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Govt Values Prisoners More Than Your Granny

13 October 2004

Government Values Care Of Prisoners At Double That Of Your Granny

With $59,000 dollars spent on every prisoner in New Zealand jails, older people in aged care facilities around the country are receiving only half that amount, with the Government valuing the cost of granny’s care at only $30,000. New Zealand is facing a major funding crisis in the next decades, as our population of over 65 year olds starts to double and treble, putting increasing pressure on New Zealand’s health and medical services and the ability of aged care providers to meet demand.

Nearly 1.1 million New Zealanders will be aged over 65 years by 2030, and a growing percentage of these will be requiring residential care and other support services as they continue to age. With the removal of asset testing and the Government’s announced intent to fund all residential aged care, industry players are now seriously questioning how and where the additional $0.5billion of funding will be provided. Alan Clarke, CEO of Abano Healthcare Group, the parent company of residential care network, ElderCare, has been warning of the impending funding crisis for the past four years.

Although his initial estimates were that health spend would be 50 percent of GDP in 20 to 30 years, a new report released today by the Health Funds Association of New Zealand, shows that estimates will be closer to 63 percent by 2050. Aged residential care has historically been under funded, and the Government has also capped the amount the providers can charge private paying residents for services. Although the CPI has increased by 21 percent in the past ten years, the aged residential hospital bed day price has only increased by eight percent. A recent call for more money to be spent on aged care resulted in a one percent increase. For everyone in the industry, that figure is seen as laughable, especially with inflation running at around 2.4 percent. For many providers the increase will not result have any benefit due to the pricing mechanism in place for the aged care sector. Local DHBs have advised that the cost of this one percent increase is $9million, amounting to $1 per day for the 9 million days of care provided per year. As reported in the recent Max Robins report on aged care funding, hospitals are under funded by 10 percent and rest homes and dementia units under funded by 24 and 25 percent respectively. Many aged care providers can simply not continue to operate, including many religious or not for profit welfare groups who have closed their doors or sold their facilities to private operators.

It is not only the amount of funding that is at issue, but also the method in which those funds are distributed. From 1st October 2003, funding of the aged care sector was devolved to local DHBs, greatly increasing the risk of under funding and affecting the market place in which they operate. With highly publicised shortages of nursing and therapy staff in all healthcare sectors across New Zealand, DHBs are competing directly with aged care providers for quality employees. By suppressing aged residential care subsidies, whilst increasing wage rates for their own staff, they are creating a wage gap which makes it even more difficult to compete. Quality of care is the number one concern of people considering residential aged care, and recruiting qualified and trained staff is a primary issue for aged care providers. “Why work in the aged care sector when you can get more money working for the hospitals?” says Craig. “Until funding is increased, the industry will have to fight to attract the qualified staff that families and residents expect”. New legislation, in particular, the Holidays Act, has proven costly to those in the industry who rely on 24 hour staffing requirements each and every day of the year. In addition, growing regulation of the industry, although seen as necessary to ensure high quality standards of care, have also added to the costs faced by aged care providers.

The Government’s Ageing In Place strategy, which encourages older people to stay at home for longer, is supported by the aged care sector, but has also led to significant increases in costs over the past three years. Residents are now entering facilities when they are older and frailer, and are therefore, requiring greater staffing and medical input. This has resulted in resthomes providing hospital level care and hospitals providing hospice care, with no increase in funding to match. “The Government is continuing to under fund a sector of the market which caters for some of the most vulnerable people in our society”, says Craig.

“With the growing number of older people in our communities, the issue of aged care is now a lot closer to home. Is your granny, or indeed yourself, really only worth half of what a murderer or rapist receives for their care in jail?” The issue of under funding in the aged care industry will not simply go away, and operators are currently urging the Government and DHBs to increase funding levels to ensure our older people have the quality care available which they deserve.


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