Strong headwinds are battering the New Zealand aged residential care (ARC) sector, resulting in a shortage of rest home beds because of underfunding and staffing shortages.

The challenges in the aged care sector also result in significant pressures on the public health system as highlighted by reports of elderly patients languishing in hospitals, awaiting transfers to other facilities that have no immediate capacity to accept them.

The Aged Care Association has attributed nurse shortages and funding shortfalls to the lack of capacity at ARC facilities and the closure of about 1,200 care home beds since the middle of 2022.

With people over 65 years-of-age approaching a fifth of our population within 10 years, arresting and reversing this trajectory is seen as crucial.

The Aged Care Commissioner, Carolyn Cooper, emphasised the extent of the problem recently, calling for a review to address gaps and blockages across “the whole system.” The Commissioner points out that older people are the biggest users of the health system and that a plan is necessary “to ensure that older people receive the health services they need.”

CMM’s Executive Director, Jill Hawkey, notes that parts of the aged care sector have for many years helped reduce the cost to the Government of providing support by delivering services at a fraction of the cost compared to public hospitals.

“The Ansell Strategic report into aged residential care in New Zealand showed that it cost the government $1,345 a day to fund a hospital bed. Meanwhile, a rest home bed was just 10.7% of this amount and a hospital bed slightly higher at 17%,” says Jill. “Although aged-care homes and hospitals like WesleyCare in Christchurch have had to be experts at providing quality care on a shoestring, the pandemic has exposed flaws in this funding approach.”

Underfunding prevents the ARC sector from offering competitive salaries to nurses, with many leaving to work for higher pay at public hospitals, forcing providers to close rooms. This is resulting in some vulnerable older people being cared for at home by relatives who themselves may be elderly and struggling.

“This is unconscionable in a country which prides itself on being caring and kind,” says Jill. “We know that there’s a growing number of people with few or no financial assets that are reaching the point of needing care. We also know that a third of retirees are renting currently and that this is expected to double by 2048.

“Financial insufficiency means that this group will be unable to access private retirement villages that operate as licence-to-occupy or to afford the premium room charges of private rest homes and hospitals. However, CMM and others in the sector have shown that it is possible to provide quality care for this group. The model is simple: affordable retirement housing in conjunction with an affordable premium room charge. But this is possible only if the government increases funding levels.”

The challenge posed by nursing shortages and the high cost of delivering quality care aside, Jill points out that there are few options for people who cannot afford the premium room charges that ARC facilities are entitled to pass on to residents in certain circumstances and which help providers to break even.

“The risk is that these people will spend more time in public hospitals while a bed is sought, placing them under increased pressure. This not only costs the government more but is a source of great stress for elderly people and their loved ones at a time of heightened vulnerability,” Jill says.

An increasing number of stand-alone charitable aged care providers are closing, with the three remaining religious providers in Christchurch all experiencing the same financial difficulties. A survey by Aged Care Matters last year underlined this threat, with 35% of respondent facilities saying that they were “very likely, or likely” to wind up over the next 12 months, and that it was “clear the sector is at breaking point.”

Jill points out that it is possible to avoid this outcome and the resulting hundreds of millions of dollars it would cost the Government to fill the gap. Analysis undertaken last year by CMM shows that the care provided in ARC facilities collectively saves the state $11,836 billion a year, providing a compelling argument for a funding increase to ensure sustainability for the sector and New Zealand’s ageing population.

The inaugural Aged Care Commissioner, Carolyn Cooper, will be the keynote speaker at CMM’s Public Celebration in November. Touchstone readers are invited to register to attend the event in person, or the livestream broadcast, at www.mmsi.org.nz/Public-Celebration-2023.