimated as
US$174,000 in 1991, including US$47,581 in direct costs. Spending on AD research was US$600million
in FY2002.
63 Alzheimer’s Association of the United States, www.alz.org

36

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Chart 9: Cost of dementia care per person, United States
45,000$42,049

Home

40,000$34,518

35,000Nursing home

30,00025,00020,00015,000$12,565

10,000$5,5425,000
DirectInformal

Source: Rice et al 1990 study reported in Wimo et al (1998) p200.

A summary of cost of illness studies in the US is provided by Max in Wimo et al (1998, p200). Even thedata above shows there is some divergence in US cost estimates, which range from US$20,000 to
US$25,000 per person64 per annum (around A$40,000 to A$50,000 at 2002 exchange rates).
Two recent studies that have looked at costs of informal care and to business are described below:
1. A large 2001 University of Michigan study estimates that informal care costs for dementia in the
US are $18 billion a year, based on observations of families and carers of over 7000 Americans
aged 70 or more, 10% of whom showed cognitive impairment consistent with dementia (43%mild, 27% moderate and 30% severe). Time spent on assistance with ADL - dressing, bathing,eating and so on - increased from 4.6 hours (no dementia) through 8.5 hours a week extra(mild) to 41.5 hours extra with severe dementia. Time spent managing the BPSSD was notincluded. The hours of care given was multiplied by the average weekly wage of a home healthaide. Most of the care burden was found to be borne by elderly spouses. 65
2. The second study, of the cost of dementia to US businesses, showed an estimated $61 billion
spent on AD, which had doubled between 1998 and 2002 (Alzheimer’s Association US, 2002b).
The cost breakdowns show costs of health care at 40% ($24.6bn) and carer costs at 60%($36.5bn), including productivity losses (30%, $18bn,) absenteeism (17%, $10bn), worker
replacement costs (10%, $6bn) and continuing insurances and temporary replacements (3%,$2bn).
The prevalence of dementia in Canadians aged 65 and over has been estimated at 8% (5% with AD),amounting to over 250,000 people. Projections indicate that by 2021, there will be almost 600,000
Canadian seniors with dementia, increasing to 778,000 in 2031. As in Australia, half of those withdementia live in the community and half are institutionalised; with the former generally with less severe
forms of dementia.
64 Using the data above, 75% (3m people) live at home costing $12,500 per person = 37.5bn plus 1m at $42,000 each =US$79.5bn, suggesting US$20,000 per person for 4m people. Alternatively, lifetime costs of $174,000 with average life
expectancy of eight years suggest average cost of US$21,750 per person. $100bn in total with 4m people suggests averagecosts of US$25,000 per person.
65 Dr Susan Aldridge, The cost of dementia, on www.healthandage.com. For the full article, see Journal of General Internal
Medicine, November 2001. These care hours may be quite conservative – a 1985 US study showed the average care hours
for mild and moderate dementia to be 22 and for severe dementia to be 56. An Italian study showed 45 hours of personalcare required and 18 hours of other non-medical services (Lowin et al, 2000).

37

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
In a 1991 study by the Canadian Study of Health and Aging (CSHA) published in the November, 1994
issue of the Canadian Medical Association Journal, annual net costs for people 65 years of age andolder were very conservatively estimated at $3.5 billion (A$3.9 billion), or about C$14,000 (A$15,575)
per person with dementia per year.66 The total figure comprised community costs of almost $1.3 billion(33%), costs to long term institutions of almost $2.2 billion (56%), drug costs of $60.6 million (1.6%) anddiagnostic costs of $13.5 million (0.3%). The total annual net costs for people under age 65 were $389.2
million. Dementia was estimated to be 4.9% of health costs in 1991 but 5.8% by 1994. Net average
cost of community care for moderate and severe patients was 2.27 times more than for mild patients.
Research for both groups accounted for only $9.8 million – A$10.9m.67
1.5.2

EuropeIn the UK, over 700,000 people have dementia, with prevalence of 1 person in 120, estimated as 1 in1000 for people aged 40-65, 1 in 50 for people aged 65-70, 1 in 20 for people aged 70-80 and 1 in 5 forpeople over 80. 68 There are 18,500 people under the age of 65 in the UK who have dementia, with theprevalence between 30 and 60 years of age 67.2 per 100,000.69 AD is estimated to cause 55% ofdementia, vascular dementia 20%, dementia with Lewy bodies 15%, fronto-temporal dementia 5% andother forms 5%. By 2010 there will be about 840,000 people with dementia in the UK, expected to rise
to over 1.5 million by 2050. 70
The annual cost of dementia in the UK was estimated in the 1993 to be between £5.4bn and £5.8bn. Of
this, £1bn were direct health and social services costs to the public sector. The direct cost of younger
people with dementia was estimated at £132 million per year.71 By 2000, cost estimates of AD in the UK
had increased to between £7.1 billion and £14.9 billion (A$20.2 billion to A$42.8 billion) or A$44,473 perperson on average72, excluding costs of mortality and lost productivity. The NHS and local authorities
pay for about 42% of total costs, the rest being borne by the Department of Social Security or people
with dementia and their families. Costs of formal care are dominated by institutional care, particularly in
hospitals and nursing homes where one estimate puts the full costs of care at £278.86 per week for mild
to moderate illness (A$41,625p.a.) and £338.38 per week (A$50,510 p.a.) for severe illness; while theperson is at home, informal care costs are typically much larger than the paid cost of formal care. Costs
are estimated to increase to £10.7bn to £20.7bn by 2021. Research costs are only £5.6m per annum for
AD (Lowin et al, 2000).
O’Shea (2000) showed the costs of caring for a patient with AD in Ireland in 1996 were £328m to £453m
or between £10,933 and £15,100 per person per annum, equivalent to A$31,385 and A$43,345
respectively. He notes that these estimates “come at the lower range of published estimates in theinternational literature”. The division of costs in this study (for the lower end of the spectrum) was: carercosts £154m (47%), residential care £82 (25%), GPs and community care £16 (5%), psychiatrichospitals £14m (4.3%), acute hospitals £5m (1.5%), and other costs £57m (17%).

66 Østbye T and Crosse E (1994) “Net economic costs of dementia in Canada” Can Med Assoc J 1994;151(10):1457-64.
67 Larry Segel The Underwriting Edge, on www.marketingoptions.com/c_ls124.htm .

68 Bosanquet, May, Johnson (1998) "Alzheimer's Disease in the United Kingdom - Burden of Disease and Future Care".

69 Harvey, (1998) "Young Onset Dementia: Epidemiology, clinical symptoms, family burden, support and outcome" 1998.
70 The Alzheimer's Society web site, www.alzheimers.org.uk .

71 Bosanquet et al (1998) ibid and Harvey (1998), ibid. Also Alzheimer’s Europe (2002) for the cost per person.
72 Lowin, McCrone and Knapp (2000) “Cost of Alzheimer’s Disease and Level of Research Funding”. Souetre et al (1999)

estimated the total cost per patient over three months as an enormous £6,616 (mild), £10,250 (moderate), and £13,593(severe) – equating to A$75,966, A$117,693 and A$156,078 per person with dementia p.a. respectively!

38

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Costs of dementia in other European countries range considerably, from 19% of total health care costs
in Sweden, by far the highest, to around 5.6% in the Netherlands (close to the average). Chart 10
shows the Dutch direct health costs predictably dominated by nursing homes (around two thirds of direct
costs), followed by hostels (30%), with specialist psychiatric services, hospital costs, home-care, GPsand pharmaceuticals together accounting for less than 5% of total heath system costs.
Chart 10: Costs of Dementia in the Netherlands

Nursing homes
65.8%
Hostels
29.8%

Specialist(psych)2.1%

Pharmaceutical
0.1%

GP
0.1%

Hospitals
1.1%Home-care
1.1%

Source: Access Economics derived from Koopmanschap et al in Wimo et al (1998).

In terms of per capita expenditures in Europe, studies in France and Germany show direct costs in theorder of US$6,778 and US$11,661 respectively for 1991 and 1995, although different methodologies
and variable exchange rates make close comparisons of these low estimates difficult. Costs in Europe
are projected to grow on average in real terms by around 1.9% p.a. for 1985-2020 and 2.6% p.a. for2020-2040 (Koopmanschap et al in Wimo et al,1998).
Perhaps the most frightening statistic in recent research in Europe was that 41.8% of people diagnosed
with AD did not receive further information on the disease or on existing services and treatment.73
Within this international context, we now turn to cost estimates for Australia.
1.6 SUMMARY OF CHAPTER ONE
Dementia is a disabling organic brain syndrome characterised by progression from mild, throughmoderate, to severe illness, with death after an average of eight years. Symptoms include loss ofcognitive abilities, behavioural and psychological symptoms, and functional disability. Diagnosis can becomplex. There are many diseases that cause dementia with varying symptoms and progression, themost common being Alzheimer’s disease (AD), vascular dementia, dementia with Lewy bodies andfronto-temporal lobe dementia. The most established risk factor is age; others include family history,
gender and cardiovascular risk factors, while protective factors may include use of anti-inflammatories,
oestrogen and statins as well as intake of antioxidants.
Prevention of dementia is currently focused on postponing the onset of symptoms to later in thelifespan, increasing healthspan and potentially preventing tens of thousands of institutionalisations perannum. Research is promising – with the best chances for AD elimination possibly related to an
73 Alzheimer Europe (2002), p1.

39

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
immune system response that destroys beta-amyloid plaques in the brain. Research is also vital to findmore effective models of care for people with dementia. Early diagnosis and intervention areparamount, ensuring the person and the family can benefit from the many advantages of drug
treatments, support and planning, which improve coping and quality of life.
Pharmacological management includes cholinesterase inhibitors (CEIs), which ameliorate thesymptoms of illness but do not reverse disease or prolong life. Three of these – Aricept, Exelon andReminyl – are available on the PBS for mild to moderate AD under certain conditions, including
demonstrated improvement. Other pharmacotherapies can include aspirin and blood thinning agents,
anti-psychotics, memantine (not yet TGA-approved) and a range of natural treatments such as Ginkgo
biloba, Vitamins C and E and folic acid.
GPs play a key role in medical treatment – recognising, assessing, planning, managing, referring andsupporting the person and their carer. However, only half of GPs are able to recognise mild dementia
and more information and resourcing is required. Neurologists, psycho-geriatricians and otherspecialists also have a key role in assessing, treating and prescribing. Acute hospital care for people
with dementia has four times the ALOS (average length of stay) of the general population.
Multidisciplinary memory clinics are a useful, important and accepted new community solution (withspecialist input) to coordinating dementia assessments and supporting the person with dementia, thefamily carer and the GP.
Psychosocial interventions are very important for disease management and quality of life, including
counselling, psycho-education, understanding of behavioural and psychological symptoms of dementia(BPSD), problem-solving strategies, person-centred care, modelling and specific therapies such as
physical, occupational, diversional, reminiscence, validation or music therapies. 25% of Australian older
people are from non-English speaking backgrounds, requiring special consideration or services.
Community bodies, such as Alzheimer’s Australia and Carer Associations are able to meet a wide
range of community needs including information, resources, support, education, counselling, referral,
legal and financial services, advocacy and program delivery. For example, Alzheimer’s Australiadelivers Commonwealth-funded national programs that include the Dementia Education and Support
Program (DESP), which includes the Dementia Helpline service; Carer Education and Workforce
Training (CEWT); Early Stage Dementia Support and Respite Program (ESDSRP); and the National
Dementia Behaviour Advisory Service (NDBAS). Private and public community support services arealso available, although not equitably or comprehensively, including personal, health, accommodationand social services such as home care, adult day care and a variety of respite services.
“Ageing in place” is a fundamental element of dementia and aged care generally in Australia, where
community-based aged care assessment teams (ACATs) assess needs and recommend appropriate
care services and settings in the community or in residential care. 52% of people with dementia live inthe community and are key users of services such as Home and Community Care (HACC), Community
Aged Care Packages (CACPs), Extended Aged Care in the Home (EACH), psychogeriatric units(PGUs), the Carer Information and Support Program, the National Respite for Carers Program and the
Dementia Support for Assessment Program. Over half of people with dementia have a child as a carer,
while 41% depend on a partner and 35% on another relative. 40% use for-profit care services and 40%
use government services. Greatest needs are for mobility, property maintenance, healthcare, transport,
paperwork, meal preparation, housework, self-care and communication. Informal (voluntary) families
and carers – the invisible multi-billion-dollar workforce – provide a huge contribution, which often may
take a heavy toll on their own health, wellbeing and income.

40

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
As dementia progresses, and depending as much on carer as patient factors, entry to residential care
may become appropriate – either low-care (hostel) or high care (nursing home). Quality of care remains
an issue, with physical and chemical restraint still used by a majority of providers, and a long way to go
in achieving widespread person-centred care strategies. Two thirds of people with dementia in
residential care are in nursing homes, one quarter in hostels and 8% in psychogeriatric facilities or othersupported residential services. ALOS is 3 years. Although 60% of nursing home residents and 30% of
hostel residents have dementia, and over 90% and 54% respectively have an obvious cognitive
impairment, 79% of residents are supported in mainstream facilities. Only 6% of beds are dementiaspecific, with the remainder being dementia areas in mainstream facilities.
In Australia there were over 162,000 people with dementia in 2002, including 6,600 under 65 – with‘younger onset’ dementia. Age-standardised prevalence for indigenous people may be higher.
Prevalence of dementia in older people doubles every five years from 1% at age 60, to 2% at 65, to
32% by 85 and to two thirds of those in their nineties. The prevalence of dementia is growing rapidly –reaching the half-million mark around 2040 and 2.3% of the population by mid-century.
The socio-economic and disability burden of dementia is severe – 98.5% of people with dementia
are disabled. People with dementia also tend to have lower incomes, with 70% represented in thelowest two income quintiles. Rural and urban prevalence distribution is similar, although access toservices is more difficult in the bush. People with dementia are under-represented in Australian
employment – 2.3% compared to the Australian average of 8.5% for people over age 65. People withdementia also have higher than their age-average use of medical services including doctor visits andspecialist visits, as well as longer hospital stays and higher age-standardised pharmaceutical costs.
The dementia epidemic is worldwide. As demographic ageing progresses, we witness anotherepidemiological transition. The management of neurodegenerative disease is the major challenge ofhealth care systems all around the globe. Costs in the United States are estimated at between
A$40,000 and A$50,000 per person per annum - US$100bn in total each year. North American andEuropean studies point to the concentration of huge costs in residential care services as well as on
informal family carers, and potentially enormous cost-savings of postponing the severity of disease.

41

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

2.

THE DEMENTIA BURDEN FOR AUSTRALIAN PEOPLE

There are three types of costs associated with dementia (see also the Methodology for this chapter):□ Direct financial costs to the Australian health system include the costs of running nursing homes
and hospitals (buildings, nursing, consumables), GP and specialist services reimbursed throughMedicare and private funds, the cost of pharmaceuticals (PBS and private) and of othermedications, allied health services, research and “other” direct costs. The latter category includes
institutional and non-institutional expenditures (such as day-care programs, home-based care andrespite) and health administration. These are analysed in Section 2.1.
□ Indirect financial costs (Section 2.2) tend to be borne primarily by people with dementia and those
who care for them. These are dominated, in the case of dementia, by the costs of care – including
the value of all care whether it is provided through the formal or informal (voluntary) sector. The
income forfeited by people with dementia and their families and carers, due to absenteeism andearly retirement, is also significant. Other costs include equipment and devices that are required tohelp cope with the illness, and transfer costs such as welfare and disability payments.
□ Non-financial costs (Section 2.3) are also very important—the pain, suffering and premature deaththat result from dementia. Although more difficult to measure, these can be analysed in terms of theyears of healthy life lost, both quantitatively and qualitatively, known as the “burden of disease”.
2.1 DIRECT HEALTH COSTS
Direct health system costs estimated in this paper are based on DCIS prevalence-based methodology
developed by the Australian Institute of Health and Welfare for the year 1993-94 and currently being
updated. This report extends and projects the AIHW work to estimate those costs attributable todementia in CY2002 (see Methodology).
2.1.1

Direct costs in 1993-94 and 2002

Table 9 shows the AIHW 1993-94 data, where dementia is already the most costly of mental healthdisorders at $714 million, accounting for nearly one quarter of all mental health system costs in 1993-94.
Spending in the ‘other direct’ category ($582m), mainly nursing homes and hostels, dwarfs that of othermental illnesses and is still grossly under-estimated (see Methodology). Community care was separate
spending under the Aged Care program budget in 1993-94.
Table 9: Comparison of the direct health system costs of mental disorders, $m, 1993-94

Dementia
Affective disorders (inc. depression)
Schizophrenia
Substance abuse disorders
Anxiety disorders
Behavioural syndromes
Other non-drug psychosis
Stress and adjustment disorders
Disorders of childhood and adolescence
Other disorders, prevention & screening
Total

Hospital
110
217
275
136
24
17
63
28
10
61
941

Medical
11
141
26
46
102
53
5
27
9
19
438

Other
Pharmahealth Other% ofceuticals services direct Total
Total
2
9
582
714 23.6%
6870148
644 21.3%810640454 15.0%1218136
348 11.5%
51
25
37
239
7.9%
45
9
50
174
5.8%
1
6
53
128
4.2%
7
31
19
112
3.7%
1
19
16
55
1.8%
3
42
29
154
5.1%
199
334 1110 3022 100.0%

Source: Mathers, Vos and Stevenson(1999), p90, Table 6.6, condensed.

42

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
By 2002, the costs of dementia were estimated as $3.2 billion, due to a 62% increase in the number ofpeople with dementia over the period, a 37% increase in costs, and an original underestimation of theresidential care component (see Methodology). The distribution of these costs across the health system
is shown in Table 10.
Table 10: Components of direct health costs for dementia, 2002
Direct health cost$m
% of total
Nursing homes and hostels
2,847.1
88.0%
Public hospitals
141.2
4.4%
Psychiatric hospitals
74.7
2.3%
Private hospitals
28.0
0.9%
GPs and specialists
24.5
0.8%
Outpatients & other ambulatory services
20.6
0.6%
Research
19.2
0.6%
Pharmaceuticals and allied health
13.8
0.4%
Other direct costs
66.8
2.1%
Total direct
3,235.9
100.0%
Source: Access Economics, based on AIHW special data request.

Chart 11 illustrates the breakdown of cost components for dementia. Residential care costs dominatedthe profile at $2.8 billion (88% of the total). This represents 66% of total Commonwealth residential care
subsidies in FY2002-03, estimated to be $4.3 billion, which fits well with Rosewarne data, while not
attributing all costs of people with dementia to dementia74. Second are public hospital costs at $141m(4.4%) followed by psychiatric hospital services ($75m or 2.3%). Private hospital services ($28m),
medical services ie, GPs and specialists ($24.5m), outpatient and ambulatory services ($20.6m),
research ($19.2m) and pharmaceuticals and allied health ($13.2m) were each less than 1% of the total.
Other direct costs, including health administration, were $67m (2.1%).
Chart 11: Components of direct health costs for dementia, 2002
Nursing homes andhostels
88.0%

Public hospitals
4.4%

Other direct costs
2.1%
Pharmaceuticals andallied health
0.4%
Research
0.6%

Psychiatric hospitals
2.3%
Private hospitals
0.9%
GPs and specialists
0.8%
Outpatients & otherambulatory services
0.6%

Source: Access Economics based on AIHW data.
74 In Section 1.2.6 we saw that Rosewarne’s data suggests 60% and 90% of nursing home and 30% and 54% of hostel

residents are effectively the minimum and maximum with dementia. Gibson’s data show that weightings for nursing homes
and hostels in total residential care are 70% and 30% respectively for people with dementia (see Chart 4). The weighted
averages are thus 51% and 79%, with the mean 65% of total residents having dementia. Costs per patient, however, arehigher for dementia patients – hence 66% is conservative, although ballpark if an allowance is also made for those withmultiple disorders. These figures conservatively concord with international data from Section 1.5.

43

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
2.1.2

Projections of direct costs

Section 1.3.3, particularly Chart 5, depicted the rapid growth of dementia
prevalence over the coming decades. Given these demographic growth
The health caretrends, together with growth in health care costs (based on trends in thecosts of dementia
Health and Community Services GDP deflator), the direct health costs ofwill nearly double
dementia are estimated to grow by 82% by 2011 (see Methodology). If
we also make an allowance for increased spending on research, GPs
this decade.
and pharmaceuticals, then direct health costs are estimated to grow by
84% to $6.0 billion. This ignores the potentially even faster growth of home-based aged care spending
on dementia, which may need to reflect increased women’s labour force participation resulting in a
reduction in “free” caregiving. Table 11 shows a breakdown of projected costs for 2011.
Table 11: Projected components of direct health costs for dementia, 2011

Nursing homes and hostels
Public hospitals
Psychiatric hospitals
Private hospitals
GPs and specialists
Outpatients & other ambulatory services
Research
Pharmaceuticals and allied health
Other
Total direct$m$5,182.2$257.0$135.9
$50.9
$66.8
$37.5
$69.9
$37.8
$121.7$5,959.7% total
87.0%
4.3%
2.3%
0.9%
1.1%
0.6%
1.2%
0.6%
2.0%
100.0%

Source: Access Economics projections.

It is always difficult to predict technological change, and it should also be noted that any increase inpharmaceutical spending, as new therapies become available, could be expected to have an offsetting
effect on other medical costs, and also on indirect costs. Also important in projections is the policy
response to the current inadequacies of residential and community care, carer programs, earlyintervention and research programs. If spending on these components is addressed in a significant way,
there may be compositional and other effects on projected direct and indirect costs. We now turn tocurrent estimates of the home and community care costs of dementia.
2.1.3

Home and community care costs

Home and community care costs (not included in direct costs for reasons given in the Methodology
section) are derived from the proportion of the HACC program that is estimated to be spent on care forpeople with dementia – 20% of current Federal spending ($674 million) or $135 million75 – plus
spending on other dementia-specific programs (such as funding for Alzheimer’s Australia) which isestimated as $40m in 2002.76 The total, $175 million, represents $2,071 per person at home withdementia (52% of the total prevalence, or 84,394 people). Taking account of those who may not accessthe services (about 19%), the average cost is $2,554 per person p.a. for those receiving them. This
amounts to 16% of Department of Health and Ageing (DHA) spending on home and community care.

75 The total HACC program, including State and Territory spending, amounts to $1.1 billion.
76 Unpublished DHA estimate.

44

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Home and community care provision is significantly less costly to the public purse than residential care,as expected, which from Section 2.1.1 amounted to $2,847 million or $36,547 per person in residential
care in 2002. This is, as expected, above the DHA published estimate of $28,796 per person for all
people in residential care, with or without dementia. The spending represents around 66% of aged carespending on residential care, $4.3 billion in 2002-03. A summary is provided in Table 12 below.
Table 12: Dementia Formal Care Costs, 2002

Home-based Aged Care

Residential Aged CareTotal

per person at
$m
home
$175
$2,071

per person
receiving
services % of total DHA$2,55416%

DHA av. cost
per person in per occupied$m
place
place % of total DHA$2,847$36,547$28,79666%
per person
per person
receiving$m with dementia
services % of total DHA$3,022$18,620$19,773
56%

Source: Access Economics

2.2 INDIRECT FINANCIAL COSTS
2.2.1

Lower workforce participation of people with dementia

People over 65 with dementia have lower rates of employment than healthy people of the same age (asnoted in Section 1.4.3), due to functional and cognitive disabilities. Table 7 showed that the employment
rate for those with dementia is 2.3% compared to 8.5% in the general population. If older people withdementia achieved the same employment rate, there would have been an extra 9,612 people in theworkforce in 2002, earning an average of $696 per week, all other things being unchanged (seeMethodology). This would have produced $348.8m in extra income.
This figure may be a conservative estimate of the true loss as many people (particularly those under 65
who have not been included here) may reduce their workload rather than stop work completely, as aresult of the health impacts of dementia. Income losses of families of people with dementia who reduceor give up work in order to care for the person with the illness are identified in the next section.
“Mavis and I looked forward to the day I would retire. We had so many travel plans. We wanted to do somuch when that time came. Unfortunately, retirement came too early and was unplanned. All our
dreams have receded and we now deal with the reality of Alzheimer’s.”‘Phillip’
Margaret and Bill Carmen had been married for 19 years. At only 43, Margaret suddenly began to show
signs of dementia and was diagnosed with Alzheimer’s disease. A high school biology teacher, she had
to give up work. Later her husband gave up his job to care for her full time.
Hampson (2000), p18.
Absenteeism: There were an estimated 3,606 people employed, over age 65, with dementia in 2002,
earning an estimated $130.8m. Although data on absenteeism rates for Australian people with dementia
who work are not available due to small sample size, a conservative estimate is likely to be around 5%
45

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
of work time lost (based on 8% lost for people with psychotic illnesses with similar cognitive andfunctional impairments). The cost of absenteeism would thus be a further $6.5m.
In total then, the loss of earnings from loss of employment and absenteeism is estimated for 2002 as$355.3m.
Potential tax revenue foregone: There are two sources of lost tax revenue that result from the lower
earnings above—the potential income tax foregone and the potential indirect (sales) tax foregone. The
latter is lost because, as income falls, so does consumption of goods and services. Table 13
summarises the tax losses of $100m in 2002, comprising $77m of personal income tax and $23m ofindirect tax.
Table 13: Potential earnings and tax revenue lost due to dementia, 2002
Potential Earnings Lost
$355.3 million
Average personal income tax rate#
21.67%
Potential personal income tax lost
$77.0 million
Average indirect tax rate#
12.5%
Potential indirect tax lost
$22.8 million
Total potential tax revenue lost
$99.7 million# Source: AEM Model, Access Economics.

Mortality burden: In addition to the income foregone due to those with dementia in the community who
are unable to work due to their illness, there is also the income foregone of those who have diedprematurely due to dementia. Deaths from dementia in 2002 are estimated as in Table 14. These arelikely to be significantly under-estimated (see Methodology) so the cost estimate of the mortality burden
is very conservative. Assuming that if those who died prior to retirement age had lived and not had
dementia, they would have been employed at the same rate as the general population over 65 – 8.5%
(39 people in all would have been employed who were not because they died from dementia). The
average age of death for those people aged 15-74 is 64.2 years (i.e., with 5.8 years to ‘average’
retirement) and the income stream is discounted at the average real growth rate in AWE (0.8% p.a.).
Table 14: Deaths from dementia, Australia, by age and gender, 2002
Males
Females
Persons
0-14
12
7
18
15-34
1
4
5
35-54
3
5
8
55-74
234
216
450
75+
1,466
3,179
4,645
Total deaths
1,716
3,411
5,127
Source: Access Economics, based on Annex Table E from Mathers, Vos and Stevenson (1999).

This yields the net present value (NPV) of the mortality burden as $8.8 million. The NPV of taxation
revenue sacrificed for the mortality burden is $2.5 million.
2.2.2

Family and carer costs

As we have seen in Section 1.2, most people with dementia receive care at home initially, with day-today personal needs and support left very much to family and friends. Society, and our public sector
health and welfare budget, relies increasingly on the support that such families and carers provide.
46

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
The approach adopted here is one of replacement cost (seeThe value of informal
Methodology), where the value of the hours of care is imputed as if
a paid care worker provided them. Three tiers of care arecare of people withmodelled, based on the University of Michigan average hours ofdementia was overcare for people with mild, moderate and severe dementia (see$1.7 billion in 2002.
Section 1.5.1). The imputed carer rate is $19.25 per hour, based on
the Community and Aged Care Services (ACT) Award, 2002
(AW817098) for a Care Worker Grade 3, with adjustment for leave loading and after hours. Most of
those with mild dementia (23% of total prevalence), about half of those with moderate dementia (22% of
the total), and one quarter of those with severe dementia (7.5% of the total) are assumed to live athome, noting that many are in nursing homes for reasons other than dementia. The results are in
Table 15, with the total value of families and carers for people with dementia estimated as $1.71 billion
in 2002. Associated tax foregone equates to $489.7m.
“I have been looking after Marjorie for 16 years but she has only required more personal care withthings like eating, showering and toileting for the past five or six years. Until two years ago I used tospend three days a week in the office, but this is now one day only. Everyone said that I should retain
an interest in my work as it would be a respite for me, and I certainly agree with that.”‘James’Table 15: Value of families and carers of people with dementia, 2002
No. of people
Hours perMillionwith dementia week of care
hours of
Value ofat homerequiredcare
care $m
Mild
36,517
8.5
16.2
311.3
Moderate
35,705
25.0
46.5
895.3
Severe12,172
41.5
26.3
506.6
Total
84,39489.0
1,713.2
Source: Access Economics estimates.

Part of the value of informal care is compensated through Federal
Family carers provide
Government Programs, notably Carer Allowance ($42.65 weekly in
80% of the value of
September 2002) and means-tested Carer Payment ($214.70
informal care without
weekly for singles). The means test (income and assets) is
modelled to exclude the top 30%, and there is an allowance ofcompensation.
25% “wastage” (people who do not claim the payment for a varietyof reasons). The value of the ‘transfer payments’, designed so thatthe burden of informal care is not borne wholly by the families and carers themselves, is thus estimatedin Table 16 below as $324m or 19% of the total burden.
Table 16: Value of Carer Payment and Carer Allowance for people with dementia, 2002
No. of people with dementia at home
Value of
After means test andValue oftransfer
Before means wastage ie, receiving payments, $m
payment
test
payment
Mild$2,22236,517
19,20942.7
Moderate$11,186
35,70518,782
210.1
Severe$11,186
12,172
6,403
71.6
Total
84,394
44,394324.4
Source: Access Economics estimates.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
2.2.3

Cost of welfare payments

Many people living with dementia are reliant on welfare benefits as their main source of income.
However, in most cases, this is the means-tested Age Pension, paid to eligible men over 65 and eligible
women aged over 60-65, depending on their birth date (by 2014 the age will be 65 for everyone). Since
the Age Pension would be paid to eligible elderly regardless of dementia, it is not included in modelling
here.
People under retirement age with dementia may be eligible for the Disability Support Pension (DSP) andin some cases, Sickness Allowance. The DSP is the main means of income support in Australia forpeople aged 16 years and over whose physical, intellectual or psychiatric impairment prevents themfrom working, or for people who are permanently blind. There were some cutbacks to the program in the
May 2002 Budget. Sickness Allowance provides assistance for people who are employed and who aretemporarily unable to work (or study) due to a medical condition. It is not significant in the case ofdementia so is not modelled here.
There are also entitlements to concession cards – Pensioner Concession Card (PCC) & Health Care
Card (HCC), which may result in concessional transfers such as prescription medicines, transport fares,
rates, power bills and car registration – and to Rent Assistance, for people who get a payment such as
the Carer Payment and pay rent for private accommodation.
Although insufficient data precludes a firm estimate of many of these transfer payments (and they arelikely to be relatively small as a proportion of the real total indirect costs anyway), a conservative
estimate of welfare payments which includes the main items – DSP, Rent Assistance andPharmaceutical Allowance – is provided in Table 17 below, totalling $52.0m of which $47.7m is DSP.
Table 17: Cost of welfare payments
weekly receiving total cost
payment
benefit$m
DSP (weighted)$ 196.95
4,653
47.7
Rent Allowance (weighted)$ 48.83
1,396
3.6
Pharmaceutical Allowance$ 2.90
4,653
0.7
Total
52.0
Source: Access Economics estimates utilising Centrelink rates of 20-Sept 2002.

2.2.4

Modifications and aids

People with dementia and their families and carers may require a variety of additional equipment, aids
and home modifications in order to continue living at home safely. These include memory aids (such aslarge-face clocks, signs and identifiers), bathing and toileting aids (eg, shower accessories, incontinencepads), safety aids (such as gas detectors, wandering/occupancy alarms), adapted cutlery and common
items (eg, clothing with Velcro), daily pill boxes, mobility/transport aids (eg, walking frames, special
shoes for “walkers”), nursing aids (eg, pressure-relief mattresses), grab rails, and so on.
There are a number of public programs for older people, people with a disability and their families andcarers to assist them to make home modifications and provide aids and equipment that will help them toremain living in their own home avoid having to go into a residential care facility. The Home
Maintenance and Modification Program is funded by the Commonwealth and State Governments underthe HACC program, with two levels of assistance. The lower level of assistance is the Home
Modification and Maintenance Services program, which includes installation of rails, provision of secure
48The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
rugs, hand showers, grab rails, moveable ramps and taps, as well as with minor home maintenance andrepairs. Assistance with major work over $5,000 is through the Home Maintenance Scheme, with thecost up to 20% of the total cost of the job.
The Program of Appliances for Disabled People (PADP) provides equipment and appliances to disabled
people and some others, who are financially disadvantaged, including adjustable beds, hoists andmechanical lifters, shower chairs and bath seats. Access to continence aids – such as pads, uridomes,
kylie sheets, commode chairs and toilet seats – is variable by State/Territory, with a summary ofnational, State and Territory programs provided in Continence Foundation of Australia (2000).
The Independent Living Centre is a non-profit organisation that provides information about equipment,
building design and other resources, as well as a display centre for people to view and sample a wide
range of products and equipment, including aids for communication, lifting and transfers, continence,
leisure and recreation, mobility, seating and transport.
Whether paid for privately or publicly, all these items incur additional indirect financial costs. Frisch(2001, Table 1, p18) undertook detailed survey work of the costs of aids, equipment and modifications inAustralia, as shown in Table 18, averaging $738.40 per person. Across all those people with dementia,
the total cost in 2002 was $119.8m.
Table 18: Costs of aids, equipment and modifications, 2002
Mean cost pa
Annual cost
per person ($)
all dementia ($m)
Housing modifications$265.20$43.0
Aids and appliances$174.20$28.3
Consumables$299.00$48.5
Total$738.40$119.8Source: Access Economics based on Physical Disability Council of DC Australia (Frisch, 2001) data.

2.2.5

Summary of financial costs

Table 19 and Chart 12 show the real indirect financial costs ofdementia as $2.2 billion, around two thirds of the direct healthand ageing costs. Total real financial costs (direct and indirect)
were $5.6 billion. Interestingly, this is roughly equivalent to total
Federal Government outlays for aged care services
administered by the Department of Health and Ageing,
estimated to be $5.5 billion for 2002-2003 (about 0.77% ofGDP).77

The total financial cost ofdementia in 2002 was$6.6 billion – over
$40,000pa per personwith dementia

In addition, there were $968 million of transfer payments – both lost
revenue (tax foregone for people with dementia and their families andcarers) and expenditure (welfare and carer payments). In total, indirect
costs were $3.17 billion (roughly equivalent to direct health and ageing
costs). The total financial costs of dementia (direct and indirect,
including additional net transfer payments) were $6.58 billion in 2002.

By 2051,dementia’s financial
impact will total
3.3% of GDP

77 As quoted in DHA (2002a) Attachment C.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
In per capita terms, the indirect financial costs of ageing are approaching $20,000 per person withdementia p.a., while the direct health and ageing costs of dementia are over $20,000 per person p.a.,including home and community care of just over $1,000 per person with dementia in 2002 (but $2,554
per person receiving the care). Relative to national income, total financial costs are already approaching
1% of GDP and are set to reach 3.3% of GDP by mid-century78. Direct costs alone will reach 1.6% of
GDP.
Table 19: Summary of direct and indirect financial costs of dementia, 2002

Total

Per
personwithdementia$3,235.9$2,847.1$174.8$3,235.9$2,847.1$174.8$355.3$8.8$355.3$8.8$102.2$2,037.6$489.7$52.0$119.8$3,165.4$6,576.1$ million
Real costDirect health costs
Including residential careHome and community care
Indirect financial costs
Lost earnings (patients)
Mortality burden
Tax foregone (patients)
Value of carers
Tax foregone (carers)
Welfare payments
Aids & modifications
Subtotal indirect financial costs
Total financial costs$1,713.2$119.8$2,197.2$5,607.9

Transferpayments$102.2$324.4$489.7$52.0$968.3$968.3

% GDP
2002

%GDP
2051

$19,938$17,542*$1,077*

0.45%

1.6%

$12,555

0.28%

1.0%

$19,504$40,519

0.44%
0.91%

1.6%
3.3%

*The averages per person with dementia in residential care and per person with dementia at home receiving formal services
are $36,547 and $2,554 respectively (see Table 12). Source: Access Economics.

Chart 12: Distribution of the financial costs of dementia, 2002
Residential care
42%

Transfers:
welfare/carer
payments
6%
Transfers:
Lost earnings &patient/carer tax
Aids andmortality (patients)
foregone
modifications
6%
9%
2%

Carer costs(informal)
26%

Other health systemcosts
6%Home-based agedcare (formal)
3%

Source: Access Economics.

2.3 THE BURDEN OF DISEASE
In 2002, over 5,000 Australians died from dementia (Table 14 Section 2.2.1), while thousands of others
suffered from its disabling and distressing symptoms and its pervasive impacts on loved ones. Dementia
78 Assuming ultra-conservatively only demographic growth and no increase in the real cost of care per person.

50

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
imposes burdens on people and their families and carers that go well beyond the financial costs. Thereis no objective way to ascertain a financial value for the pain, suffering and premature death from
illnesses like dementia for all those involved. However, the internationally developed ‘Burden of
Disease’ methodology (see Methodology) has earned recognition in Australia and overseas as a useful
way of estimating the years of healthy life lost due to a condition. This method uses DALYs—or‘disability adjusted life years’—as the measuring stick. DALYs have two components:□ the years of life lost (YLL) due to premature death—the mortality burden; and□ the years of healthy life lost due to disability (YLD)—the morbidity burden.
DALYs, YLLs and YLDs provide indicators that are useful in measuring
the impact of disease and exploring the effectiveness of healthspending in terms of purchasing years of healthy life. The AustralianInstitute of Health and Welfare has provided some excellent analysis in
this area. Mathers, Vos and Stevenson (1999) estimate the burden of
disease in 1996 for a variety of disease and injury categories. Table 20
extrapolates their estimates for dementia to 2002 using prevalence anddemographic data.

Dementia cost over
117,000 years ofhealthy life forAustralians in 2002.

Table 20: Burden of disease from dementia, 2002
Males
0-14
15-34
35-54
55-74
75+
Females
0-14
15-34
35-54
55-74
75+
Total
0-14
15-34
35-54
55-74
75+

DALYs
44,039358
36
1,388
17,70424,55473,043
204
112
1,578
22,85848,292
117,083
562
147
2,966
40,561
72,846

YLL
10,812
358
36
50
2,542
7,827
20,620
204
112
118
2,778
17,40931,432
562
147
168
5,320
25,236

YLD
33,227
1,338
15,163
16,72752,424
1,461
20,08130,88385,651
2,799
35,24447,610Source: Access Economics, utilising data from Mathers, Vos and Stevenson (1999).

In Australia in 2002, the burden of disease attributable to dementia was estimated as 117,083 DALYs.
Morbidity was the major source of burden (85,651 YLDs were 73% of the total) while mortality
accounted for 31,432 YLLs or 27%. Females bore 62% of the overall burden of disease and the same
proportion was borne by people aged over 75. It is noteworthy that the disability weights for dementia
are 0.27 for mild cases, 0.63 for moderate cases, and 0.94 for severe dementia. The latter is the highest
disability weight for all illnesses, equal with severe rheumatoid arthritis and higher than that of final
stage terminal cancer (0.93). This shows the extent of the disability burden for dementia compared withother illnesses. The next section provides further comparison with other diseases.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

3.

COMPARISONS, CONSTRAINTS AND SCENARIOS

3.1 COMPARISONS WITH OTHER DISEASES
Dementia is one of the leading causes of health system costs and disease burden in Australia. National
Health Priority areas, which account for over 70% of the total burden of disease (DALYs), are currently:□ Cardiovascular disease□ Cancers
Dementia is more
□ Mental healthcommon than
□ Injury□ Diabetes
epilepsy or skin
□ Asthmacancer.
□ Arthritis and musculoskeletal disease
While dementia falls within the Mental Health priority area, the main policy focus within mental health so
far has been on depression. This section compares the prevalence, health costs and disease burden of
dementia with other illnesses, including the National Health Priority areas.
3.1.1

Comparisons of prevalence

Chart 13 compares the prevalence of selected disorders in Australia according to the latest data fromthe National Health Survey, released in October 2002 and relating to the year 2001. National healthpriority areas are asterisked. Musculoskeletal disease, of which arthritis is the largest component,
dominates the profile, followed by circulatory disease. Asthma is also very common, affecting over 2m
Australians, while 1.8m have mental disorders and around 1.4m suffer injuries (including poisoning).
Diabetes affects over half a million Australians. The prevalence of dementia is of the same order ofmagnitude as partial and complete blindness, and cancers (excluding skin cancer, the most commonform) and slightly less than dermatitis and eczema combined. Dementia is more common than epilepsy
or skin cancer, and the NHS data also indicate higher prevalence than alcohol and drug abuse.
Dementia is more common than any other neuro-degenerative condition, including Multiple Sclerosis.
Chart 13: Prevalence of selected conditions, 2001
All musculoskeletal disease *All circulatory disease *Arthritis *Asthma *All mental disorders *All injuries and poisoning *#Diabetes *Dermatitis and eczema
Other cancer *Blindness (complete/partial)
DEMENTIA
Alcohol and drug abuse
Epilepsy
Skin cancer *

0

1,000

2,000

3,000

4,000

5,000

6,000

Number of persons ('000) reporting condition

Source: Access Economics based on ABS (2002) 2001 National Health Survey data. # estimated from ABS (1997) 1995
NHS data. * = National health priority areas.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.1.2

Comparison of financial costs

Table 21 compares the direct health system costs of dementia with those of other disorders, including
the national health priority areas, according to Mathers and Penm (1999)79. Circulatory disease was themost costly, as a result of its impact on the hospital system. Digestive diseases (largely dental
problems, ulcers and hernias) are second highest because of their dental costs. Musculoskeletal
disease is third, due mainly to the various impacts of arthritis and osteoporosis across the healthsystem. Injuries (including self-inflicted injury) also have high hospital costs, just tipping them above
mental illnesses in the year of comparison. Mental illness is next, representing over 8% of total healthcosts. Dementia is the most costly component of mental health, as noted in Table 9 (Section 2.1.1). Of
all expenditure on health, dementia was already 2.3% by 1993-94, 20% of nursing home costs. As
noted in Section 2.1.1, the nursing home costs of dementia were likely underestimated by half in 199394, putting the probable contribution of dementia closer to $1.4 to $1.5 billion.
Table 21: Comparison of direct costs, 1993-94
Disease category (ICD-9
chapter)
Circulatory*
Digestive
Musculoskeletal*
Injury*Mental*of which dementia
Respiratory (inc. asthma*)
Nervous system
Cancer*
Genito-urinary
Symptoms
Complications of pregnancy
Endocrine (inc. diabetes*)
Skin
Infectious
Other
Total
Dementia as % of total

Total
PharmaCosts Hospitals Medical ceuticals
3,719
1,657
503
715
3,715
1,070
284
275
3,002
1,207
518
276
2,601
1,663
393
127
2,586
1,007
432
198
714
110
11
2
2,521
833
624
784
2,334
766
431
248
1,904
1,327
261
53
1,662
997
383
143
1,334
478
426
302
1,051
941
32
11
966
235
222
309
956
336
247
259
849
246
316
193
2,197
1,297
566
148
31,397 14,062
5,640
4,042
2.3%
0.8%
0.2%
0.1%

Dental &allied Nursing
health homes
40
587
1,849
35
416
430
160
112
83
718
4
539
37
107
227
503
12
32
17
32
57
5
6
54
47
56
6
15
13
45
21
3,075
2,647
0.1%
20.4%

Other
218
202
154
146
147
48
135
159
219
90
66
60
98
53
65
117
1,932
2.5%

Source: Mathers and Penm (1999), Table 1, p2 and special AIHW data request for dementia.

However, it is noteworthy that circulatory and digestive disorders, as wellAt least $1 inas cancer, injuries, diabetes and asthma, are likely to have smaller indirectevery $40 in thecosts since the requirement for ongoing carers is not so high. With cancer
and circulatory disease, this is unfortunately because of their high fatality
Australian healthrate, while in the others it is because treatment and management enablesystem is spent
lower levels of disability and care or, in the case of injuries, a higher rate of
on dementia.
recovery. Because of the substantial carer costs for dementia, it is likely torank extremely highly in indirect costs, although insufficient comparable
data are available to draw sound conclusions. Musculoskeletal disease
would probably rank highest due to both high prevalence and high disability burden.
79 Although this data relates to the year 1993-94, it is the most recent available. Updated cost data are expected from theAIHW in June 2003.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.1.3

Comparison of disease burden

The disability
burden ofdementia ishigher thanthat of every
other national
health priority.

It is in terms of the burden of disease from disability that dementia is most
costly. More years of life are lost due to disability (YLD) from dementia (5.6% of
the total) than from every other national health priority area, second only todepression (8.0%), as shown in Chart 14. Asthma ranks third (4.8%), followed
closely by osteoarthritis (also 4.8%), hearing loss (4.1%) and diabetes (3.8%).
Cardiovascular disorders (such as stroke and ischaemic heart disease) alsorank in the top ten. Dementia is the second highest disability burden for womenand the fourth highest for men (Mathers, Vos and Stevenson, 1999, p51, T4.3).
Chart 14: Ten leading causes of years of life lost due to disability (YLD), 1996
Depression
DEMENTIA
AsthmaOsteoarthritis
Hearing loss
Diabetes mellitus
Alcohol abuse
COPD
StrokeIschaemic heart disease
Generalised anxiety disorderAge-related vision disorders
0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

YLD as a % of total YLD

Source: Mathers, Vos and Stevenson (1999), Figure 2, pxxv.

In terms of total DALYs, including the YLL or mortality burden,
dementia ranks fourth highest for women and tenth for men, of all
disorders. For older Australians, these rankings rise to third (8.9% of
the total disease burden) and fifth respectively (5.3%). Table 22shows the contribution of dementia to the total burden of disease forolder Australians. The only greater threats to older Australians are
smoking-related – ischaemic heart disease, stroke, lung cancer andchronic obstructive pulmonary disease (the latter two for men only).

Dementia carries thegreatest burden of
disease for older
Australians, unrelated
to smoking.

Table 22: Contribution to the total burden of disease for older Australians
1
2
3
4
5
6
7
8
9
10

Males
Ischaemic heart disease
StrokeLung cancer
COPD
Dementia
Prostate cancer
Colorectal cancer
Diabetes mellitus
Adult-onset hearing loss
Benign prostatic hypertrophy

% of
DALYs
21.7
8.6
6.9
5.8
5.3
5.1
3.8
3.0
2.9
1.9

1
2
3
4
5
6
7
8
9
10

Females
Ischaemic heart disease
StrokeDementia
COPD
Breast cancer
Colorectal cancer
Lung cancer
Age-related vision disorders
Diabetes mellitus
Osteoarthritis

% of
DALYs
20.3
10.7
8.9
4.0
3.6
3.4
3.1
2.8
2.8
2.2

Source: Mathers, Vos and Stevenson (1999), Table 5.9 p73.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.2 CONSTRAINTS TO SERVICE DELIVERYThis section identifies constraints to current service delivery and to extending service provision to meetprojected need, including medical and hospital services, pharmaceuticals, research, residential care,home and community programs, and demand/distributional issues in the health financing system. A
solution-focused approach is adopted, which is developed further in the following chapter on strategies.
3.2.1

Medical and hospital services

Early detection: As noted in previous sections, although GPs are often the first contact for people withdementia and their families and carers, they are often not equipped to carry out the morecomprehensive psychometric screening nor have the skills to diagnose the early stages of dementia orcomplex and unusual dementias. Interventions are required to assist GPs (and others) in detecting
dementia. Extension of specialist services for early detection of dementia, for example through memory
clinics, is important.
The General Practitioner Assessment of Cognition (GPCOG), a recent screening tool, has been
recommended by Professor Henry Brodaty as valid, reliable, quick to administer (less than 4 minutes formost), easy to use and acceptable to GPs and their patients, representing an advance over former
screening tests – performing as well as the Abbreviated Mental Test and at least as well as the MMSE.
Many GPs require more information about how to administer the GPCOG and differential diagnosis ofcognitive impairment, although MMSE should also continue to be encouraged.
Using PET scans in the early stage diagnostic process for AD has been found to reduce the falsepositive rate by half and the false-negative rate by 60%. This new analysis, presented by University ofCalifornia (Los Angeles) researcher Dr Silverman at the American Academy of Molecular Imaging in
October 2002, suggested that patients could be kept out of nursing homes for 9 to 18 months longer
through such early diagnosis and the use of early treatment of AD with cholinesterase inhibitors. He also
found that early diagnosis and treatment could substantially reduce medical and hospital costs.
Expanded use of PET scans may not be possible in Australia in the near future however.
Supplementary education of GPs and primary care workers is also required to assist them in caring
for patients subsequent to screening. This should include dementia management principles with thegoal of recognising highly trained GPs as ‘dementia-accredited GPs’. This is in keeping with the deinstitutionalisation of mental health care over the past two decades, the burden of which has fallen
largely to GPs. Increased remuneration is indicated for the higher skills levels required for suchaccreditation, perhaps in the style of current Enhanced Primary Care (EPC) Medicare items. There arealso constraints to GPs attending patients in nursing homes, in part due to the remuneration structure.
New information technology initiatives such as teleconferencing may provide support for GPs who are
more isolated. Information technology may also be of use in GP education and referencing programs.
Acute care hospitals: Acute hospital costs could be reduced by reducing the time (four times theALOS) that dementia patients are hospitalised awaiting transfer to a high care facility. Such transfers
comprise nearly two thirds of entries to high care. Ongoing monitoring is required to assess potential
mechanisms for reducing these wait times, and the cost-effectiveness, appropriateness and equity
considerations of such interventions. Access to dementia-trained nursing staff should be available alsoin acute care hospitals for the period of the ‘wait’. Acute care providers report that they need moretraining, resources (including geriatricians) and strategies to manage people with dementia (secureenvironments, appropriate assessment tools, care and discharge planning). These issues are being
addressed in some States through “Innovative Places” and similar models.
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.2.2

Pharmaceuticals

Early access to medications at an affordable price is another constraint for people with dementia andtheir families and carers. Access is currently constrained by:□ an overly rigid definition of 'acceptable benefit' (which excludes maintenance of existing cognitive
function in a progressive condition, and also excludes improved social functioning, which reducescarer burden and delays institutionalisation);□ the exclusion of people with non-AD forms of dementia; and□ administrative arrangements that can result in unintended and adverse outcomes.
Disadvantaged groups include people with non-Alzheimer dementia andall people with dementia who need anti-psychotic treatments.

PBS ‘cost-cutting’measures could be
increasing overall
health care costs
by 30-50%.

Moreover, such cost-cutting measures – targeting pharmaceuticalexpenditures – have been found in numerous studies to be ineffective in
reducing overall health costs. Rather, they have been found to increase
overall health costs by 30-50%. Horn (2002) summarises current
research, which has shown that:□ limiting doctors’ prescribing choices was found to be associatedwith increased overall utilisation of pharmaceuticals;□ there are significant associations between formulary restrictions in a drug class and higher healthcare utilisation (GP or emergency department visits, additional prescriptions, hospitalisations);□ the negative effects of formulary restrictions lead to particularly suboptimal therapy and outcomesfor older people;□ patients with pharmaceutical capitation had 14% higher total“Rising drug costs
health costs than non-capitated patients and 29% higher
are, in general, part
pharmaceutical costs (although this is not currently important for
the Australian system);of the solution, not□ newer drugs are often those targeted for cost-control becausepart of the problem.”they can be most expensive; yet these can offer the best
Kleinke (2001)
outcomes as they are likely to have fewer side effects, improved
safety and efficacy, greater ease in use, increased complianceand be better tailored to individual needs;□ best practice drug use can result in lower carer absenteeism, lower employee turnover and greaterlabour productivity;□ if the only options are to control or not control drug access, then not controlling is the better choice.
There is a third option, however – discovering, through clinical practice improvement (CPI) studies what
the best treatments for specific types of patients are, and implementing them as guidelines. CPIs canuncover important, sometimes surprising and cost-saving results. Kleinke (2000) concludes that the best
strategy for preventing over-use and inappropriate use of pharmaceuticals is to tie utilisation of drugs tobest practice research and established clinical guidelines.
One example is the treatment of agitation in dementia. Cost-cutting regulation has aimed at
discouraging the use of psychiatric medications in the treatment of dementia in nursing homes and thelimitation of pharmacotherapy to monotherapy. However, CPI studies have shown that this intervention
has in fact increased overall costs relative to combination therapy.
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Another example studied limiting both access to psychiatric drugs and visits to mental health providers.
This was associated with higher total health care costs. In contrast, unlimited and early access to bestpractice mental health care for another firm (Merrill Lynch) was shown to reduce costs per employee by
25%.
Dr Horn provides other examples for treatment of depression, asthma, arthritis, ulcers, hypertension andantibiotics. She concludes that drug costs are not a cost item to be managed, but a health maintenanceitem to be leveraged.
“Curtailing access to medications via cost-control mechanisms can adversely affect other health costs
and increase total health care utilisation”.
Horn (2002)
3.2.3

Research

Section 2.1.1 on direct costs showed that, projecting official AIHW estimates of public research on
dementia in 1993-94 of $8.4m, Australia in 2002 spent around $19.2 million on such research. Thisequates to $118 per person with dementia per annum, or $1 on research for each $342 of the total
costs of dementia (0.29%). However, Jorm et al (2001) and Maller and Rees (2002) note that thisgrowth (the ‘normal’ for the sector) has not occurred for dementia and that in fact, official money spent
on dementia research may be as little as $2.5m in 200080 – less than 1% of all NHMRC researchexpenditure ($15.40 per person with dementia and $1 for every $2,630 that dementia costs).
Alzheimer’s Australia generates from trust funds a mere $40,000 annually to extend towards research
grants, compared with US$120m (A$240m) that the US Alzheimer’s Association has granted since 1982
– over 25 times the annual per capita level in Australia.81
Other international comparisons (summarised in Table 23), while not directly comparable, suggest that:□ Spending on AD research in the United States is A$300 per person (A$1.2billion in total), with callsfrom stakeholders to increase it to US$1bn (A$2bn or A$500 per person).
□ In the UK, research funding on AD is trivial – 60% of the amount spent on stroke, less than 10% of
the amount spent on heart disease and only 3% of the amount spent on cancer (Lowin et al, 2000).
□ In Canada, the 1991 data are similar to the AIHW data for Australia in 1993-94, around 0.25% of thecost of the disease.
Table 23: Comparisons of costs and research allocations, Australia, Canada, US and UK
Comparisons
Australia,
Australia,
US,
UK, Canada (1991,
AE 2002 Jorm, 2000
1996-2002
2000 conservative)
People with dementia
162,297
162,297
4,000,000
710,000
250,000
Total costs ($Am)$6,576$6,576$200,000$31,576$3,894
Cost per person ($A)
$40,519$40,519 $40-50,000$44,473$15,575
Research costs ($Am)
$19.2
$2.5
$1,198$23.5$10.9
Research (A$/person)$118.36$15.40$300$33.15$43.61
Total costs: research costs$342$2,630$167$1,341$397
Source: Access Economics using exchange rates of A$1=$US0.50 = C$0.8989 = UK£0.3484.

80 A search on keywords ‘dementia’ and ‘Alzh’ showed $5.36m in NHMRC grants for 2002 and $42.4m for 1995-2002.
81 A$240m / 14 (population factor) / 20 (years) / 30,000 ($A in Australia) = 28.6 times larger

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
In Australia, if we took the current US level as a comparator ($300 per person), we should be spending$49m per annum on officially funded dementia research; if we used the US goal as a comparator, weshould be spending $81m p.a. As middle ground, if we aimed to make research 1% of the total costs ofdementia each year, we should be spending $66m p.a.
Australia, as a ‘knowledge nation’, has comparative advantages in innovative research anddevelopment, and should be pulling our weight internationally in this critical area. Large pharmaceuticalcompanies are already spending substantial resources on medications and vaccine research. However,there is a critical gap both in Australia and overseas for research into better clinical practice and care, ina country whose aged system is in many ways world class. Less than 10% of our research on dementia
involves the investigation of services, and this knowledge is less importable because there is so muchthat is unique to the Australian situation (Jorm, 2001). In the area of dementia services, research should
focus on:□ the key factors that make staying at home more or less likely - including understanding better therole of psychosocial approaches to keeping people with dementia at home;□ the importance of new technology in the design and modification of homes;□ the importance of autonomy in user satisfaction with long-term care and the role of the consumer asbudget holder;□ the evidence available for achieving better co-ordination of services - in the community and atdischarge from hospital in particular;□ the meaning of ‘domestic’/ ‘homely’ in the context of residential care;□ the advantages and disadvantages of early diagnosis for a consumer and the role of memory
clinics;□ the profile of the minority who will need dementia specific care.
In sum, Australia has fallen behind substantially in dementia research. Greater investment in research isimperative in meeting the challenges presented by the dementia epidemic, with priority accorded toresearch on care practices and the delivery of services as well as bio-medical and medical research.
“Given the magnitude of potential savings – including savings to public health care programs – if
Alzheimer’s disease could be prevented or arrested at an early age, a substantially increased federal
commitment to Alzheimer’s disease research is clearly warranted… There are few signs that public or
private research is being undertaken at a scale warranted by the magnitude of the disease’s costs.”
Hay and Ernst, quoted in Lowin, McCrone and Knapp (2000)
3.2.4

Home and community care

Constraints arise in community care in two areas - in-home support services and support for families
and carers. For in-home support services, the barriers are primarily financial. Many people cannot
adequately access home-based maintenance and support through HACC and more intensive support,such as CACPs. Recent increased HACC budget allocations in FY2002-03, while welcome, have fallen
short of addressing unmet need. Additional funding would ease these constraints. Steps also need to betaken to ensure that all HACC, CACP and EACH services are capable of supporting people living in thecommunity with dementia. As with the residential sector, this will require additional training for staff,
beyond its current respite worker focus, to ensure that all staff in services that have contact with older
people are in a position to understand the needs of people with dementia and how those needs impact
on service delivery. While staff training is normally an employer responsibility the structure of thecommunity services sector makes it very difficult for organisations to meet the costs of additional
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
training. Accordingly Government support for the cost of this training should be provided. The existing
CEWT program is a cost-effective model that could be expanded to meet this need.
In terms of family and carer support, the issues are
not just financial – innovative models are required.
The 2002-03 Federal Budget included an extra $80
million to help families and carers over the next four
years, with $30 million to expand the number of
respite services, assist with the cost of equipment andtransport and provide emotional and psychologicalsupport for families and carers.82 A further $20 million
is to help families and carers of people with dementia
to obtain residential respite and increase access to
specialist psychogeriatric advice and support. An
additional $30 million will support ageing families and carers of people with disabilities by providing
education and training for volunteer carers, targeted care packages and assistance with purchasingcare services and equipment. A Commonwealth Carer Resource Centre in each capital city acts as asingle contact point for carers seeking information and advice about the full range of services available
to them. The Government is also funding the development and distribution of some carer resource
materials.
While these measures provide a good basis there remain large gaps in the following three key areas.
1. Respite
Funding for the National Respite for Carers Program has
increased from $19 million in 1996-97 to an estimated $88
million in 2002-03. This represents a good start, however,much existing respite care is not appropriate for carers ofpeople with dementia, who require regular respite care thatis responsive to key changes in their situation, with thecapacity to also support them in emergencies. Respite carefor younger people with dementia can be particularly
inappropriate.

Respite is an essential partof dementia care. It must be
tailored, timely, linked withother types of support andprovided by knowledgeable,
skilled and flexible helpers.

The quantity of residential respite care available is capped at 63 days maximum in a financial year (oneday in six, with an additional 21 days in special circumstances). More in line with other work weeks
would be two days in seven (including nights) – 104 days per FY – plus annual holidays. However, theexisting places are in fact under-utilised (64% of available allocated respite days in residential facilities
are used), with the 2002 Budget including funding to increase the take-up rate of residential respite. As
a consequence the Commonwealth is utilising such funds increasingly through brokerage.
Funding for the Early Stage Dementia Support and Respite program (currently being evaluated) needs
to be extended, or new funding provided for a new program for support and respite for people with midstage dementia. Additional funding for support is likely to be particularly cost-effective in reducing carerburden and delaying institutionalisation (see Section 3.3.2).
82 Carers Australia (2001) identified transport and equipment costs as one of a number of priority areas for the 2002-03

Budget. Regarding emotional support for carers, Carers Australia seeks to develop ongoing partnerships for a range ofcounselling models (including personal and relationship counselling, family conferencing and telegroup counselling services)for carers and their families, including subsidising carers who are unable to meet the user charges for counselling services.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Moreover, more flexible models of respite care are needed, including overnight and weekend support,
cottage style accommodation, extended hours at day centres and extension to many areas where there
are access problems and service gaps.
2. Carer education“Most carers do not have access to appropriate education programs to assist them in their caring role…
In a recent national health and wellbeing survey, 33% of respondents reported physical injuries as aresult of providing care, but 49% of respondents had never received information or practical training.”
Carers Australia (2001)
There remains a lack of access for family carers to informal, practical, age-appropriate and culturally
sensitive instruction and advice tailored to their immediate and continuing needs. This need must be
met with the assistance of people with first hand experienceof dementia care. Additional funding is required, ideallychannelled through Carer’s Associations and Alzheimer’s
Australia, to:□ subsidise respite care and other participation costs forfamily carers who need financial assistance to takeadvantage of the education program;□ expand national Alzheimer’s Australia programs toenhance support groups, counselling, training and ‘livingwith memory loss’ programs;
Above: Donald, 29, assists his
grandmother, Mary, with all of□ expand dementia specific and quality person-centred
her basic needs
care programs to respite service providers and residential
care staff.
The pioneering work of the late Professor Tom Kitwood of the Bradford Dementia Group has contributed
significantly to quality of care outcomes for dementia care, including carer training programs based on
his person-centred principles (Kitwood, 1997). The University of Bradford (2001) has instigated the first
UK undergraduate degree in Dementia Studies based on his work, including distance learning and key
techniques such as Dementia Care Mapping, devised by Kitwood as a way of consulting with people
with dementia who may not find it easy to comment through questionnaires or focus groups.
Dementia Care Mapping is a method of evaluating and improving the care given to people withdementia in home-based, respite and institutional settings. 'Mappers' make detailed observations ofpeople with dementia in a particular setting, recording what they see on a grid. Observations are carriedout over a prolonged period of 6 - 8 hours covering the full waking day of residents. The resulting dataoffers a 'map' which shows in summary how each resident fared - what they did throughout the day,
what they enjoyed and what caused them distress. It shows how care is distributed among the group,
notable characteristics of the style of care as well as an overall index of the general quality of theservice. It can highlight individual needs of residents that have perhaps gone unrecognised as well as'high spots' in a person's day that indicate particularly good practice. Ongoing training with staff on site
by the Dementia Team can enhance the good practice and help make necessary improvements.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3. Workforce opportunities to assist families and carers in being able to maximise employment
Currently there are few initiatives that target employers of family carers. The goal would be to enable
them to develop strategies for more flexible work practices in order to retain participation rates of trained
workers. As the demographic transition continues, participation rates – particularly of women – will
become increasingly important in maintaining economic growth as well as sustainable public sector
revenues from taxation. These factors were noted in the Federal Government’s InterGenerational
Report, launched with the May 2002 Budget.
Possibilities might include part-time home-based work, work-based adult day-centres, or access towork-based services for family carers such as counselling or exercise programs. In addition, dementia
awareness and destigmatisation courses could be introduced in workplaces. A few pilot trials of suchinitiatives should be implemented, based on international pilots.
3.2.5

Residential care

After an ACAT has made a recommendation for transition of a person with dementia to appropriate
residential care, it will often provide a list of local facilities, although in many areas in Australia the ‘good
ones’ are likely to have waiting lists exceeding a year. Even if a place becomes available, it may not suitthe individual (eg, same gender preferences for shared rooms in some low-care facilities). Moreover, theaccommodation provider may be seeking a person without challenging behaviours, yet the reason forseeking care may have been that the family carer is unable to cope with a demanding phase of BPSD.
Often decisions are made under pressure, and the family carer takes whatever becomes available,
which can result in deep dissatisfaction, particularly if promised services (such as specific therapies) are
not forthcoming or if the quality of care is not up to expectations.
Nursing and personal care staff are not well remunerated. There has been exposure in recent years of anumber of cases where residents have been inappropriately drugged, restrained or neglected.
Rosewarne et al (2000) found that half of all high care facilities reported regular use of ‘chemical’restraint and one third reported regular use of ‘physical’ restraint. Across all facilities, chemical andphysical restraint were used rarely or never in 48% of facilities, sometimes in 36%, and often or
regularly in 16%. Facilities that had a ‘no restraint’ policy found that if restraint was not an option, staff
tried much harder to find other more appropriate solutions. The Australian government has recently
funded a national project to provide education and training materials for aged care staff regarding theappropriate use of restraints.
Existing dementia-specific care
With the number of high care beds strictly controlled since ACATs were established, although waiting
lists83 for nursing homes are reduced, the impairment of those admitted and consequent nursing
requirements have increased. Although a large and growing proportion of high care residents havedementia, the design, staffing and management of nursing home services have been geared more tophysical disabilities with limited scope to manage the particular BPSD needs of dementia residents.84
This has led to greater demand for dementia-specific care facilities, although policy remains to
83 Entry period (the days between ACAT assessment and entry into residential care) has increased however, and is a poor

proxy for waiting time. For more detail, see AIHW (2002c).

84 One example is the ability to manage late afternoon restlessness common among people with dementia, often termed‘sundowning’. The reason for this behaviour is thought to be past history of busy-ness with children and meals, and many
dementia residents still feel an unclear call to action, leading to agitation and often wandering. Specific therapies and skills
are required to caringly manage these behaviours, as well as fairly high staff-to-resident ratios.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
accommodate mobile people with dementia in low care facilities, reflected in the allocation of a large
proportion of the low care places in recent Aged Care Approval Rounds to people with dementia, eventhough their ACAT assessment may be ‘high care’. ACAT assessments do not reflect the optimal type ofenvironment for the person, and therefore the type of accommodation payment that is most appropriate.
For low care facilities, 85% of residents with dementia are supported
More dementiain mainstream areas (15% in dementia-specific areas); for high carespecific places are
facilities, the comparable figure is 92% (and 8%). Hostels have, since85
the termination of Dementia Grants , struck funding problems, mainly
needed, particularly
because recurrent costs are higher due to the special requirements offor those who aredementia care, yet residents must be assessed as ‘low-care’ (whichambulant and haveoften they are not) in order to gain a place. Conversely, there aredisincentives to invest in high care facilities because it is so difficult
challenging
for providers to cover the capital costs (without accommodation
behaviours.
bonds), and this may not be appropriate for mobile people anyway
who need personal rather than nursing care. There is the option of
becoming an ESP, although these places are too limited to be able to adequately cross-subsidise, whichin any case is sub-optimal and potentially inequitable.

Recurrent costs constrain‘low care’ dementia places.
Capital costs constrain ‘highcare’ dementia places, evenwhen these are appropriate.

As noted earlier (Section 1.2.9), over 90% of people in highcare and 54% of people in low care facilities have dementia
or cognitive impairment, yet only 6% of residential care beds
are dementia-specific. The capacity for residential care to
support people with dementia (both facilities and workforce
training) is a serious constraint. There are too few places
specifically designed to support people with dementia withchallenging behaviours or other special needs, and inadequate training for staff caring for these people.
It is estimated that at any time 10% of residents with dementia will require special support.
A final issue is care for people with severe (physically aggressive or violent) BPSD. These 1% of people
with dementia who need mental health and aged care services may be unable to access either state
mental health of Commonwealth funded aged care. This represents a significant gap in the care system.
Finding care for the person with dementia can be extremely challenging. It is widely acknowledged that
there is a nationwide shortage of dementia-specific residential accommodation. Such homes require ahigher staff-to-resident ratio and a higher level of security, and they need to offer appropriate therapies
and facilities, such as safe walking areas for residents. Ideally they are smaller, with only 10-15
residents – a comfortable number of new faces for the person with dementia to deal with.
Hampson (2000), p227.
Summary of issues for existing residential facilities□ increased ongoing training for all care staff in dementia-specific and quality person-centred careprinciples;□ staff-to-resident ratios that address understaffing, with guidelines on the appropriate mix of nursing
and personal care staff;□ tighter accreditation and monitoring of standards to actively ensure quality care, with restrictions
placed on chemical and physical restraint practices;
85 Dementia Grants Program funding was made available to all low care facilities for a period of eight years from the mid-

1980s.

62

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ review of remuneration for nursing and personal care staff;□ planning ratios need to make provision for dementia care and challenging BPSD;□ descriptors in the RCS should concord with ACAT assessments; ‘high care’ should include the needfor behaviour management and environment, not just the need for nursing care;□ potential perverse incentives in the RCS relating to behaviour need to be addressed with increased
rating/funding also attached to interventions which will prevent challenging behaviours rather thanrating/funding solely favouring managing challenging behaviours;□ overall numbers of places and sustainable funding mechanisms (see Section 3.2.6 below); and□ greater access to care for people with severely aggressive behaviours.
New models of residential care
Suppose we were starting from scratch and knew what we know today. To promote ageing-in-place, wewould want to have integrated facilities that could cater for a range of different needs as a person ages,
rather than having to move them to a new location. We would want to be able to cater for the specificneeds of the large proportion of residents who have dementia or cognitive impairment, or could developthese in later years. We would want to have staff who were trained in dementia-specific and quality
aged care principles, as well as facilities that were appropriate for the various stages of ageing as wellas the mild, moderate and severe stages of dementia – including secure walking areas, a few
segregated areas for people with highly challenging behaviours, low care areas for mobile people andhigh care nursing areas for those less mobile.
Rosewarne et al (2000) proposes the ‘Cluster house campus model’ – separate buildings (‘houses’)each with around 15 beds within a single complex (‘campus’) of around 90 beds. The houses would
operate largely as independent care units with a caregiver supported by an on-staff visiting registerednurse. “The campus could have houses for the more behaviourally disturbed, for those with highphysical care needs and for those who require secure wandering areas… The care follows the resident,ie, residents do not have to be moved to an entirely new location as they become more dependent. The
necessity for developing specialised stand-alone dementia facilities is becoming less critical as thismixed campus approach becomes more widely adopted” (p51). The diagram below illustrates current
models of care facilities, compared with a cluster house campus.
Models of residential care

Mainstream units

Dementia-specificwings

H high nursing care
L low nursing careM ‘mainstream’ residents
D residents with dementia
SW secure walking areas
B residents with BPSD

Co-located units

Stand-alone facilities

SW
HDB
HM

HD
SW

LM

LD
LDB

Cluster Housing

SW

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
For care assessment and placement purposes, behaviours might be stratified as B1, B2, B3 and B4,
based on Rosewarne et al (2000) descriptors, with:
B1: problem behaviours requiring basic management and occasional intervention;
B2: episodic problem behaviours requiring frequent intervention and expert management;
B3: continuously disruptive problem behaviours requiring frequent intervention and expert management;
B4: continuously disruptive problem behaviours requiring management in specialist psychiatric facilities.
There is also broad concordance with the seven tiers of descriptors offered by Brodaty et al (2003),
although tiers 6 and 7 (the ‘tip’ of the Brodaty triangle) would be captured together within B4:□ 1 no dementia (M) – 93.4% of older Australians;□ 2 dementia no BPSD (D) – 39% or 63,000 people with dementia;□ 3 mild BPSD (DB1) – 29% or 47,000 people;□ 4 moderate BPSD (DB2) – 21% or 34,000 people;□ 5 severe BPSD (DB3) – 10% or 16,000 people;□ 6 very severe BPSD (DB4) – 0.9% or 15,000 people; and□ 7 extreme BPSD (DB4) – 0.1% or 200 people.
Scenario: Rose is aged 75. Since her husband died five years ago, she has lived with her youngest daughter(aged 39) who works full time and has three school-age children. Rose’s other children live interstate. Two recent
falls have resulted in osteoporotic vertebral fractures, and Rose also has osteoarthritis and mild cognitive
impairment. Her daughter has begun to suffer from stress-related illnesses, and there are tensions with her sonin-law. Together with other factors, she is assessed by an ACAT as eligible for low care accommodation, and isoffered a place in a new local facility, ‘21st Century Homes’.
Rose takes up residence in Lively Marigold (LM) Cottage and makes some new friends, including a former
neighbour. She continues to drive to go to bridge games with her old friends, and for special events. A few years
later, she is diagnosed as having mild dementia due to Alzheimer’s Disease, and six months later a place
becomes available next door in Lazy Daisy Cottage, where she transfers. Together with her family, she decides
to sell her car, although she still enjoys regular shopping excursions utilising the Century bus with her Century
friends. Older friends pick her up for special events. Her youngest daughter and her family continue to visit
regularly. She finds support amongst residents as they talk together about dementia and its impact on their lives.
After her 81st birthday, Rose’s wandering develops into agitated walking, she loses many language skills, and her
GP and specialist describe her dementia as ‘moderate’ and her behaviours as ‘B1’. She strides for some hours
each day in the beautiful adjacent secure walking area, Serene Way. She also enjoys looking at photos with herfamily, and listening to her granddaughter playing the flute. However, she has been gradually developing someworsening behaviours that are disturbing other residents of Lazy Daisy. While some of these have been
understood and addressed, others remain, including screaming at night (B3) and verbal aggression requiring
frequent expert intervention (B2), for which family, staff and specialists have been unable to find any solutions.
Rose is provided with the next available place in an adjacent cottage, Little Dainty Bluebell. Her walking can beaccommodated in a less accessible secure area, very similar to Serene Way. However, she becomes incontinent
over the following year and the level of nursing that she requires necessitates a further transfer, at age 84, to ahigh care cottage for people with dementia and challenging behaviours, Heavenly Daffodil Bank. The aggressive
behaviour and screaming stage gradually subside, becoming more infrequent and low-key. Then Rose falls andfractures her hip. After a 5-week hospitalisation, she has lost a lot of her mobility and ceases both walking and the
disturbing behaviours.
Rose is resettled from acute care to Century, this time in Hydrangea Dusk cottage, where she spends her time insedate activities including listening to music and massage therapy. At age 86, Rose develops a persistentinfection and a palliative care specialist spends some time with her and her family during her final weeks. She
dies peacefully at home in Hydrangea Dusk cottage with her daughter and granddaughters beside her.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3.2.6

Health financing and cross-cutting access issues

Chart 15: Ageing in Australia: Population
by age, 1971, 2001, 2041, dependency
ratios and budget impacts
80-84

Females

Males

70-74
60-64
50-54
40-44
30-34
20-24
10-14
0-4
-10%

80-84

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Males

8%

10%

Females

70-74
60-64
50-54

For the 400 years prior to 1920, for which British data are
available, the proportion of the population over 65
hovered around 8% of the total (Broe, 2002). From 1920,
rapid population ageing in developed countries has
begun. Australia has already seen significant
demographic change – birth rates are lower, life
expectancy is higher, family size has fallen and more
people live alone. The change in the age structure from1971 to 2001, together with the ABS projected change to2041, is shown in the top three panels of Chart 15 at left.
By 2041, people aged 65 and over will represent 25% of
the population compared with 8% 30 years ago and justover 12% currently. The fourth panel of Chart 15 shows
how this cohort of the population is expected to surge asa percentage of the total, increasing the ‘dependency’
ratio of older people to those of working age.

40-44
30-34
20-24
10-14
0-4
-10%

80-84

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Males

8%

10%

Females

70-74
60-64
50-54
40-44
30-34

The implications of the demographic transition for healthand aged care spending are substantial. Medical, hospitaland pharmaceutical expenditures are all substantiallyhigher per capita for older people than for younger
people. Welfare (disability and carer) payments and agedcare services will also burgeon. Moreover, in addition todemographic factors, changing technologies and baby
boomer expectations will put sustained pressure on
demand for services – both quantity and quality.

20-24
10-14
0-4
-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

25%
Actual20%

Projected

15%

10%Projections from ABS Cat. No. 3222.0.

5%
1971

% of GDP

1

1981

1991

2001

2011

2021

2031

2041

Commonwealth Budget Spending Less Revenue (no change)

0
-1
-2
-3
-4
-5
2003

2022

2042

The impact on Federal budget balances, from both
spending growth and a relative contraction of the workforce tax base, is shown in the final panel of Chart 15.
The InterGenerational Report, released in May 2002,
highlighted these topical issues, concluding that carefulplanning will be required to meet the future challenges,
and accompanied by a sharp cut in the PBS budget.
Rather than targeting pharmaceuticals growth, which
may well have a negative overall impact on national
wellness as demonstrated in Section 3.2.2 above, more
attention might better be directed at devising savings
vehicles for health and ageing. These could include
superannuation-type contributions (1-3% of income)acting as insurance against future residential or evenhome-based care costs, together with public safety nets
to ensure equity of access. Other options could include
incentives to extend unsubsidised private healthinsurance and review of copayments to ensure thatmarginal prices are sending appropriate demand signals.
65

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
The issue of pricing of aged care services is indeed a complex area, with subsidies for residential agedcare currently under federal review. The May 2002 budget included a two-year ($7.2m) review of pricing
for RAC subsidies and also took a step in the right direction by delivering the election-promised $50m
indexed annually (totalling $211.1 million over the four-year forward period) into RAC subsidies, as well
as a sizeable package for capital development in rural and remote areas (see Table 24).
Table 24: 2002-03 Federal Budget measures for residential aged care
Measures
Capital assistance for aged care in rural & remote Australia
Increased RAC subsidies
Allowing new aged care residents a 28 day grace period fromincome testing
Review of pricing arrangements for RAC subsidies
Enhanced assessment of concessional residential status
Sub-total residential care

2002-03
$m
8.3
51.2
-

2003-04
$m
18.0
52.2
-

2004-05
$m
25.9
53.3
-

2005-06
$m
26.6
54.4
-

Total
$m
78.8
211.1
-

3.7
-5.6
57.6

3.4
-13.2
60.4

-13.6
65.6

-13.9
67.1

7.2
-46.2
250.9

However, existing Alzheimer’s Australia national programs appear under-funded. There has been noreal increase in core DESP funding since 1997 and funding was cut with the implementation of DESP
compared to its predecessor program funded under the National Action Plan for Dementia Care.
Demand for services is outstripping supply, with long waiting lists for CEWT courses building up in many
parts of the country. At current levels of funding, Alzheimer’s Australia services reach only 5-10% of thetarget group, with even lower penetration in rural and remote areas. Alzheimer’s Australia has anunparalleled reputation for delivering high quality and cost-effective dementia specific services, in partdue to the use of well-trained and highly committed volunteers. As such, this delivery vehicle is being
under-utilised – a critical mistake in the current climate. Bird and Parslow (2001), in reviewing
Alzheimer’s Australia services, proposed that federal funding should be increased from $4m to $13m
p.a. within three years. In 2001-02 funding was roughly $5m.
Financing of dementia care will not be just an ageing issue. Being a younger person with dementia canbe even more difficult and costly. Dementia care should not be linked exclusively to aged care. In
addition to ACATs, DCATs (Dementia Care Assessment Teams) or even ADCATs (Aged and Disability
Care Assessment Teams) should be available to include younger people with dementia, and suitableaccommodation should also be available – perhaps cluster cottage style – for younger people. Anotheraccess issue relates to the fact that dementia is increasingly multicultural. Dementia policy and services
should be increasingly multicultural too, and this requires specialist resources. In particular, there is aneed for assessment tools that can be used for people from different backgrounds. Moreover, a lot more
still needs to be done to destigmatise dementia.
There is scope for increased use of information technology in improved models of care. One example isthe completion of a US pilot program for an Alzheimer’s Caregiver Support System (ACISS), recently
announced by Healthvision Inc. ACISS is a web-based program including information and resources tosupport family caregivers and improve the care delivery process for key stakeholders. Communication
between clinical professionals, caregivers and patients included videoconferencing and web-based
messaging, moderated chats and forums. Caregivers could have their questions answered remotely by
medical professionals, or communicate with their peers without leaving home.86 General practice isanother target area for IT-based solutions, as observed in Section 3.2.1 above.
A final consideration is the nature of generations of families and carers of the future. Many
demographers are questioning whether the ‘selfish generations’ (baby busters, Generation X, Y and on)
86 See www.healthvision.com

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
will continue to provide the sacrificial home-based care of the past. It seems unlikely that attempts to tip
the balance towards reliance on home-based and community services will continue to reap significant
savings. There comes a time where, if families and carers are no longer prepared to provide voluntary
services, home-based care may become as expensive – perhaps more so – than good residential caremodels. This should be recognised particularly in dementia care strategies of the future.
The fate of many elderly people today is to spend their last years alone, ill and in poverty, segregatedfrom a society that prefers to turn away from distressing sights. It is a society that believes we areresponsible for creating our own success and has little patience with those on whom fate has bestowed
anything less… Devotion is not a word that sits comfortably anymore. We see independence as ourbirthright. With the long shadow of Alzheimer’s stretching in our direction, I wonder how we will copewith a partner who can no longer ‘do his own thing’ or ‘get a life’. Will we care for each other in the way
our parents have? And if we don’t, who will?
Hampson (2000)
Summary: Intergenerational planning needs to acknowledge the need for health and aged carespending to grow in real and relative terms, with strategies for successfully managing the change.
These strategies will include minimising inter-generational transfers (fewer young people financing thegrowing number of elderly), maximising intra-personal transfers (savings schemes), coming toconsensus on the private-public mix of care provision, improving models of care to promote both costefficiency and quality and providing safety nets for disadvantaged groups. Access for such groups,
including people with younger onset dementia and people from culturally and linguistically diverse
backgrounds, should also begin to be addressed now. More needs to be done to destigmatisedementia. Better use should be made of Alzheimer’s Australia and of new information technologies indelivering services. We should not assume that future generations would provide the levels of voluntarycare that previous generations have provided.
3.3 SCENARIO ANALYSIS OF VARIOUS INTERVENTIONSThis section provides some brief scenario analysis of the potential benefits and cost impacts of various
interventions in dementia care. The cost analysis in the preceding chapter, and indeed cost studies
around the world, have identified a number of principles in prioritising dementia interventions:(1) the financial cost of care for people with dementia, whether provided formally or informally,
increases with disease severity – care needs to be taken not to just transfer financial costs to familycarers (indirect costs) in an effort to reduce government (direct) costs;(2) the financial cost jumps considerably when the person is institutionalised. Policy-makers haveconcluded that more efficient outcomes are achieved by supporting home-based care (throughservices and financial assistance) for as long as possible, to lengthen the “optimal” level of care;87(3) any intervention that prolongs life will incur additional costs, in which case the most cost-effective
interventions are ones that ‘buy’ the greatest number of DALYs (both through deferred mortality as
well as reduced morbidity) for each dollar spent;(4) big savings in prevention only come from eliminating diseases which cause major disability, of
which dementia is the giant – in which case research is the compelling investment area.
87 In general, a net burden of care is placed on an informal carer if this exceeds the carer’s “optimal” level, which may varyfrom person to person and often depends on the level of support that carers receive through financial assistance and service
provision. More study needs to be conducted in Australia on optimal levels of care, which could perhaps be based on datafrom ACAT assessments. At the moment, many indicators seem to suggest that informal carers are either providing longer
than optimal care levels or, to say the same thing another way, receiving insufficient services.

67

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia“With indicated prevention, as pointed out above, prevention may actually cost more money. So why
should we bother with prevention? The primary factor to consider is whether people have moresatisfying years of life, which are free from disability, rather than saving the government money.”
Jorm (2002)
Three scenarios are analysed – pharmaceutical interventions, participation in family carer support
programs, and research resulting in a cure.
3.3.1

Pharmaceutical interventions

Pharmacotherapies using cholinesterase inhibitors (CEIs) may have three important impacts:
1. permitting a delay in the institutionalisation of a person;
2. reducing the number of hours of informal care-giving required in the short run; and3. improving the quality of life for patients and caregivers.
There are other beneficial effects – for example, using CEIs may save costs by reducing the use ofother drugs such as antipsychotic medications, of reducing the need for other therapies (such as GP
visits, hospitalisations) and of enabling people to continue working – however, these are not included
here due to lack of sufficient large trial data.
As noted in Section 1.2.2, treatment of AD with CEIs delays progression of symptoms for nine to twelve
months and possibly longer. CEIs have proved effective in 12, 24 and 30 week trials, some studies haveshown that there is no loss of benefit after one year of treatment, and extension studies of placebocontrolled trials have shown that the effects of CEIs may last more than a year.88

88 Studies 1-7 show improvements in nine months of treatment, 8-11 in twelve months, and 12-13 more than twelve months.

(1) Farlow M, Gracon SI, Hershey LA et al (1992) “A controlled trial of tacrine in Alzheimer's disease” The Tacrine Study
Group, JAMA, 268:2523–9.
(2) Rosler M, Anand R, Cicin-Sain A et al. (1999) “Efficacy and safety of rivastigmine in patients with Alzheimer's disease:international randomised controlled trial”, BMJ, 318:633–8.
(3) Tariot P, Solomon P, Morris J et al (2000) “A 5 month, randomized, placebo-controlled trial of galantamine in AD”
Neurology, 54:2269–76.
(4) Rogers SL, Doody RS, Mohs RC et al (1998) “Donepezil improves cognition and global function in Alzheimer disease”
Arch Intern Med, 158:1021–31.
(5) Thal L, Ferguson J, Mintzer J et al (1999) “A 24 week randomized trial of controlled-release physostigmine in patientswith Alzheimer's disease” Neurology, 52:1146–52.
(6) Rogers S, Farlow M, Doody R et al (1998) “A 24 week, double-blind, placebo-controlled trial of donepezil in patients with
Alzheimer's disease” Donepezil Study Group, Neurology, 50:136–45.
(7) Qizibash N, Whitehead A, Higgins J et al (1998) “Cholinesterase inhibition for Alzheimer's disease: a meta-analysis of thetacrine trials” JAMA, 280:1777–82.
(8) Rogers S, Friedhoff L (1998) “Long-term efficacy and safety of donepezil in the treatment of Alzheimer's disease: aninterim analysis of the results of a US multicentre open label extension study” Eur Neuropsychopharmacol, 8:67–75.
(9) Winblad B, Engedal K, Soininen H et al (2001) “A 1 year, randomized, placebo-controlled study of donepezil in patientswith mild to moderate AD” Neurology, 57:489–95.
(10) Raskind M, Peskind E, Wessel T et al (2000) “Galantamine in AD: a 6 month, randomized, placebo-controlled trial with a
6 month extension” Neurology, 54:2261–8.
(11) Mohs R, Doody R, Morris J et al (2001) “A 1-year, placebo-controlled preservation of function survival study of donepezil
in AD patients” Neurology 57:481–8.
(12) Doody R, Geldmacher D, Gordon B et al (2001) “Open-label, multicenter, phase 3 extension study of the safety andefficacy of donepezil in patients with Alzheimer's disease” Arch Neurol, 58:427–33.
(13) Rogers S, Doody R, Pratt R et al (2000) “Long-term efficacy and safety of donepezil in the treatment of Alzheimer's
disease: final analysis of a US multicenter open-label study” Eur Neuropsychopharmacol, 10:195–203.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
In the following analysis, the work of independent and award-winning researchers Lopez et al (2002) inassessing the effects of these improvements on traditional milestones for AD have been utilised, andapplied to the Australian situation. Lopez et al (2002), in an open label study, assessed cognitive
function using the MMSE (endpoint less than 9), ADL using the Blessed Dementia Rating Scale (BDRS,
endpoint 12 or more), and institutionalisation based on admission to a ‘nursing home’ (including US‘personal care’ and ‘healthcare’ facilities ie, the equivalent of either low or high care Australian facilities).
The results (see Table 25) showed that people who used CEIs:□ improved on all measures, with fewer than controls reaching the end-points (MMSE <9, BDRS 12+,
institutionalisation);□ had significant difference in the rate of change in MMSE (16.3 the average for CEI users compared
to 6.2 for non-users) – expected average decline 2.5 points for users and 3.5 points for non-users;□ had significantly higher BDRS scores for ADL (4.7 compared to 7.3 for non-users, and a significant
difference in the rate of change);□ had significantly less institutionalisation (6% after three years compared to 41% for non-users) – thisis supported by other studies, for example Knopman et al, 1996);□ no significant association was found between CEI use and time to death.
Table 25: Outcomes of patients using CEIs compared to controls after 36 months# CEIs% total # Controls% totalX2
BDRS > 12
35
26%
62
46%
13.1
MMSE < 9
38
28%
67
49%
11.7
Institutionalisation
8
6%
56
41%
47.1

p value<0.0001<0.001<0.0001

Source: Lopez et al (2002).

The research team concluded:“Whereas short term benefits in cognitive and functional competence with CEI use are to be
expected, it is the longer term outcome (the delay of entry into a nursing home) that demonstrates
the powerful effect of these drugs. This suggests that physicians should be cautious in judging the
medication response after only a few months of treatment, as the full benefits of CEI use take placeover a longer time frame.”
An implication for Australia is that the six-month review period required by the PBS for access to
subsidised CEIs is too short. Furthermore:“The fact that the use of CEIs delays time to nursing home admission and does not affect physicalsurvival has important scientific and public health implications. The CEIs seem to allow patients tomaintain relatively normal activities of daily living for a longer period of time, but to do so without
significantly prolonging life.”
1. Delay in institutionalisation
Chart 16 illustrates the delay in institutionalisation, with the ‘survival rate’ for CEI users significantly
higher even after 84 months. Clearly it is the area between paths A and B that represents the potential
saving in institutional costs, with differences emerging from early on. It is interesting to note that in thefirst 24 months, nearly 20% of the control group had been institutionalised whereas none of the CEIusers had found this necessary at this stage.

69

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Chart 16: Kaplan-Meier plot of time to nursing home admission among patients with AD(A) taking and (B) not taking cholinesterase inhibitors.

Notes: A: n=135, B: n=135. 130 patients took donepezil, 22 took tacrine and were switched to donepezil, and 6 took
rivastigmine. Nursing homes include the equivalent of Australian low or high care facilities. Source: Lopez et al (2002).

There are a number of possible approaches to modelling the effects of delays in institutionalisation due
to use of CEIs. In submissions to the PBS, applicants are required to adopt a dynamic modelling
approach where the number of people in the target group are identified; adjustments are made for thoserefractory to treatment, who die during treatment (eg, from a stroke or heart attack) or who for someother reason discontinue treatment; as well as individualistic (probability/risk) modelling of entry into
residential care. Adjustments are made for changes in prevalence of the condition as well as the various
impacts of the drug usage over time, with savings then identified in the initial and subsequent years until
a steady state is reached.
An alternative approach, and the one adopted here, is to model steady state equilibrium positions withand without the intervention – like a ‘before’ and ‘after’ snapshot picture – but assuming the final steadystate occurred in relation to the current prevalence pattern, to enable a ‘what if’ comparative analysis.
Such an approach would not necessarily need to be limited to the populations for approved use as per
PBAC rulings; in this case the modelling is applied to the population of all people with dementia, rather
than just those with AD (the current PBS restriction) due to the growing evidence noted earlier that othernon-AD forms of dementia may also respond similarly to treatment with CEIs. As such, this might beconsidered an ‘extreme’ scenario of maximum leakage from a PBS perspective.
Applying the Kaplan-Meier plot in Chart 16 above to a comparative steady state model, and as noted inTable 25 above, the difference between the CEI users and the control group was 35% at 36 months, oran average delay in institutionalisation of 12.71 months. This is also in line with the wealth of otherliterature noted earlier showing an average impact of improved symptoms of 12 months.
A delay in entry to residential care has three impacts – savings in residential care cost, increased
expenditure on formal community care costs, and increased expenditure of informal care resources.
Note this is just the isolated cost of not being in an institution, not the other advantages of wellness,
which include lower carer burden and improved quality of life (being able to work, lower healthcare
usage), which are addressed below. The costs of residential and formal and community care per person
per annum have been estimated in Chapter 2.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
A 12-month delay in institutionalisation would effectively mean that 12% of people with dementia(19,476 people) would not go into residential care that would have otherwise, as illustrated below:
Steady State 1
Steady State 2

Community Care – 52%
84,394 people
Community Care – 64%
103,870 people

Residential Care – 48%
77,902 people
Residential Care – 36%
58,427 people

8 years

It is assumed that all people are treated in the community while their dementia is still in the mild tomoderate stage, but people who are already in residential care due to reasons other than their dementia
are not modelled as being treated with CEIs. This approach is adopted in order to quarantine the effectof the dementia treatment, rather than the more complex interactions of other factors also.
Results are depicted in Table 26. In this comparative static analysis, the Federal government would be$597 million better off if residential care could be delayed for a year. Family carers, however, would be$320 million worse off. Overall, there would be a net real economic saving of $276 million ($1,701 perperson with dementia or $14,178 per entry avoided) from delaying institutional care for one year.89
Table 26: Savings, residential care deferred one year, Australia, 2002,
Type of cost

Steady State 1
Steady State 2$/person p.a. No. people Total ($m) No. people Total ($m)

Difference($m)

Residential
Residential care

36,547

Formal (Fed) comm. Care
Informal community care
Carer payments
Total

2,554
20,3007,307

Savings per entry avoided (Fed)Savings per entry avoided (total)
Savings per person with dementia

77,902

2,847.1
Community
68,435174.8
84,394
1,713.2
44,394324.4
2,212
Net difference$30,632$14,175$1,70158,4272,135.3

712

84,210103,870
54,638215.092,108.6
399.3
2,723

-40
-395
-75
-510
($m)
597
-321
276

To Fed government
To informal carer*
Total* Not including gaps (residential care fees, community care payments). Source: Access Economics

From where does the net saving derive? It is speculated that residential care involves higher costs perunit due to additional capital and administrative costs – there are no tiers of management for the homecarer. Certainly the finding is common to international studies. In Italy for example, Trabucchi andBianchetti found savings of around US$4,000 (A$8,000) per
Delaying residential
person per annum through preventing a 4-point/year decrease in
MMSE score in a year (the equivalent of CEI therapy). Leon et alcare for one year saves(1996) estimate average total monthly cost of caring for an ADgovernment $600m but
patient in 1996 was US$2,306; US$1,827 formal services andmakes family carers
US$479 of informal care, of which US$2,029 can be saved if
disease progression can be slowed – 88% of the total or nearly$320m worse off.
US$25,000 per person p.a. Rice et al (1993) estimate that
average annual formal carer costs for institutionalised persons

89 Note that this is not the same as simply subtracting total community costs ($510m) from residential care costs ($712m) –which would suggest only a $202m saving – because carer payments are a transfer cost. Delaying residential care causes$75m to be gained by informal carers but lost to Federal government, thus the net effect is $202m plus $75m = $276m.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
with AD amounted to US$42,049 per patient, more than three times the cost for non-institutionalised
persons, suggesting savings in the order of US$30,000 per entry avoided.
On this scenario there are likely to be additional savings due to the reductions in informal care hours
required, to which we now turn.
2. Reduction in hours of informal care required
From the analysis above (Table 26) we saw that, if there were
no change in health level, family carers bear the brunt of care in
the community rather than in an institutional setting.

If delaying residential
care for one year isaccompanied by
reduced care hours,
everyone is better off.

However, because of the better outcomes in both cognitive
function and ADL (nearly 50% better in each case), it is postulated that the hours of care required for theyear of residential care avoided would actually be able to be costed at the level for mild dementia. The
reduction in hours of informal care can be measured, once again adopting the replacement cost
approach. This results in a 16.5 hour per week saving, using the University of Michigan Study results(see Sections 1.5.1 and 2.2.2), only 34% of the hours of care of moderate dementia. Thus thereplacement cost would also be 34% and, in similar vein, the carer payments and formal care service
hours required. The savings under this scenario are modelled in Table 27 below. Once again, it should
be noted that this is a comparative static analysis of the whole population of people with dementia,
rather than a dynamic analysis of just those eligible for PBS-listed drugs.
Table 27: Savings, one year deferred residential care, symptoms improved, Australia, 2002
Type of cost

Steady State 1
Steady State 2
Difference$/person p.a. No. people Total ($m) No. people Total ($m)($m)
RESIDENTIAL

Residential care

36,547

Formal (Fed) comm. care
Informal community care
Carer payments
Total

2,554
20,3007,307

Savings per entry avoided (Fed)Savings per entry avoided (total)
Savings per person with dementia

77,902

2,847.1
Community
68,435174.8
84,394
1,713.2
44,394324.4
2,212
Net difference$42,257$49,219$5,90658,4272,135.3

712

84,210103,870
54,638152.0
1,489.3
236.0
1,877.3

23
22
88
335
($m)
823
136
959

To Fed government
To informal carer*
Total* Not including gaps (residential care fees, community care payments). Source: Access Economics

Table 27 shows that, if residential care is delayed together with reduced care hours, equating todelaying the progression from mild to moderate dementia for one year, then net savings in a year are
nearly $1 billion – $276m from delaying institutionalisation, and $683m from reducing the extent of
informal and community care services needed. Smaller packages are being provided to more people.
The benefit here is that there is ‘Pareto optimisation’ – nobody is made worse off in buying an overall
economic gain. Indeed, benefits under this scenario are now $5,906 per person with dementia p.a.
(closer to the Italian savings estimate also).

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3. Improved quality of life

Moreover, CEI use

Finally, if progression of dementia to the moderate stage is deferredincreases Australiafor one year, a person’s quality of life is improved. Section 2.3
showed that the disability weightings for moderate dementia are 0.63,
wide ‘health-span’ bycompared with 0.27 for mild cases. The disability burden of theover 15,425 DALYs
severe cases does not change (still 48,689 people). However, more
per yearpeople move from the ‘moderate’ burden (now 22,072) into the ‘mild’burden category (now 91,535). For 42,846 people, then, there is an
extra 0.36 DALY each. Australia-wide, the gain is 15,425 extra years of healthy life!
“Within the next 20 years, Alzheimer’s disease will likely surpass heart disease and cancer as the most
costly disease in America… Medical interventions are becoming more promising, and with them comesthe possibility that the economic burden of the disease may be lessened and, more important, clinicalbenefits realised. By improving cognitive function with pharmacotherapy, it is possible to reduce
caregiver time, delay nursing home placement, and improve quality of life.”
Meek et al 1998, p72
And the cost of the treatment? Treating all Australians withmild dementia, as cases arise (ie, incidence), and assumingthat the drug cost is $160 per month, would yield a total cost of$39m in the first year. However, to reach the steady state
equilibrium as modelled above, the ongoing annual drug cost
would be $139m. In terms of cost: benefit ratios, there would
be a return to Federal government of around 6:1, and an
overall return of at least 7:1.
3.3.2

Returns to investment in
CEI use are 7:1, plus a
13% increase inhealthspan for people
with dementia

Support for family carers

Benefits of support programs have been researched in a number of studies. One study, the Mittelman
study from New York, showed that family carers of people with AD who received family and individual
counselling were able to give care for almost a year longer than those in the control group. In Australia,
Brodaty has shown that involvement in a ten-day training course, with follow-up from a key worker for atleast twelve months, lowers levels of stress and depression in family carers.
The cost of the Early Stage Dementia Support and Respite Program in Australia, in terms of providing
1:1 support, is estimated as $37.50 per hour provided or, assuming the equivalent of weekly one-hoursessions as the model of care, $1,950 per person per annum. Alzheimer’s Australia has suggested in its
2003-04 Budget Submission that spending of $300,000 is indicated to extend this program in thecommunity to meet current demand. This level of funding would provide 8000 hours of care or help 154
people according to the scenario modelled here. From the previous scenario, we know that savings per
nursing home entry avoided would be $14,175 after compensating families and carers, even if there
were no net benefit to health. This saving for all 154 people would result in overall savings of $2.18m, ora cost: benefit ratio of 1:7. This might be taken into consideration in the current evaluation of the
program, and might even suggest a larger budget for the program than the proposed additional$300,000. The outcomes are summarised in Table 28.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Table 28: Returns to Support Spending, ESDSRP, 2002
ESDSRP new spending
Hours of support
Hourly cost
Per carer 1hr/wk, 52wks
Numbers of people helped
Savings per entry avoided
154 people not institutionalised
Return to $1 p.a.
3.3.3

$300,000
8,000$37.501,950
154$14,175$2,180,837$7.27

Returns toinvestment in support
programs may also
be in the order of 7:1,
plus increased inhealthspan for familycarersResearch resulting in a ‘cure’

The magic bullet. It may not be as long a shot as it appears90. Hatfield, Sonnenschein and Rosenberg(2000) summarise the research of Murphy and Topel on the economic value of investment in medical
research over the longer term. Some of their findings include:□ roughly one third of the total health savings are a result of medical research that led to new drugs
and treatment protocols, with 3:1 consistent average long term returns;□ the order of magnitude of savings for ‘big’ diseases are huge – the savings from prevention andtreatment of cardiovascular disease over the 1970s and 1980s were US$1.5 trillion, representing an
average return of US$500 billion per annum, while research success that spared just 1 cancer
death in 1000 would be worth US$46 billion p.a. (the total US research budget – private and public
is US$45 billion);□ small programs can also reap exceptional returns – for example a 17-year program which invested
US$56 million in research on testicular cancer led to a 91% cure rate and ongoing annual savings of
US$166m;□ the economic value of longevity rises as society becomes more prosperous and the value of curing
or preventing chronic diseases of ageing such as dementia, is rising as average age of the
population rises;□ progress in research against one illness increases the value of progress against another; and□ these estimates are purely financial – they exclude the benefits of increased healthspan.
Applying these principles to dementia research in Australia, the case for higher funding levels is evenmore compelling. Table 29 summarises the issues. The real cost of dementia is $5.6 billion, while ourcurrent Federal investment in finding a ‘cure’ is around $2.5m p.a. (see Section 3.2.3). This is compared
to a suggested investment of $49m p.a., which would bring Australia in line with current US spending.
On the basis of the long term average for medical research investment, $1.9 billion of research would be
required to find a ‘cure’. At the current investment level, we won’t find a ‘cure’ for 748 years. If we spent
at target, we would find a ‘cure’ by around 2040. The magnitude of health savings in current dollars
would be around A$4 trillion.

90 It should be noted in this scenario that what is being modelled is the extreme case of a prevention or treatment being

discovered that is able to completely eradicate dementia, as with polio, and such as might be promised by a future ‘vaccine’.
In reality, the multi-causal aspects of dementia diseases might mean that ‘cures’ form a spectrum of outcomes including
disease reversal or significant delay of onset, substantial reduction of symptoms and extension of quality life throughimproved management (as with AIDS), and the like.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Table 29: Returns to research investment in Australia
Real cost of dementia ($m)$5,608Investment in cure (current)
2.5
Investment in cure (target)
49
Ratio of returns
3:1
Implied research level required ($m)$1,869Years to cure (current)
748
Years to cure (target)
38
Difference in years
710
Potential cost savings ($m)$3,979,200
3.3.4

A cure by 2040?
Increasing research
to $49m p.a. could
save Australians$4 trillion in future
health costs

Summary of scenario analysis

1. Delay of institutionalisation for 12 months saves the Federal government $600m but makes
families and carers $320m worse off, with net overall savings of $14,175 per entry avoided;
2. Delayed progression of illness – mild rather than moderate – together with delayed
institutionalisation is preferred, as families and carers would be $136m better off and the Federal
Government $823m better off, with overall savings of $49,219 per entry avoided.
3. use of CEIs achieves both the above outcomes with returns of 7:1 on investment, as well as saving
15,425 DALYs – a 13% increase in healthspan for people with dementia.
4. support programs for family carers – such as delivered through the ESDSRP, also accrue
returns of around 7:1 on investment, together with valuable health outcomes for families and carers.
5. research resulting in a cure – increasing research funding to $49m p.a. from the current 2.5m
could generate a cure by 2040 and save Australians $4 trillion in future health costs.

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4.

OPTIONS AND CHALLENGES“While much has been done to assist people with dementia and their families and carers, much remains
to be done. Given the scale and progression of the epidemic, simply doing whatever the community isalready doing means going backwards and going backwards at an ever-increasing rate.”
Alzheimer Australia’s submission to the 2003-04 Federal Budget
4.1 SETTING THE SCENE
4.1.1

National Action Plan for Dementia Care

This section briefly outlines where we have come from in strategic planning for the dementia epidemic.
The five-year National Action Plan for Dementia Care (NAPDC) was instituted in 1992. It set a strategic
direction for dementia care designed to strengthen the capacity of the aged care system to better meetthe needs of people with dementia and their families and carers. Rather than advocating a separate
stream for dementia care services, it aimed to integrate the various aspects of dementia care throughthe aged care sector and programs. The Action Plan set targets and actions for achievements between
1992-93 and 1996-97 in seven key areas, namely:□ diagnoses and assessment;□ services for people with dementia;□ services for families and carers of people with dementia;□ quality of service;□ community awareness;□ research and evaluation; and□ policy and planning.
Midterm review of the NAPDC identified the priority need for a more coordinated approach to dementia
care training for all staff working in residential aged care facilities. The National Residential Dementia
Training Initiative (NRDTI) was thus established to provide systematic training for staff in
Commonwealth funded residential aged care facilities in order to improve dementia care practice. The
NRDTI also aimed to facilitate the longer term capacity of the aged care industry to sustain dementia
care training beyond the Initiative.
Other challenges highlighted by the NAPDC included special problems in rural and remote communities
and continued harnessing of political will, particularly at State and Territory government level. The NSW
Government implemented the five-year NSW Action Plan on Dementia 1996-2001 and has recently
released the next plan “Future Directions for Dementia Care and Support in NSW 2001-2006”.91 Victoria
has also produced an excellent policy statement, “Dementia Care and Support in Victoria: 2000 and
Beyond.” 92 All States and Territories have to some extent either produced dementia-specific strategicplans and/or incorporated dementia aspects into mainstream service planning.
The 1997 Aged Care Reforms were introduced in part to improve the structural service delivery for older
Australians with complex physical, mental and psychogeriatric needs. Fine-tuning continued through the
National Strategy for an Ageing Australia93 (2001), towards the thematic goal of ‘world class care’.
91 The NSW strategy is at http://www.add.nsw.gov.au/PDF/Future%20Directions%20CD%2010.9.pdf

92 Victorian Government Department of Human Services, November 2000, available on www.dhs.vic.gov.au/acmh
93 The National Strategy is available on www.health.gov.au/acc/ofoa/documents/pdf/nsaabook.pdf

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4.1.2

Aged care reforms and the Two Year Review

Professor Len Gray reported specifically on dementia care in the Two Year Review of Aged Care
Reforms, which was finalised in 2001. He stated that the government is working towards a national
dementia policy framework, with first steps being the August 1999 Dementia Forum, additional DESP
funding, expansion and enhancement of respite services including Carer Respite Centres, carertraining, new funding for the Early Stage program and the national helpline, growth in PGUs and training
in dementia care for people from diverse cultural and linguistic backgrounds.
He noted that the former Personal Care Assessment Instrument (PCAI) and the Resident Classification
Instrument (RCI) had not adequately recognised the amount of staff time required to care for residents
with dementia, as also recognised by Rosewarne et al (1997). Also, because funding levels were notlinked to the severity of behavioural problems of people with dementia and did not recognise theresource intensive nature of dementia-appropriate care, he concluded that “a major disincentive tocaring for these residents was built into the system” Gray (2001, p214). Gray noted that Cuthbertson,
Lindsay-Smith and Rosewarne (1998) found that the ‘new’ Resident Classification Scale (RCS)
introduced in 1997, increased funding for residents with cognitive impairments and behavioural needs
by some 20%.
While in theory this might be true, critics argue that it does not occur in practice and that, as validated by
the RCS assessors, the RCS is hostile to dementia care. This is because questions 8-14 of the RCS,
the behaviour questions that most likely relate to dementia specifically, constitute as little as 16% offunding and that Q 8 and 12-14 are four of the six most downgraded questions by validators. Moreover,negative incentives occur since the system rewards perverse behaviours, rather than rewarding quality
care that effectively prevents and manages those behaviours.
The Two Year Review noted “some participants considered that access to care for people withbehavioural problems has not improved, as some providers are reluctant to admit residents who exhibit
difficult behaviours and are unable to provide secure accommodation.” Gray (2001) also concluded that:□ there is a lack of data regarding dementia in residential care, although proxies can be derived from
RCS weighted scores of those who probably and possibly have dementia; these data showed that
91% of residents in high care homes and 58% in low care homes fell into either category, including
almost all RCS1 (99%) and RCS2 (95%) residents;□ the consultation process highlighted a lack of specialised and secure accommodation for people
with moderate to severe dementia, and insufficient financial support for providers to supply it;□ there was insufficient data to comment on the need for secure and segregated accommodation,although noting that the government identified priority pockets of need for dementia-specific care forthe first time in the 2000 capital works Approvals Rounds;□ priority in Approval Rounds and the changes in the RCS will not necessarily deliver an appropriatequantum of dementia specific homes in every region of Australia.
□ It is recommended that further investigation be undertaken into the needs for and provision ofaccommodation and care options for people with dementia. Such an investigation should include a
focus on infrastructure and options for addressing identified deficiencies.
For a two-year review, this single recommendation for ‘further investigation’ is insubstantial. One would
hope that such investigation was ongoing anyway. In the discussion, there also seems to be little
appreciation of the problems related to the various capital and recurrent funding issues for high care andlow care facilities respectively or the problems in the RCS, which had the opportunity to identify andprovide for dementia behaviours and environments and did not. Rather, although the ACAT/RCS
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
instruments have improved on the former PCAI/RCI instruments, they have not addressed the key
issues as they continue to classify and weight needs primarily in terms of nursing needs, provide
insufficient data for the evaluation of dementia outcomes, and fail to address the issues associated withfinancing capital costs. The review also failed to look at particular non-residential care needs for people
with dementia.
The fairly blunt industry response to the review is summarised in Aged and Community Services
Australia (2001), including a number of ‘real world aged care economics’ examples and case studies
precipitating negative returns on investment, concluding (p10) that:“The Report… leave[s] the reader with the view that the reforms have fixed all the significant
problems in aged care and that all of the measures introduced since 1997 are working smoothlyand effectively. As this Industry Response has shown, nothing could be further from the truth.
The aged care industry is fast reaching a crisis point in terms of its ongoing viability. It is unable togain access to the capital required to make necessary building improvements or to finance the newbeds needed. The industry is drowning in an increasing volume of red tape and is facing increasing
difficulty in recruiting staff it needs to provide quality care…
Older people still suffer the consequences of poor coordination between the health and aged caresystems. They still experience significant problems in gaining access to the services they need.
They still suffer from failures in the quality of care. Older people deserve better.
Resting on its laurels is not a viable option for any Federal Government. That should be the realconclusion of the Two Year Review of Aged Care Reforms and the basis for a genuine Government
response.”
In its response to the Two Year Review, the government accepted the recommendation and pointed to:□ Claims that average funding per dementia resident had increased 124% since 1997 (no data
provided, and no description of how dementia residents were identified);□ $92.5 million over 4 years to expand respite for families and carers of people with dementia;
and□ establishment of a working group to consider the care and accommodation needs of people
with dementia.
The Report of the Working Group on Dementia Specific Aged Care has just been released, concludingthat there is scope for improvements to accommodation and care options across all tiers of dementia
needs. Specific conclusions and departmental responses are94:
1. More research and evaluation is needed on effective care services for people with dementia.
Response: Making services more effective for people with dementia will be considered further in theCommunity Care Review.
2. Joint Commonwealth/State/Territory action is required for people with extreme or severe
behavioural and psychological symptoms of dementia.
Response: The Commonwealth Government will discuss options with the State and Territory
Governments.

94 Department of Health and Ageing (2002b), p21.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
3. While appropriately structured residential aged care services are sufficient for many people withdementia, planning should take account of the need for dementia specific care, both residential andcommunity.
Response: The needs of people with dementia will be considered in the Review of Pricing
Arrangements of residential aged care and the current review of RCS funding options.
4. Access to respite care for people with behavioural and psychological symptoms of dementia needs
to be enhanced.
Response: The needs of people with dementia will be considered in the Review of Pricing
Arrangements of residential aged care and the current review of RCS funding options. It should also be
noted that the 2002-03 Federal Budget provided $10m for Commonwealth Carer Respite Centres to topup payments to facilities offering dementia specific accommodation. Additionally, the 2002 Budget
includes $10 million over four years to expand the Psychogeriatric Care Units to achieve national
coverage as a Commonwealth only program.
5. A greater emphasis is needed in community care on the provision of dementia specific programs
delivered by trained staff.
Response: This will be considered further in the Community Care Review.
6. There are gaps in the early intervention services for people with dementia and their families.
Depending on the outcomes of the evaluation, the Alzheimer’s Association Australia Early
Intervention project (funded by the Commonwealth) may be a model for such a service.
Response: This will be considered in the evaluation of the Early Stage Dementia Support and Respite
Project.
4.2 THE FUTURE VISION
Disease and disability associated with dementia are not inevitable consequences of ageing. The
challenge of the dementia epidemic that is now, in 2003, becoming increasingly evident, is to attaindeclining disease and disability rates amidst a steep rise in the number of older people. The task isurgent. But there is broad scope to implement a positive agenda that can sustain an effective responseover the coming decades.
In Australia, our mental health and broader health goals should be aimed primarily at increasing‘healthspan’ – years of healthy, active life expectancy. To this end, we must adopt a longer term national
vision about future action – not just in terms of disease management, but also in terms of action thatgovernment, academia and the private sector can jointly pursue to prevent and ultimately curedementia.
A national vision requires a nationally coordinated approach. Commonwealth and State and Territory
governments must come together with health professionals, people with dementia and their families andcarers to acknowledge and plan for the demands of an illness that is poised to become Australia’s
number one health issue in the next two decades. Secure political commitment and consensus among
stakeholders is essential.
With the first wave of baby boomers commencing retirement in 2005, the demographic transition is now
firmly underway. In that fiscal context, it is crucial to not simply put more money into ineffectual systems
but rather to shift health spending from acute to chronic care models to maximise returns from limited
resources and to utilise evidence based approaches. Moreover, many interventions to date have been
suboptimal, if not myopic, focusing on direct costs rather than the enormous benefits of investments in
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
wellness. Whole economy analysis, including impacts on the labour market and other sectors, must be
considered from now on in policy development for healthy ageing and dementia care.
Strangely, the enormity and priority of the dementia epidemic has not yet been acknowledged innational policy making. Dementia is already intricately linked with recognised national health priorities
including cardiovascular disease, diabetes and depression, and it is the mostly costly area of mental
health. Dementia prioritisation, and a national strategy to realise the vision, is long overdue.
Five key elements of the future strategy must involve:□ a significant investment in research for cause, prevention and care;□ early intervention through improvement in diagnosis, and the provision of cost-effective
pharmacotherapies;□ comprehensive provision of support, education and respite services – in place in the community as
far as is optimal;□ quality residential care, appropriately financed, that are centred on the person with dementia andtheir family/carer; and□ provision for special needs, including people with younger onset dementia, people with special
BPSD needs, people from culturally and linguistically diverse backgrounds, indigenous Australians
and people in rural and remote areas.
If, starting today, we embark on such positive strategies, Australia can lead the way in effectively andsmoothly managing the dementia epidemic transition.
“Thanks to the efforts of thousands of carers, the last 20 years have seen the stigma of dementia at
best reduced but not removed. A positive approach to planning dementia care now will ensure that intwenty years time the quality of life of people with dementia, their families and carers will be much
improved – a society truly committed to the prevention of dementia. That is the vision of the Alzheimer’s
Association Australia.”
Alzheimer’s Australia,
Submission to the Parliamentary Inquiry on the Ageing of the Australian Population, 2002
4.3 STRATEGIES AND RECOMMENDATIONS
4.3.1

Prioritisation of dementia

Because of the impact of demographic ageing and the importanceof dementia in overall health costs and disease burden, dementia(and the nexus between ageing and mental health more generally)must be incorporated in Australia’s priority setting for health andageing.
Most telling is that dementia, after depression, is already thesecond largest cause of disability burden in Australia (ahead of
diabetes, asthma, osteoarthritis and the other health priority areas),and it is growing much faster than depression so is set to become
the number one cause of disability burden by 2016.

Dementia should be anational priority. It is
set to become the
Number One cause of
disability burden inAustralia by 2016. It
will touch many of us
directly of indirectly.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

180
160

Dementia

140
Depression

120
100
80
60
40
20

2030

2028

2026

2024

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

Years of Healthy Life Lost from Disability
YLD - ('000)

Chart 15: Burden of disability of dementia and depression, ‘The Big Two’, 1996-2031

Source: Access Economics projections, based on AIHW and ABS data.

The issue is how and where to prioritise. Dementia does not fit completely comfortably in either the agedcare of mental health portfolios. Currently dementia care is funded primarily through aged careprograms and the risk of dementia increases sharply with age. Moreover, some stakeholders are not
comfortable with the mental health categorisation of dementia in international and diseaseclassifications given remaining stigma.
Although mental health is one of Australia’s seven national health priorities, together with cardiovasculardisease, cancer, injuries, diabetes, asthma and chronic musculoskeletal disorders (notably arthritis andosteoporosis), the National Mental Health Strategy has not embraced dementia. The mental health careresources list on the federal departmental website has 666 words, none of which is ‘dementia’ or‘Alzheimer’s’ (see www.mentalhealth.gov.au/resources/). Searching the mental health home page forthe word ‘dementia’, yields no hits at all (www.mentalhealth.gov.au/index.htm).
Whatever decision is taken on the most effective point of coordination of planning dementia, it is clearthat a whole of government approach is needed. This is because dementia care is so broad ranging,covering aspects of aged care, community care, residential care, medical services, psychiatric andspecialist services, pharmaceuticals, workforce and housing.
Recommendation 1: Dementia should be a national health priority. Because dementia issues are sobroad ranging – covering aspects of aged care, community care, residential care, medical services,
psychiatric and specialist services, pharmaceuticals, workforce, housing, research, technology, financeand so on – a coordinated sector-wide approach needs to be adopted in addressing theserecommendations. It is vital that dementia initiatives are no longer lost between bureaucratic divides orgovernmental tiers, being referred from one review to the next without concrete action. Rather, priority
should be accorded within public sector programs, resources and funding in a coordinated andcomprehensive manner.
The current National Mental Health Strategy review and the Residential Aged Care Pricing Review
should provide concrete proposals for addressing the issues raised in this report. Consideration should
be given to including a central coordination point for future ongoing dementia planning and care,perhaps as part of a more strategic approach to neurodegenerative disease.

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4.3.2

Research

Recommendation 2: The funding of dementia research should form an essential part of thegovernment’s response to the dementia epidemic, as well as forming part of a more general
reprioritisation of health research resources on the basis of projected prevalence, costs and disease
burden. In view of Australia’s international comparative advantages in health research investment, as
well as the potentially enormous cost-effective returns (potentially saving up to $4 trillion in Australia inlong term health costs), urgent action should be taken to substantially boost the level of researchfunding for dementia including:□ Official research funding for dementia should be increased to $49m per annum within three years,
with prioritisation of specific projects determined in conjunction with Alzheimer’s Australia.
□ Research priorities should be directed towards:•

Cause: Understanding of the biomedical causes of dementia, including epidemiological(population-based) medical risk factors and public health research95;•

Cure: Measures that prevent or postpone the onset of dementia, or that slow or reverse diseaseprogression96;•

Care: Effective models of care (best clinical practice) for people with dementia, including ways
to enhance primary care, dementia services (as per Section 3.2.5) and effectiveness of training
interventions.97□ Research should be collaborative and multidisciplinary, including the interaction of other conditions
on dementia (eg, diabetes), and the interconnections between different types of dementia, withemphasis on prevention, healthy brain ageing and effective quality care.
4.3.3

Prevention and early intervention activities

Recommendation 3: Promotion of dementia prevention activities should be initiated, targeting thecommunity and health professionals (particularly in primary care), possibly in conjunction with otherstakeholders including consumers groups (such as the Heart Foundation) and official bodies, including:□ addressing cardiovascular risk factors – reducing hypertension, cholesterol and homocysteine(folate) and anti-platelet treatments;□ promoting good diet, exercise, quitting smoking, and drug and alcohol programs as dementia
prevention activities as well as promoting health generally;□ promoting ongoing awareness to reduce other dementia risk factors such as head trauma (eg, seatbelts, helmets etc), occupational hazards (eg, exposure to electromagnetic fields) and others as
revealed or confirmed by ongoing research.

95 This research, together with awareness campaigns, has enabled diseases such as lung, skin and breast cancer to be seen

as conditions with preventable elements subject to a public health approach.

96 Specific research priorities might include amyloid-based treatments (including immunisation), new drug treatments(including with memantine), anti-inflammatories, oestrogen therapies, anti-oxidants and nerve growth factor supplementation.

97 Specific priorities include research on diagnosis, effects of care standards (community care, long term care, terminal care,

care needs and planning), carers’ support, alleviating distressing behavioural symptoms and pain for non-verbal patients,
medication for nursing homes and research into true levels of awareness (insight) in dementia (Maller and Rees, 2002).

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4.3.4

General practice

Recommendation 4: To address the gaps and unmet need in current service provision, measures toenhance GP services should be initiated or expanded, including:□ GP education and support in implementing models of care that include early diagnosis, careplanning and information about the support available for people with dementia, their families andcarers;□ GP training and appropriate remuneration for ongoing management of dementia;
o introduction of a program for ‘dementia-accredited’ GPso review the rebate scheme for GPs visiting patients in residential care;□ teleconferencing and other initiatives to support more isolated GPs in diagnosis and treatment.
4.3.5

Other medical and acute care services

Recommendation 5: To address quality, cost and workforce issues in acute care, measures are
required to:□ ensure quality person-centred dementia care is available throughout the acute care system;□ prevent admission to the acute care system through better treatment of people with dementia intheir own (family or residential) home, including possibly psychogeriatric services to complement
ACATs;□ assessment of acute care hospital waiting times for transfer into residential facilities, relative costs
and potential mechanisms for reducing these, such as ‘Innovative Places’ or similar models; and□ measures to enhance recruitment, retention and training of nurses in dementia care, possibly
utilising moneys from the $47.5m (2002-03 to 2005-06) announced last budget for aged nursing;□ workforce measures to increase training, recruitment and retention of specialist geriatricians; and□ greater investment in specialist referral services (such as memory clinics) to support GPs in
diagnosis and management of people with early stages of dementia.
4.3.6

Pharmacotherapy

Recommendation 6: Affordable access to medications appropriate to their diagnosis should be
expedited for all people with dementia. Current PBS arrangements should be replaced by a simpler
access regime comprising:□ diagnosis confirmation by a specialist or by a dementia-accredited GP;□ ongoing access predicated on best clinical practice, which might involve, for example:o regular monitoring of broad patient outcomes such as maintenance or improvement in cognition
and/or social functioning, including for people who have non-Alzheimer dementia;□ access to telephone approval of authority scripts.
Pharmaceutical expenditures should not be seen as a cost but rather as an investment in wellness:□ PBS cost-cutting measures that are not evidence-based should be avoided;

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ subsidies should encourage pharmaceutical interventions for dementia based on Clinical Practice
Improvement studies, and noting that this study shows returns to investment in cholinesterase
inhibitors of 7:1 due to delays in institutionalisation and reduced carer burden, together withimproved quality of life;□ treatment of agitation in dementia and access to anti-psychotics should reflect existing evidence;and□ longer term differences, rather than just those limited to six months, should be considered.
4.3.7

Home and community support services

Recommendation 7: While much has been done to enhance home and community services in recent
years, remaining priorities include:□ a one-off 20% increase in the Home and Community Care (HACC) program funding;□ 6% growth per annum in HACC funding (to cover demographic ageing based prevalence increases)
plus an indexation amount that more adequately covers increased costs in service delivery, to benegotiated in consultation with key stakeholders;□ greater inclusion of the voluntary sector (including families and carers) in the formulation andimplementation of policy with respect to people with dementia and their families and carers.
4.3.8

Families and carers

Recommendation 8: Family and carer support, education and respite remain an ongoing challenge, as
well as one of the most important aspects of managing the epidemiological dementia transition. A longterm strategy is required to be developed by key stakeholders. There have been advances in family
and carer services in recent years, but current evidence suggests that care support remains sub-optimal(ie, an undue burden on families and carers). Additional measures should include:□ consideration of “optimal’ informal care levels with a view to setting guidelines and targets for longterm planning purposes;□ additional recurrent funding to promote best practice in respite care including:o incentives for implementation and diversification of 'carer friendly' models of respite care,including facility-based respite services, building on pilot studies; ando respite services which cater for people with the specific behavioural and psychologicalsymptoms of dementia (BPSD);□ applying best-practice carer education and support models identified by research, pilots, trials andevaluations which, as with cholinesterase inhibitors above, show potential average returns around
7:1;□ improve incentives to encourage increased employment participation and retention of families andcarers, including flexible work practices such as part-time home-based work, work-based adult day
programs, workplace dementia awareness and destigmatisation.
Please remember this: Community care is good policy – but only if it acknowledges that the homebased care of a person with dementia can be a skilled, exhausting, costly, long-term, lonely job for the
person doing the caring. It must be properly resourced to be accessible to all Australians.
Alzheimer’s Australia (2001a)

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
4.3.9

Strengthening community services provided though Alzheimer’s Australia

Recommendation 9: Any strategic national plan to address the dementia epidemic in Australia must
include nationally consistent and longer-term funding arrangements between governments and thevoluntary groups providing services to people with dementia, notably Alzheimer’s organisations, which
are cost-effective and high quality delivery vehicles, due in part to the dedication of volunteers. Long
term recurrent funding arrangements need to be negotiated with Alzheimer’s Australia, including:□ a one-off increase in funding for Alzheimer’s Australia from $5m pa in 2001-02 to $13m by 2003-04,
with annual indexation reflecting both cost-price factors and increases in numbers of older people,
to enable:(i)extension of Carer Education and Workforce Training (CEWT) courses, accredited
courses for workers in residential care, and to meet special needs of families andcarers;(ii)

increased Dementia Education Support Program (DESP) funding for national
expansion of counselling services, including additional full time counsellors in NSW andVictoria and part time staff in other States and Territories;(iii)

expansion of the Early Stage Dementia Support and Respite Program (ESDSRP)(currently being evaluated), and/or additional funding provided for a new program forsupport and respite for people with mid-stage dementia, based on the results ofsuccessful pilot projects undertaken by State and Territory organisations;(iv)

additional funds to meet the specific requirements of people with dementia and theirfamilies and carers with special needs, including people from culturally and linguisticallydiverse backgrounds, indigenous people and people with low levels of literacy, andpeople in rural and remote communities;(v)

expanded information resources projects including on Down’s Syndrome and dementia;(vi)

dedicated funding to build infrastructure for national data collection.

□ an expansion of psycho-geriatric units (PGUs) has been funded by the Commonwealth. This will
follow a review of the operation of current projects. The expansion of PGUs on a national basis
using a consistent behaviour advisory model and focusing on meeting the needs of staff working
with people with challenging behaviours would form a useful part of the overall service network.
4.3.10Residential care

Recommendation 10: Residential dementia care remains problematic. In general, the principles ofageing in place and including dementia care within mainstream aged care are desirable, however themechanisms for addressing identified constraints need to be addressed within the context of the current
Pricing Review. Priorities include to:□ incorporate behavioural and environmental recommendations in Aged Care Assessment Team(ACAT) assessments, so that people with dementia and the nature and stage of that dementia are
identifiable;□ revise the Resident Classification Scale descriptors to accord better with ACAT assessments,
reflecting behavioural and environmental care needs as well as nursing and personal care needs,
so that people with dementia and the nature and stage of that dementia are identifiable;□ in the context of the federal Review, and in close consultation with providers and other key
stakeholders, review and make recommendations to implement changes to subsidies and possibly
85The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
accommodation bonds and other funding vehicles in ways that remove the disincentives to provisionof quality dementia residential care, in particular addressing:o capital constraints to high care facilities for people with dementia, including with BPSD; ando recurrent funding constraints to low-care facilities for people with dementia/BPSD.
□ joint review by government, providers and stakeholders of the long term capital requirements for
new dementia facilities based on better models of dementia care, with consideration of a full rangeof finance vehicles including insurance mechanisms;□ change the residential care planning guidelines to ensure that all facilities have the capacity to carefor people with dementia and that at least 10% of residential care places are dementia specific for
those with special support needs;□ assess supply and demand factors driving growth in overall numbers of places and ensure that
supply growth is adequate and sustainable to meet demand growth over the longer term;□ promote and fund new aged care facilities built on the cluster campus model on a providergovernment partnership basis;□ extend the number and diversity of newer models of quality care to help residents with dementia,
with ongoing cost-benefit evaluation in particular in relation to quality of life;□ increase ongoing nursing training in dementia-specific and quality person-centred care principles,
ensuring that all residential care staff have completed formalised competency based training at theCertificate III level in Aged Care, and understand the needs of people with dementia and how that
impacts on service delivery;□ increase specialist geriatrician input into diagnosis, management and training;□ introduce government support for the cost of staff training in facilities with limited financial resources
or whose ability to provide staff training is otherwise constrained;□ ensure guidelines are developed that identify appropriate staff to resident numbers linked todependency that address understaffing;□ tighter accreditation and monitoring of standards to promote quality care, with restrictions placed on
chemical and physical restraint practices;□ review of nursing and personal care worker remuneration;□ improved access to specialist behaviour advisory services;□ greater access to care for people with dementia with serious psychiatric symptoms, as well as thosewith serious mental health problems who develop dementia.
4.3.11

Cross-cutting issues

Recommendation 11: Issues that cut across all aspects of dementia care, reflecting the different
needs of different groups of people, and that require intervention include:□ improved access to community, residential and medical services for people with younger onset
dementia, including separate strategic planning to meet their specific needs outside the aged caresector;□ improved access for people with dementia and their families and carers who are from culturally andlinguistically diverse backgrounds, including improved assessment tools;□ improved access to services for indigenous Australians living with dementia;□ greater public efforts to destigmatise dementia; and86

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia□ smarter use of new information technologies in delivering services, particularly to people in rural andremote areas, including cost-benefit studies of information technology instruments such as webbased information resources and messaging, moderated chats and forums, videoconferencing andclinical communications.
4.3.12

Health financing

Recommendation 12: Intergenerational planning needs to acknowledge the need for health, aged anddementia care spending to grow in real and relative terms, with strategies for successfully managing thechange. Various tiers of government are already taking steps in this direction. Action-oriented planning,
integrally involving stakeholders, needs to address:□ appropriate savings or insurance schemes to provide for future health, ageing and dementia needs,
including consideration of quarantined increases in the Superannuation Guarantee levy;□ consensus on and planning for the future private-public mix of care provision and of insurance
provision.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

METHODOLOGY
Prevalence
The prevalence estimates are obtained from two data sources, a special data request from theAustralian Bureau of Statistics Survey of Disability Ageing and Carers together with international metaanalyses from which Professor Anthony Jorm98 and others have derived previous Australian prevalence
estimates. There are weaknesses with both data sets. The ABS data are likely to contain considerable
under-statement of prevalence, as it is a household survey (including ‘establishments’) that relies on
self-reporting (including by others in the family) and therefore is likely to have downward bias inreporting dementia, particularly in single-person households. It does, however, contain data across all
demographic groups and regions with no a priori reason why there would be more bias in one groupcompared to another. Indeed, both 1993 and 1998 data were purchased to confirm the integrity of thedemographic splits (see Table 3, Section 1.3.2).
The international (Jorm) data provides a much better estimation of total prevalence, which is quite
robust for age cohorts over 60 worldwide. Its limitations are that it does not reflect the genderbreakdown and does not comment on prevalence for people under 60. The two data sets werereconciled by applying the demographic splits of the DAC Survey to the overall prevalence estimates of
the international data. The estimates for 2002 were thus based on the prevalence rates per 1000 foreach demographic cohort projected to the estimated population in each cohort in 2002, as per ABS(2000). The prevalence estimates will be conservative as they will not capture people whose dementia
has not been diagnosed.
Projecting prevalence to 2051 (Section 1.3.3) to derive the function in Chart 5 was achieved by applying
the prevalence rates for each of the demographic cohorts to the cohorts as projected by the ABS for
2011, 2021, 2031, 2041 and 2051 (Series II, ABS, 2000), fitted with a smoothed curve. Once again theprevalence estimate may be conservative as diagnoses may occur earlier in the future, in line with thecurrent trend.
Disability and socio-economic impacts
Section 1.4.1 uses the International Classification of Impairments, Disabilities and Handicaps 1980 as aframework to identify whether a person has a disability and the associated level of restriction. People inthe 1998 DAC Survey were defined as having a disability if they had one or more of the following
impairments that had lasted, or were likely to last, for a period of six months or more:□ loss of sight (not corrected by wearing glasses or contact lenses);□ loss of hearing, that restricted communication or resulted in the use of an aid;
□ speech difficulties in preferred language;□ chronic or recurring pain, that restricted everyday activities;□ breathing difficulties, that restricted everyday activities;□ blackouts, fits, or loss of consciousness;□ slowness at learning or understanding;□ incomplete use of arms or fingers;□ difficulty gripping or holding things;□ incomplete use of feet or legs;□ a nervous or emotional condition that restricted everyday activities;□ a restriction in physical activities or in doing physical work;
98 Director, Centre for Mental Health Research, Australian National University

88The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
□
□
□
□
□
□

a disfigurement or deformity;need for help or supervision due to a mental illness;long-term effects of head injury, stroke or any other brain damage;treatment or medication for another long-term condition or ailment, and still
restricted in everyday activities;
any other long-term condition resulting in a restriction in everyday activities.

The flow-chart below shows how the population is subsequently categorised, with 3.61 million
Australians in 1998 having a disability, including 98.5% of people with dementia almost all of whom
have specific restrictions, and so on as per Table 4.

With disability
3 610 300
All persons
18 660 600
Without disability
15 050 300

With specificrestrictions
3 155 900

Without specificRestrictions
454 400(a) Includes 1,332,500 persons with core activity restrictions.

With core activity
restriction 2 828 000
Of which:
Profound537 700
Severe598 200
Moderate
660 300
Mild
1 031 800

With schooling or
employment
restriction (a)1 660 400

The ABS included all people who reported having either dementia or Alzheimer's, regardless of otherconditions; if someone reported having both conditions, they are only counted once. For the rural-urban
comparisons in Table 6, unfortunately data were not available by RRMA group – only the geographic‘section of state’ classification. For further descriptions of the ABS methodology see ABS (1999).
Direct health system costs
Direct health system costs can be estimated in one of two ways—the ‘bottom up’ approach, calculated
by adding actual (or imputed) costs for a representative cohort of patients, or the ‘top-down’ approach,which attributes total health expenditures to disease based on available information on the mix of
diseases treated and the costs of treatment. While the former is sometimes more accurate in giving upto-the-minute estimates for specific diseases, there can be problems in obtaining representative
samples and representative cost patterns, and the advantage of the latter approach is that there will beconsistency of coverage and estimates across diseases, which is more helpful for policy makers.
In this study, the top-down approach is adopted, based on the methodology developed by the AustralianInstitute of Health and Welfare (AIHW), in collaboration with the National Centre for Health Program
Evaluation (NCHPE) for the Disease Costs and Impact Study (DCIS). This major study measures healthservices utilisation and expenditure for specific diseases and disease groups in Australia, in accordancewith the Ninth Revision of the International Classification of Disease (ICD-9) published by the World
Health Organisation (WHO). The DCIS methodology has been gradually refined to estimate direct costsof hospitals, GP and specialist medical services, allied professionals, pharmaceuticals, nursing homes,
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
research and other costs (such as administration), primarily from hospital morbidity data, case mix data
and the National Health Survey (NHS), as well as other sources. DCIS methodology is detailed in
Mathers et al (1998), while results are provided in Mathers and Penm (1999).
As noted in Section 2.1 (Table 9), the direct health system costs were estimated by the AIHW in 199394 as $714 million. However, this is almost certainly an under-estimate in that only 17 per cent of
nursing home costs were attributed to dementia although at least 60% of residents in nursing homes
have this condition. The AIHW is currently in the process of reviewing their costings and new estimatesare expected in mid-2003. In this paper, the conservative 1993-94 figures were used as a base forprojections to 2002. However, the nursing home component was adjusted by a factor of 2.2 to takeaccount of the AIHW’s initial substantial under-estimation and to correlate better with expected averagecosts per resident as provided from other sources. The additional breakdown provided in Table 10 was
obtained through a special data request from the AIHW.
Cost projections to 2011 were based on prevalence changes due to demographic ageing (30.2%)
together with projected growth in the Health and Community Services GDP deflator. The average
growth in this deflator over 1993-94 to 2000-01 was 3.8% per annum. The growth projected in the
deflator over 2002 to 2011 was 39.8%, resulting in overall growth of 82%. To this, an adjustment wasmade to reflect recent large institutional changes, such as the introduction of the three cholinesterase
inhibitors on the PBS, as well as highly desirable changes, such as higher levels of researchexpenditure and spending on primary care (GP education, training and remuneration). The total value ofall these factors was only $69.8m, however – quite small although representing significant growth (anadditional 67% over the decade) from a low base for these three items. There are still considerable
upside and downside risks – even small percentage changes in the RAC component would change theprojection considerably. RAC costs could go down if, for example, pharmacotherapy is effectively
administered or could go up if, for example, there are substantial injections to the RAC subsidy orcapital costs. Similarly, hospital costs may be lower if waiting times into residential care are reduced,
while technological change – always the rogue variable, could either greatly increase or greatly reduce
the totals.
Home and community care costs
These were not included in direct costs for historical reasons, although they are very similar in nature. In
the 1993-94 AIHW data, nursing homes were part of ‘health’ expenditures (see Mathers et al, 1999, p6)
whereas ‘community and public health’ programs had only just begun to emerge and were consideredmore part of ‘aged care’ expenditure. Today the distinction seems less appropriate but is adhered to on
the basis of tradition, and for comparability with most other health spending analyses, which generally
do not include home and community care costs.
Indirect costs
The World Health organisation and cost of illness studies in the past have typically classed indirect
costs as all those costs that are not direct health system costs, the approach adopted here (except forthe special case of home and community care). More recently, there is a trend to separately identify
costs that are borne by government as opposed to costs to individuals or society. While this distinction
is not made in this paper (except in the scenario modelling) it can be derived from the analysis.
However, the economic distinction between real and transfer costs is made, where real costs represent
real goods and services whereas transfer costs simply represent money that is transferred from one
income unit to another. Transfer costs are interesting in terms of the overall government budget
composition. Measurement of indirect costs remains a matter of some debate and controversy.
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
Lost earnings and production (‘human capital’): This focuses on the loss of production or earnings
associated with illness and premature death. The higher end of such estimates includes absenteeism
costs plus the discounted stream of lifetime earnings lost. The lower end might include only the ‘friction’period until the worker can be replaced, which would be highly dependent on labour market conditions
and un(der)employment levels. The intermediate approach adopted in this paper comprises the lost
production of one period due to exit from the workforce and absenteeism. In this case, it is reasonably
assumed that, in the absence of illness, people with dementia would participate in the labour force andobtain employment at the same rate as other Australians, and earn the same average weekly earnings(based on ABS Average Weekly Earnings AWE 6302.0 August, released 14 November 2002) of $696
per week, including full and part time earnings across all occupations and regions. The implicit andrealistic economic assumption is that the numbers of such people would not be of sufficient magnitude
to substantially influence the overall clearing of the labour market. The estimate of 5% absenteeism forpeople with dementia is based on costings and data from Access Economics (2002).
Mortality burden: The mortality burden makes similar assumptions to those above if, in the absence of
the illness, those people with the illness did not die in 2002 but rather were well and participated in thelabour force similarly to average Australians, and for the same expected duration. The average age atdeath of 15-74 year olds with dementia (64.2 years) is derived from the demographic profile ofdementia, together with the assumption that an insignificant proportion would work after age 75. The
discount rate for the net present value (NPV) of the future income stream – 0.81% – is based on the 30year average growth of real AWE (with the Consumer Price Index as the deflator) for the period 1981-82
to 2011-12, including forecasts from the Access Economics Macroeconomic Model. A long-term
average is required due to the sensitivity of the results to the discount rate. Then:
NPV = ΣY(1+r)i = $0.22m where Y=$36,282, r=0.81% and i=0,1,2…6
The number of people who died (463) is then multiplied by the employment rate (8.5%) to give thenumber of people (39) who died who would, if they were alive and well, have been employed. Overall,
39*$0.22m = $8.8m, the mortality burden.
Under-estimation derives from the official mortality rate – for over 162,000 Australians with dementia
and average life expectancy of 8 years, one would expect a priori that the number of deaths would becloser to 20,000 than 5,000 in 2002 as extrapolated from the 1996 AIHW data. However, theconservative approach was adopted and the official estimate used.
Potential tax revenue foregone: People with dementia or their families and carers who work less orretire early will not only forego income, but will also pay less personal income tax. The income tax
foregone is a product of the average personal income tax rate and the foregone income. With dementia
and lower income, there will be less consumption of goods and services, estimated up to the level of thedisability pension. Without dementia, it is conservatively assumed that consumption would comprise
90% of income (the savings rate may well be lower than this). The indirect tax foregone is a product of
the foregone consumption and the average indirect tax rate. Average tax rates (2002) as shown in Table
13 are derived from the AE macroeconomic model incorporating changes from A New Tax System from
1 July 2000. Tax revenue sacrificed is included as a transfer payment (not a real economic cost).
Family carer costs: Placing a value on the cost of unpaid family care is the one of the most difficult
aspects of disease costing. It is nonetheless a hugely important indirect cost, and becoming more so as,
in Australia, we increasingly accommodate people with disabilities and frail aged people in thecommunity.

91The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
There are three potential methods of estimating the cost or value of families and carers:
1. an opportunity cost approach – the value of the work (earnings) and/or leisure they sacrifice(possibly also including the health and emotional wellbeing that they sacrifice);
2. the replacement cost approach – what the government would have to pay if a family carer wereabsent;3. what family carers themselves feel they should be paid (eg, as in the O’shea 2000 Irish study, whichinterestingly provided an estimate of only £2 to £4 per hour).
There is no data on the latter in Australia. Moreover, a comprehensive “bottom-up” opportunity
assessment of carer costs in Australia would also require additional detailed survey work to assess careneeds of all levels and types of people with dementia, as well as resolving the contentious issue ofvaluing lost employment and leisure (particularly when many families and carers are retired). Hence thereplacement cost approach has been adopted here, taken as the cost of outsourcing the equivalent care
hours at standard remuneration rates for care workers. The calculation using the replacement cost
methodology to derive the total carer costs is detailed in section 2.2.2.
Social welfare payments: The disability pension, sickness benefits and various allowances paid tothose suffering from disease are costs to the tax-paying community, which could be put to alternativeuse. These are also income transfer payments rather than real economic costs, but again relevant to the
public financial position. The Disability Support Pension is the main item here for dementia – thispension was previously known as the invalid pension and was introduced in 1910 as a result of theInvalid and Old-age Pensions Act 1908.
The weighted average payment per week in Table 17 is derived from the Centrelink website(www.centrelink.gov.au) for each of the various payments, with weights split equally between singles
and couples and between the various categories of Rent Assistance. The number of people receiving
DSP and pharmaceutical allowance (4,653) is the total number of people with dementia under 65(6,635) multiplied by the number estimated to be in the lowest two income quintiles (70.2% from
Table 5). The people eligible for Rent Assistance is assumed to be only 30% of these (1,396), assuming
70% average home ownership Australia-wide.
Modifications and aids: Since these are also not included in the AIHW 1993-94 data, and can be quite
substantial, they were included in these costings utilising the Frisch (2001) data, as detailed in Section
2.2.4 and Table 18.
Burden of disease
In recent years, the World Health Organisation (WHO), the World Bank and Harvard University havedeveloped a methodology that provides a comprehensive assessment of mortality and disability from
diseases, injuries and risk factors in 1990 and projected to 2020 (Murray and Lopez, 1996). Thisapproach has been adopted and applied in Australia by the AIHW with a separate comprehensive study
in Victoria.
Mathers, Vos and Stevenson (1999) estimate the burden of disease for dementia in 1996 in Annex
Tables F, G and H. The YLD, YLL and total DALY elements were then extrapolated to 2002 on the basisof projected growth in the prevalence of dementia over the period. The disability weights used by the
AIHW team were 0.270 for mild dementia, 0.630 for moderate dementia and 0.940 for severe dementia.

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

BRODATY TRIANGLE
SEVERITY vs TYPES OF CARE FOR PATIENTS WITH BEHAVIOURAL AND PSYCHOLOGICAL SYMPTOMS OF DEMENTIA
See Brodaty, Draper and Low (2003).
Tier Description
Tiers 2-7 percentage andnumber of the estimated
162,000 people with dementia
1
No dementia+

2

3

Dementia no
BPSD

Mild BPSD

39% *63,00029% *47,0004Moderate
BPSD

21% ♣

5

Severe BPSD

10% ♣

6

Very severe
BPSD

16,0000.9% ♣
1,500

7Extreme
BPSD

0.1% ♣
200

34,000Level of Disturbance & Intervention Use Cumulative
Strategies to prevent dementia remain unproven, although some evidence exists for the protective effects of Vitamin E, Vitamin C,
statins, antacids, low cholesterol, hormone replacement therapy, education, increased social, mental and physical activities, treatment ofvascular risk factors and prevention of hypertension.
Interventions not widely researched. Medications slowing progression of dementia may also prevent emergence of BPSD. For example
galantamine has been shown to lower rate of emergence of BPSD. There is evidence that environmental modifications, higher staff
ratios and staff training, may prevent emergence. Early intervention programs for dementia such as Living with Memory Loss program
run by the Alzheimer’s Associations may also prove effective.
Night time disturbance, wandering, mild depression, apathy, repetitive questioning, shadowing. Management through caregiver, staff
and general practitioner education, environmental modifications, general activity programs e.g. education of caregivers, multi-sensory
stimulation; abilities-focused program; enhanced nursing home environment; education & environmental modifications; client centredcare; visual barriers; activities, medication guidelines & educational rounds.
Major depression, verbal aggression, psychosis, sexual disinhibition, wandering. Management through psychogeriatric consultation –medications, behavioural management, e.g. physical activity programme; individualised Music; stimulated presence; behavioural
management techniques; bright light therapy; outdoor environments; increased environmental quality; Alzheimer’s Australia South
Australia’s hotline for BPSD.
Severe depression, psychosis, screaming, severe agitation. Management in dementia specific nursing homes or by psychogeriatricteam e.g. dementia special care units; individually tailored psychogeriatric management.
Physically aggressive, severely depressed, suicidal. Management in psychogeriatric or neurobehavioural units e.g. CADE units;
psychiatric hospitalisation.
Physically violent. Management in Intensive Specialist Care Unit.

Please note Tiers 2-7 only included in the estimated 162,000 people with dementia in Australia in 2002
+ In 2002 there are approximately 2.5 million people aged 65 years and over in Australia and some 162,000 of them have some form of dementia. People with dementia represent 6.6 percentof this population.
*Statistics based on clinical observations♣ Statistics based on Lyketsos et al (2000).

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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

GLOSSARY OF COMMON ABBREVIATIONS
Aβ
ABS
ACAT
AD
ADAS-Cog
ADL
AIHW
ALOS
APP
BPSD
CACP
CDAMs
CEI
CEWT
COPs
CPI
CT
DAC
DALY
DESP
DHA
DLB
DSM-IVEACH
EPC
ESDSRP
ESP
EU
FTD
FY
GDP
GP
GPCOG
HACC
ICD-10ITbeta-amyloid
Australian Bureau of Statistics
Aged Care Assessment Team (in Victoria: ACAS – Aged Care Assessment Service)
Alzheimer’s Disease
Alzheimer’s Disease Assessment Scale – cognitive subscale
activities of daily living
Australian Institute of Health and Welfare
average length of stayamyloid precursor protein
Behavioural and Psychological (Signs and) Symptoms of Dementia
Community Aged Care Packages
Cognitive Dementia and memory Services
cholinesterase inhibitor
Carer Education and Workforce Training (project)
Community Options Projects
Clinical Practice Improvement (study) or Consumer Price Index (context-dependent)
computed tomography(ABS Survey of) Disability Ageing and Carers
disability adjusted life year
Dementia Education Support Program
Department of Health and Ageing
dementia with Lewy bodies
diagnostic and statistical manual – version four
Extended Aged Care in the Home
Enhanced Primary Care
Early Stage Dementia Support and Respite Program
extra service provider
European Union
fronto-temporal (lobe) dementia
fiscal (financial) year (1 July to 30 June)gross domestic productgeneral practitioner
General Practitioner Assessment of Cognition
Home and Community Care (program)International Classification of Diseases – tenth revision
information technology

MCI
MMSE
MRI

mild cognitive impairment
mini-mental state examination
magnetic resonance imaging
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The Dementia Epidemic: Economic Impact and Positive Solutions for Australia
NAPDC
NDBAS
NGF
NHS
NRCP
NRDTI
NSAID
PCAI
PET
PGU
PHI
RAC
RCI
RCS
TGA
UK
US
VaD
YLD
YLL

National Action Plan for Dementia Care
National Dementia Behaviour Advisory Service
nerve growth factor
National Health Survey
National Respite for Carers Program
National Residential Dementia Training Initiative
non-steroidal anti-inflammatory drug
Personal Care Assessment Instrument (pre-1997)
positron emission tomography
psycho-geriatric (care) units
private health insurance
residential aged care
Resident Classification Instrument (pre-1997)
Resident Classification Scale
Therapeutic Goods Administration
United Kingdom
United States of America
vascular dementia
years of healthy life lost due to disability
years of life lost due to premature death95

The Dementia Epidemic: Economic Impact and Positive Solutions for Australia

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