The report from the NSW Productivity and Equality Commission, released Wednesday and commissioned by the state government, said an extra 2,600 aged care beds would be needed each year to meet future demand, but NSW is projected to deliver only 660.
Commissioner Peter Achterstraat told the ABC that keeping patients in hospital was costing $1,000 a night compared with "just a few hundred dollars" at an aged care facility. He said there were over 1,100 people in hospital today who should not be there.
"We need to look outside the box," Achterstraat said, proposing "a third alternative, such as intermediate care" where people can go to facilities which are not an acute hospital but not an aged care.
NSW Health Minister Ryan Park said the state government would provide interim services, but argued aged care was traditionally the responsibility of the Commonwealth. In September, state and territory leaders called for the Commonwealth to expand its Support at Home package for stranded patients.