Despite funding to ease rest-home staffing shortages, the sums don’t add up to provide the levels of care that soaring numbers of frail older people need.
It’s been more than 10 years since a new resident drove their own car to Bryant House rest home and dementia care in Napier. Owner and manager Greg Pritchard says it used to be common for residents at the 33-bed aged residential care facility to still be driving. These days, though, many of them would find it difficult to drive a motorised scooter, let alone a car.
“The acuity levels have increased exponentially to the point where, if someone comes into rest-home care they can often not walk or look after themselves independently, and they are likely to have a degree of dementia. That’s why they can’t live at home – they’re not safe,” says Pritchard, who has run Bryant House with his wife, Susan, for 15 years.
The main reason for the change is that people move into aged care later than they used to. New Zealand’s “ageing in place” policy, introduced in 2002, means older people are staying at home for longer. In 1988, the median age at which New Zealanders entered aged care was 79. By 2021, that had risen to 85. Those extra six years means they are more likely to be suffering from the health conditions associated with ageing, such as loss of mobility, cognitive decline, and difficulties with everyday activities such as getting dressed.
More complex needs require more complex care, which is more expensive to provide. Almost all aged residential care is delivered by private organisations – both for-profit and not-for-profit – through contracts with Te Whatu Ora Health New Zealand and Pritchard says the amount of funding they get is making it harder and harder to fulfil the obligations of their contracts.
“The incremental increases we’ve had are around 2 per cent a year, but some years we’ve had almost nothing. It’s not just our current government; successive governments have failed to address this issue.”
Pritchard is not the only one finding it difficult to make ends meet. Work carried out by the New Zealand Aged Care Association 18 months ago found that the sector was underfunded by around $425 million.
“That’s about running your business; it’s about the cost of consumables; it’s about inflation; it’s about capital costs,” says the association’s chief executive, Simon Wallace. The association represents 93 per cent of the country’s 659 aged residential care facilities, which between them oversee almost 41,000 beds. Of those, just over half are provided by large, publicly listed or private companies, most of which also own retirement villages. The rest are owned by smaller private companies and individual private operators, or not-for-profit charitable organisations.
1100 beds closed
The cost-of-living crisis has put aged-care providers under even more financial pressure, with the cost of everything from food to incontinence products going up.
Jo O’Neill, chief executive of Presbyterian Support Otago, says the cost of all their contracts has increased in the past two years. The provision of personal protective equipment, laundry, food – every contract has gone up by more than 9 per cent in the past two years, and some have gone up by more than 40 per cent, but our income to provide those services has not changed.
Her organisation, a registered charity, runs nine aged residential care facilities in the Otago region. It’s one of many forced to close aged-care beds in the past few years due to growing staff shortages that, by September 2022, had seen the loss of about 1000 nurses and 1100 beds – mostly hospital and psychogeriatric beds, which need to be staffed by registered nurses 24 hours a day.
That has made it much harder for older people to find care. Some have ended up staying at home longer than was good for them. Others have spent unnecessarily long periods in public hospitals – this is known as bed blocking because it prevents other people getting the hospital care they need. The closures also mean some older people have had to move to another care home.
Like other organisations forced to close beds, Presbyterian Support Otago laid the blame for the staff shortages that led to the unit’s closure on two things: low salaries for registered nurses working in aged-care facilities compared with their public hospital colleagues, and tight post-Covid-19 immigration settings. The latter have made it difficult to attract the overseas-trained nurses (particularly from the Philippines and India) businesses have historically relied on.
The sector has complained long and loud about both issues, and shortly before Christmas, the government appeared to listen. On November 28, it announced a $200 million-a-year pay-parity funding package to help registered nurses working in the community, including those in aged-care homes, who have been earning up to $20,000 less than public hospital nurses. This is believed to have driven staff turnover of around 50 per cent, with many aged-care nurses leaving for hospital jobs. As a result, the number of nurses working in aged care has fallen from about 5000 to 4000.
On December 12 there was a second announcement – this time, that overseas-trained nurses would join other medical professionals on the “straight to residence” pathway known as the Green List, rather than having to wait two years before getting New Zealand residency. Both moves have been welcomed in the sector.
More complex needs
As welcome as these changes are, they won’t solve the long-term challenges facing aged residential care – how we provide and pay for the growing number of frail older people who will need care in the future.
Aged residential care facilities provide care at four different levels – rest home, hospital, dementia and psychogeriatric. Most people (84 per cent) receive either rest-home or hospital care. Those who qualify for rest-home care have fewer complex needs and don’t require such intensive support. Those in hospital care, on the other hand, are in much poorer health. Most need help from two people to move about, and they must be continually monitored by a registered nurse.
The association’s annual data shows the proportion needing rest home care fell from 49 per cent in March 2014 to 42.7 per cent in September 2021. Anecdotal evidence suggests that those qualifying for rest-home care are often closer to needing hospital care than previously.
The number needing care is also increasing and, over the next 30 years, they will increase even more. By 2051, the number of people aged 80 or older is expected to almost quadruple, from just under 200,000 in 2021 to more than 730,000.
At present, just over a quarter of those 85 or older are in residential care. It’s possible that with a greater commitment to at-home care and better medical treatment, the percentage will drop in the next three decades. Those in the sector say the way it’s funded means it’s difficult for facilities to make ends meet with the number of beds they have now, let alone find the capital they need – as much as $250,000 per bed – to build more.
Added to this, many older facilities are reaching the end of their useful life, and without substantial capital investment, they are likely to eventually close. “How does the funding model build in an incentive to upgrade old care homes, to renovate them, to build bigger rooms and that sort of thing?”
Basics and extras
Te Whatu Ora sets the amount paid to facilities to provide care and accommodation for each resident. The average weekly payment now ranges from $1271.68 for rest-home care to $2241.30 for psychogeriatric care.
Depending on a resident’s financial circumstances and their level of care, either Te Whatu Ora pays the full amount, or the resident pays a proportion of it – as much as $1349.60 a week, depending on where they live.
In the 2021-22 financial year, long-term aged residential care cost Te Whatu Ora $1.33 billion excluding GST. Residents contributed another $970 million before GST.
The amounts may seem a lot – more than $116,000 per person for a year of psychogeriatric care. But, as Wallace explains, that sum must cover not just accommodation and food but services including laundry, cleaning, continence products, doctors’ visits, medication and activity programmes, on top of 24-hour care from registered nurses and healthcare assistants.
“We’ve been consistently arguing to government that it’s just not enough. Many facilities just can’t remain financially stable with what they’re obligated to provide in their contract.”
To help cover the shortfall, aged-care providers are increasingly charging accommodation supplements for what are known as premium rooms. These are bigger than standard rooms and they often have ensuite bathrooms and access to a balcony or garden.
Two-thirds of all aged residential care rooms provided now carry accommodation supplements, with premiums ranging from as little as $35 to more than $700 a week. It’s estimated that they bring another $300 million a year into the sector.
Presbyterian Support Otago’s Jo O’Neill says it’s more than 10 years since a standard room was built anywhere in New Zealand. Even charitable organisations like hers have been forced to introduce accommodation charges, though they are relatively modest and apply to less than half of its beds.
She worries that we are already well on our way to creating a two-tier system where people who can afford to pay additional costs will get access to aged care when they need it, and those with few assets and no income apart from national superannuation will have very few options.
“We already have a class system in aged care. It started a long time ago, and it’s going to get worse. There will be a whole level of older people who require care but who will never be able to access it, because they simply can’t afford it.”
Carriann Hall, chief executive of CHT Healthcare, a not-for-profit organisation that has provided aged residential care for more than 60 years, agrees that it has many benefits for those who need it. The fact is, says Hall, there’s a reason some people need to be cared for by registered nurses and healthcare assistants. “These are people who have got really complex needs and they need a lot of support.
“What I really worry about is older people not being able to get into an aged-care facility, because we know what a huge impact that has on their lives. It’s so important to give them every opportunity to have as good a life as possible at this time of their life.”