Geriatric hospitals see cash squeeze

By MARTIN JOHNSTON health reporter

Owners of private geriatric hospitals fear that many will close and standards will drop if the Health Funding Authority succeeds in reducing the patient subsidies it pays.

Under contracts with the authority, hospital charges are fixed at an average $128 daily (excluding GST) a patient. Owners say the authority is attempting to cut the price significantly and establish one price nationally.

Lesley Clarke, executive director of the Private Hospitals Association, representing 110 geriatric hospitals, said, "Hospitals are staffing over and above what's required in legislation because they are trying to provide quality care."

If the subsidies were cut, hospitals would be forced to reduce staff to minimum levels, possibly compromising safety. Some would simply be forced to close, she said.

That would push patients on to the public system, which lacked the capacity to provide the longer-term care needed by frail, elderly patients.

Authority spokesman Gerard Vaughan would say little because talks were still going on with owners, but he emphasised that "clients' needs will be at the forefront."

There are almost 7000 patients in private geriatric hospitals, in addition to nearly 1400 in dementia units and 10,200 authority-funded residents in rest homes.

Means-tested Government subsidies last year totalled $221 million for rest-home and dementia-unit care, and $268 million for geriatric-hospital patients - in addition to superannuation payments.

Ms Clarke said it made no sense to apply a single price nationally because costs, which were highest in Auckland, varied so greatly.

The authority was making selective use of a study by PricewaterhouseCoopers on GST-exclusive prices at geriatric hospitals, rest homes and dementia units.

The study found that the price range for hospitals was $119 to $159 a day per bed, but that a lower range, from $117 to $154, was justified. The average for rest homes was $69. The range was $48 to $84, and should rise significantly, to $80 to $110.

Ms Clarke said she understood that while the authority's initial offer to rest homes would give an increase to many, it was to be less than $80.

The authority was clear that it had no extra money, so to pay rest homes more it would have to cut funding to hospitals.

Gordon Rodger, a part-owner of Havencare Hospitals, which has about 300 beds, mainly for the elderly, in four Auckland hospitals, said that most operators' prices had not risen for three years, yet patients' average level of dependency had increased sharply.

He added that the authority was also introducing tougher and more costly standards in some areas.