Martin Taylor: Quiet crisis hits elderly care sector

When grandma or granddad can no longer look after themselves, and the family cannot either, who will step in? If things keep going the way they are, the answer will be no one.

During the past 10 years, a quiet crisis has been developing in residential care of the elderly. To put it simply, they are underfunded and many are finding it hard to stay afloat.

Last Wednesday, the Freemasons announced the sale of their Mt Roskill retirement village and hospital. But since November, more than 17 rest homes and or complexes providing residential care of the elderly have gone on the market.

When even non-profit organisations are pulling out of residential care, you have to wonder what is going on. The Methodist Mission has signalled it may be forced to sell its Auckland rest homes, the Salvation Army is putting all 12 of its 70-year-old residential aged care centres on the market, which has followed rest home and private hospital closures in Dunedin and Christchurch.

And in Auckland again, the district health board wants to stop people moving to central Auckland rest homes from other areas - even as close as the North Shore - because of funding shortfalls and the high number of residential care beds in its area.

Even Parliament's health select committee has confirmed that the sector is in meltdown. In a report on caregivers' wages, it said: "We are concerned by evidence of chronic underfunding of the aged care and disability sectors."

In response, Residential Care New Zealand and the New Zealand Private Hospitals are combining so that aged care providers and the private hospital sector are better represented.

The new organisation, HealthCare Providers NZ, to be started on March 10, will represent more than 650 residential care facilities and private surgical hospitals, and aims to find a solution to the present crisis and ensure the sector's future.

Until now, the care of the aged has been a right. But this sort of care is in danger of becoming available only to those who have the money to pay for it.

Subsidised long-stay rest homes are not the same as retirement villages, where older people who have enough money buy a unit. There, they pay their own way, they are younger and they do not need 24-hour care.

It is not well understood that all residential care facilities for the elderly are provided by private rest homes and hospitals. Around 42,000 New Zealanders who live there are not the only ones affected by the uncertainty; their families and those who work there are also hit.

A government subsidy of $88 a day, including GST, for each qualifying resident to private providers was meant to cover everything - food, accommodation, nursing care, doctors' visits and medicine.

But last year, inflation alone was 3 per cent. After prolonged negotiations and in the face of scattered collapses, closures and sales of rest homes and hospitals, the Government has finally agreed to raise rates to match inflation.

There are, however, further pressures. Rest home owners have had to handle a 2 per cent increase in wage costs because of the Holidays Act, and will soon face large increases in costs because of the nurses' pay settlement.

They also face difficulties attracting skilled staff on the wages they can afford to pay. Caregivers' wages average between $10 and $12 an hour - too low to look after the elderly.

As well, funding has not kept up with the level of care demanded by a rising entry age. Ten years ago, the average age of people in rest homes was 75. Today it is in the mid-80s. Population projections show rising numbers of elderly people. If some private providers cannot keep their doors open, it is unlikely any will build new facilities.

So New Zealand does not just face a present crisis in its ability to provide care for the elderly. The foundations for a future crisis are also being laid.

Although the Government's $18 million cash injection has eased the pressure a little, the sector's future is by no means assured.

A report was due back to the Government early this year, aimed at working out the industry's future needs. But many members of Healthcare Providers NZ are concerned the investigation will not solve the funding problem.

That is based on what happened in 2000, when the Ministry of Health ignored its $500,000 PricewaterhouseCoopers' report because the report concluded the sector was underfunded by more than 20 per cent. It is hoped this year's report will recommend an outcome that will provide sustainable funding for the sector in the future.

If this is not the result, the crisis will continue and become worse.

That would leave everyone in an unfair situation - the elderly, their families and providers.

*Martin Taylor is the chief executive of HealthCare Providers NZ.