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Minister Please Clarify – How Much and When

20 May 2005

Minister Please Clarify – How Much and When

The Hon Pete Hodgson yesterday reacted angrily to HealthCare Providers NZ claim that the $71 million allocated to DHBs for aged residential care does not guarantee resthome and aged geriatric hospitals more funding to look after the elderly.

“I was surprised by the Minister’s reaction and we will withdraw all criticism of his budget announcement when he confirms or intimates that:

DHBs will increase the bed day price for aged residential care by 5% (about $45 million), and DHBs will compensate providers for inflation (about $27 million), and That this increase will be paid in the 2005/06 financial year.

If he cannot do this then his angry response is unfounded and HealthCare Providers NZ original analysis of the $71 million budget announcement stands.

What providers were hoping for was a budget allocation that earmarked a particular amount of funding for providers, such as the $18.7 million boost given to homecare providers.

It is the difference in the two budget announcements in combination with providers’ recent experience (where it took 9 months of negotiation with DHBs to get an inflation adjustment for 2003/2004) that makes us treat the $71 million announcement with scepticism.

The Minister may claim that it is up to DHBs to spend the money where they wish and it is for each board to set their own priorities. If that is the case, then he cannot guarantee aged care providers an increase in their Aged Residential Care contracts and again HealthCare Providers NZ analysis is correct.

The Minister also said that, “The budget contains, gst included, more money that Mr Taylor’s request for $50 million plus inflation”. This is incorrect.

“To address the crisis in the short term I asked for 5% per year, accumulative, for three years, plus inflation and compensation for nurses MECA which is forcing up wage rates in non-DHB care facilities”.

“Based on the assumption 1% increase equals $9 million, and that inflation will run at 3% this would cost the government under $200 million in 2007/8, depending on how much additional funding the sector was given in compensation for the Nurses MECA”


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