Parties offer more for aged care but bills huge

An Australian-owned company which has bought the Salvation Army's New Zealand rest homes says it is banking on higher state subsidies to make them profitable.

Eldercare, owned since May by Australia's Macquarie Bank, is believed to have paid about $40 million for the 11 Salvation Army rest homes from Auckland to Dunedin.

Other charities, including the Methodist Mission Northern and Presbyterian Support in Auckland and the northern South Island, have also sold their homes to corporate buyers in the past two years, saying they could not sustain the losses they were making at present funding levels.

The Freemasons also put their Roskill Masonic Village in Auckland up for sale in February.

It has proved an exception to the corporate trend and has been bought by the Anglican Church's Selwyn Foundation.

Eldercare general manager Craig Percy said his company bought the Salvation Army homes on Tuesday expecting that government subsidies to the sector would have to rise over time.

"We are taking a long-term view. The demographics come into play in the overall game plan," he said.

"There are no guarantees in life. But there was a report done in 2000 by PricewaterhouseCoopers, which was seen as a pretty neutral report, which said the aged care sector was underfunded by 20 per cent.

"Since then the district health boards have settled their nurses' MECA [multi-employer collective agreement], and that means that registered nurses and care staff in DHB hospitals are getting upwards of 30 per cent more than aged care providers can pay.

"Our view is that a nurse is a nurse is a nurse, it doesn't matter if they are working in aged care or hospitals or general practitioner clinics."

But the sums involved are big, even in an election where the two main parties are tossing around $1.3 billion in extra family support (Labour) or $3.9 billion in tax cuts (National).

The Government spends about $900 million a year on rest home subsidies. Adding 20 per cent to that would cost around $200 million, and paying nurses in rest homes the same rates as those in public hospitals would add a further $300 million - a combined cost of $500 million.

The National Party's health policy, unveiled by party leader Don Brash in New Plymouth on Tuesday, offered just over one-tenth of that - $59 million extra from next April.

Labour's May Budget provided for $71 million, which was described as extra money for aged residential care - $38.4 million for inflation and growing needs, and an "additional" $32.5 million.

But Healthcare Providers of New Zealand chief executive Martin Taylor said yesterday that the $32 million was actually to rectify a "mistake" made when the Health Ministry handed responsibility for aged care to district health boards in 2003.

And although the $38 million was announced in the Budget as for residential care, in fact it has been given to DHBs for the broad category of disability services and health of older people. The DHBs are now negotiating with Healthcare Providers of NZ about how much will actually go to rest homes.

A working party told the Government in February that fully addressing the funding pressures on rest homes and homecare services, including the expected pay rise for nurses, would cost "hundreds of millions of dollars".

Associate Health Minister Pete Hodgson told the Healthcare Providers last month that he acknowledged the sector was underfunded. But long-term funding solutions had been deferred until a further report due by December.

Officials said in the February report that "the problem lies not only in funding levels, but also in systemic problems such as conflicting incentives and lack of budget accountability in some parts of the system, as well as poor information systems".

National finance spokesman John Key has said National would spend about $300 million a year less than Labour on the overall health budget by 2008 - around $11.7 billion against $12 billion under Labour.

National would axe Labour's plan to extend higher subsidies for doctors' visits.

But Mr Key said yesterday that aged care was one of four key health sectors.

WHAT THE PARTIES WOULD DO

Labour

Complete study to determine future funding levels by December, recognising that standards, staffing levels and funding must rise progressively; provided $71 million extra in 2005 Budget.

National

Guarantee a 3 per cent ($24 million) inflation adjustment plus a further $35 million for rest homes from next April; pay travel costs for homecare workers ($19 million).

NZ First

Review rest home funding, particularly in relation to costs imposed by legal changes.

Greens

Increased aged care funding beyond the 2005 Budget increase to pay travel costs for homecare workers, hourly wages to respite caregivers, better pay and staffing levels in rest homes; restore a role for the public sector in aged care services.

United Future

Pay parity between nurses in aged care and public hospitals; travel allowances for homecare workers; reassess the way government funds aged care.

Progressives

Maintain and, where appropriate, increase rest home subsidies; address the pay gap between public hospital and aged care nurses; seek an all-party "accord" on rest home and homecare services.

Maori Party

Promote whanau involvement in healthcare of elders, backed by training and support.

Act

Cut taxes so people can buy their own health insurance and care.