Another alarm bell for aged care
The New Zealand Aged Care Association (NZACA) says cost pressures driven by DHB and government decisions are hurting its rest home members, which cannot continue to absorb spiralling costs of caring for the elderly.
Chief executive Simon Wallace said they were under pressure from a range of rising costs.
“For the first time ever in annual funding negotiations we sat down with the Ministry of Health and DHBs and modelled and agreed on all the costs facing rest homes. This has shown that current funding shortfalls are creating an unsustainable sector. Without a significant funding increase the sector will struggle to deliver the quality of care New Zealanders expect for their ageing population,” Mr Wallace said.
More than half of the country’s rest homes were owner-operated, and were unable to absorb additional costs.
The most significant cost pressure was salaries and wages, which accounted for up to 60 per cent of a rest home’s expenses, and was rising dramatically due to government pay settlements and statutory minimum wage increases.
Providers were under ongoing pressure to pay their registered nurses more to avoid further losses of staff to public hospitals in the wake of the DHB Nurses Multi-Employer Collective Agreement (MECA) last year. DHB annual funding increases to rest homes was consistently below the increases paid to hospital nurses, resulting in an ever-widening pay gap, which DHBs were using to actively recruit nurses from rest homes.
Meanwhile the government’s statutory minimum wage increase earlier this year required providers to pay non-carer service staff such as kitchen hands, cleaners and laundry workers an extra $1.25 per hour, with no increase in funding.
Providers were also under pressure to match the large increase DHB service workers had received under their MECA last year, while caregiver pay equity legislation required them to match pay to qualifications, and caregivers had been achieving higher qualifications than were allowed for in last year’s fee increases.
“The specific DHB and governmentdriven costs are exacerbated by the general inflationary pressures on aged care with the cost of compliance creep, like new food safety costs and overall inflationary pressures measured by the Aged Care Price Index (ACPI), which is tracking above the Consumer Price Index,” Mr Wallace said. “The reality is that if the industry was operating fully in the private sphere, providers could pass these increased costs on to their customers. But we cannot do that, as we receive capped funding from government and are restricted under our contract as to what we can charge our residents.
“We also have a situation where GPs are not passing on savings to Community Service Card holders living in our rest homes. These reductions were introduced as a result of the government’s primary care initiatives in December 2018.
“We cannot continue to absorb these rising costs. Already this year we’ve seen closures, or the announced closure, of rest homes in Wellington, Christchurch and Invercargill. And we will see more unless the funding reflects the cost pressures.”