Rest homes face closure
A landmark pay victory for workers could force facilities to close, write Brittany Baker and David Burroughs.
Independent rest homes say they could be forced to close when a landmark deal for increased wages for elderly care workers comes into effect this week.
From Saturday, about 55,000 workers in aged residential care will receive pay increases from around $16 an hour to between $19 and $23.50, in what has been hailed as a victory for low-income workers in the sector.
But dozens of homes say they will struggle to cover extra wages.
The $2 billion settlement will be funded over five years through an increase of $1.9 billion the Ministry of Health’s budget and $192 million from ACC, with employers expected to contribute the remaining $245m.
But the manager of the Opunake Cottage Rest Home, the sole facility for 100km along the Taranaki coast between Hawera and New Plymouth, said the $2000-a-week increase to their weekly wage bill could spell the end for the 25-yearold business.
Anne Woods said: ’’I had to tell (staff) we are actually in a really dire position at the point now where we need to look to attract more residents or shut’’.
‘‘They were obviously down. A couple of people said immediately, ‘can we not have our pay increase? I’d rather have a job than $23 an hour for six months’.’’
Most of their 18 caregivers had been employed for at least a decade, with some having been employed for more than 20 years.
The situation in Opunake is mirrored around the country.
In Counties Manukau, Glenbrook Rest Home owner and manager Peter Mathyssen conducted an informal survey, and of the 30 rest homes that responded, 90 per cent said their extra funding wouldn’t cover the extra wages.
Mathyssen said caregivers deserved the higher pay for the tough work they dobut added he was worried the higher wages could encourage rest homes to hire lessqualified staff to combat increased costs.
Gaylene Rielly, who manages Benhaven Rest Home in Upper Hutt, said residents could face reduced services as a result.
‘‘It is going to be a struggle. It would be in any facility, but the level of care could be compromised,’’ she said.
Sam Jones of union E tu said they pushed hard for appropriate funding in the settlement and there should be no excuse for cut hours or closure.
He said if rest homes are facing closure, then a shortfall ‘‘must have already been there’’ as wages should have no real impact.
But Simon Wallace, the New Zealand Aged Care Association’s chief executive, disagreed.
In a recent submission to the Health Select Committee, he said the financial pressure pushed onto smaller operations would lead to closures, redundancies and fewer options for an ageing population.
An unnamed rest home in the Waikato would close, while others in Taranaki and Wellington were also weighing up their options.
‘‘A larger 80-bed facility in Hamilton is likely to make caregivers redundant in order to cut its losses and stay open.’’
The Ministry of Health’s deputy director of service commissioning Keriana Brooking said there should be no surprise in shortfalls as providers had agreed to the framework and were well aware of any downsides.
‘‘In those discussions with DHB representatives, they considered the pros and cons of building pay equity increases into the bed-day price,’’ she said.
‘‘It was jointly decided to process on that basis. This decision explicitly recognised it would result in ‘overs and unders’. As a result, providers and DHBs have agreed to hold a funding review.’’
A date for the review has yet to be announced.
District health boards were unable to say how or when rest homes would receive any additional funding to remain operational as they are bound by a national process, which determines all funding guidelines.
Until a resolution is found, Brooking suggests providers and DHB funders ‘‘work closely together where there are concerns for provider viability and service continuity’’.