A parliamentary select committee has heard a grim litany of complaints about an aged care sector that's being pushed to financial breaking point.
Submitter after submitter said the sector could barely make a go of looking after the frail elderly under current funding arrangements, despite a decade and a half of warnings from expert reports. And they said the future was looking even worse.
The average cost of Aged Residential Care (ARC) is $64,000 a year per person, according to the industry body, the New Zealand Aged Care Association (NZACA). In the 2022-23 year, the Government, via Te Whatu Ora, paid $1.4 billion in ARC costs, while residents paid $1 billion via means and asset testing, including superannuation deductions, and deductions from the value of their home. The costs are certain to grow with swelling numbers of older people.
The matter has come to a head once again after National’s coalition agreement with NZ First called for a select committee inquiry into funding of aged care.
That inquiry, by the Health Select Committee, is also looking at asset testing of people with neurological cognitive disorders, who are the most expensive patients in the system.
Asset testing is aimed to transfer some of the cost of ARC from the State to individuals, by eating into family assets including the home, down to a threshold of $284,636, or $155,873 excluding the home if a partner or dependent child lives there.
The setting of these levels has produced angry outbursts from people who see their inheritance crumbling away. But others argued that allowing people to keep more of their inheritance would increase the burden on the public purse still further.
The possibility of reducing thresholds to ease the pressure on government budgets is expected to be considered by the committee, but there is no certainty a recommendation like this will be made.
Most submitters to the inquiry tip toed around the matter.
The listed company Ryman Healthcare lamented the economics of the system generally, saying; “the existing level of funding is insufficient to maintain or modernise current facilities, and there is inadequate return to build new beds. (Increased funding) could come from individuals paying more into their level of care, or a reduction in asset thresholds, or an increase in government funding.”
Another retirement company, Arvida, called for a review of funding so aged residential care would be viable, but chose not to comment on asset thresholds.
Bupa also hedged its bets, saying “consideration should be given to setting appropriate and sustainable asset thresholds that reflect the true cost of care without unduly penalising individuals, families and businesses.”
Dementia NZ said asset testing thresholds were not its area of expertise, but appeared to open the door to a possible lowering of the level.
“Our view is that any decisions pertaining to asset thresholds must ensure that quality, evidence-based services are accessible to those who are unable to pay, and that there is choice for those receiving services.
Age Concern actually called for an increase in the threshold to allow more money to be made available for people to support themselves in their old age.
More than 80 individuals and organisations submitted to the select committee. Many of them gave graphic warnings about how hard it is to make ends meet right now.
One of them was the century-old home help body, Aged Residential Care, which warned “primary and secondary health services would be under insurmountable pressure if homebased providers are not sustainably funded.”
More dramatic testimony came from CHT Healthcare Trust, a 60-year-old not for profit organisation with 21 care homes.
“It costs $21 million to build a 60-bed care home,” CHT wrote in its submission.
“Based on estimated future cashflows, on the day it opens a care home would be valued at around $12 million. Even a not for profit cannot sustainably manage that level of write off."
“We don’t have retirement villages and we simply cannot build the new care homes and be financially responsible.”
'The funding model is broken and needs to be replaced'
Another submission came from Foxton’s Lonsdale Care Centres, which does palliative care or 24-hour supervision, and had a similar point to make.
“The healthcare system is not set up for the provision of quality care at any level….there have been repeated reports since 2010 that have warned successive governments that the sector is underfunded and that a crisis is approaching…..The crisis has arrived. The funding model is broken and needs to be replaced.”
The Lonsdale submission contained a bleak forecast regarding the future of aged care in rural areas.
“Premium priced beds continue to be built for people that have the financial means to pay. Where people rely on government funding, facilities are shrinking and will ultimately close. Therefore, care will be provided for those who have the means to pay. It is a political decision whether this is acceptable.”
Yet another report is currently being written on this subject. It is a comprehensive review of all aspects of funding ARC by Te Whatu Ora, which is expected to go to Cabinet next month.
A question has been raised over its robustness by the NZACA, whose chief executive Tracey Martin told the select committee there had been inadequate consultation in writing this report.
“Right now, aged care is being redesigned behind closed doors,” she said.
“We and our colleagues representing palliative care, dementia, alzheimers and gerontologists, have been excluded from designing a new delivery and funding system. Without on-the-ground experts, this will result in a short-sighted and short-term fix instead of the affordable and sustainable system change we need.”
But Te Whatu Ora’s director of Ageing Well, Andy Inder, denies this allegation of exclusion.
“The Aged Care Association was one of the 2000 people and organisations we received over 10,000 pieces of feedback from during our initial engagement during May and June this year,” he says.
“That engagement included eight regional workshops, online webinars, a public survey and various meetings and workshops.”
Another argument from Martin is Te Whatu Ora is mainly interested in clearing sick old people out of hospital, to overcome “bed blocking” of patients from other demographics. Inder denies that charge.
Meanwhile, Martin went on to say that a select committee hearing was not equal to the task of dealing with such a huge problem as funding aged care.
“We ask the committee to consider requesting the Minister of Health to hit pause on the aged care sector redesign,” she said.
“We ask the committee to recommend with some force that a ministerial task force or multi ministerial forum that includes representatives of the peak bodies and stakeholders be created.”
40 Comments
Following the listed retirement companies, they seem to be stuck between insufficient government funding and elderly people unwilling to pay for their own care. Even when the model is set up with low weekly fees and all the profit comes from reselling the unit after it is vacated, there is a movement for residents to be able to claim a share of any capital gains - having their cake and eating it.
The result is that they are moving away from care and towards premium villages, leaving a gaping hole that charities cannot fill.
I would strongly support more user-pays for those able to do so - taxpayer support should be ensuring everyone gets reasonable care, not ensuring that there is a chunky inheritance waiting for the kids.
No they don't and in the past I have worked at several facilities that offer mixed stages with large degrees of nursing care & monitoring in the same building even as those with completely independent living. The difference between such a huge variety of staged levels with different elements added/more security/safety features is client/family choice, staff training & hours required and what is funded by MoH and what is required by clients/family/company to cover the gaps (staff funded by MoH below min wage, no public hols or leave funded, even sick leave not funded etc so massive cuts to hours or outside funding needed).
Are you sure you are talking about a retirement village (that sells licence to occupy properties) because every agreement I have seen and several instances I personally know of will not provide assisted living to lease holders....the only way they can get care is to move into a rest home facility.
Care to name a facility that offers such?
Yes they do...as did the ones I have personal experience of...but when care needs increase the ability to occupy the LTO unit is lost...and transfer to an assisted living (rest home) often in the same development, becomes a requirement.
The level of assistance in LTO units ranges from non existent to limited.
Summerset offer "Supported Living" in their serviced apartments. They also say they can provide most "rest home" type services in those apartments, without the need to move to the more medicalised Aged Care unit. So the pathway is from Independent Villa, to Serviced Apartment (at no cost to the resident), to Supported Living (in Serviced Apartment), to Aged Care bed or Dementia Unit.
How do I know? I just attended a Summerset seminar on their care options, and how they are funded.
"On 4 May 2020 this petition was submitted by Sue Brown, whose mother lived in a serviced apartment in a retirement village prior to needing greater level of care. In late 2016, the petitioner’s mother’s health began to decline. On 1 December 2016, the petitioner’s mother had a health assessment booked with a geriatrician who recommended the petitioner’s mother continue staying in her serviced apartment. 6 On 15 December 2016, the petitioner took her mother to the hospital to have her eating problem investigated. Following this, the retirement village would not accept the petitioner’s mother back into her serviced apartment until another support needs assessment was completed. 7 The petitioner’s mother stayed in hospital for several days, as the retirement village completed the support needs assessment. Prior to the assessment the retirement village did not confirm whether they had capacity to provide a higher level of care, should it be required. 8 The support needs assessment recommended the petitioner’s mother needed temporary additional care, similar to rest-home level of care. This level of care could not be provided in the serviced apartment. Consequently, the retirement village informed the petitioner they did not have capacity to provide for the petitioner’s mother, and that she would need to seek another facility."
https://www.hud.govt.nz/assets/Uploads/Documents/Government-response-to…
The devil is always in the detail....seldom in the brochure.
If you move into a village that doesnt have aged care facilities, or does not have enough aged care facilities, then yes obviously you are going to need to go somewhere else. This is one reason why some Summerset villages have closed their aged care beds to non-residents. If you cant get in to the aged care unit in your current village, they will move you to another village aged care unit. You also need to look at the process involved in moving in to the aged care unit BEFORE you need to move there - there is a waiting list that you put your name on, and the village then closely manages you and the transition into care. You cant just expect for an aged care bed to suddenly materialise for you overnight - there is a scheduling process, and if you are in the schedule, then they will keep beds open for you. Moral of the story - choose your RV operator and village carefully.
Moral of the story....your LTO is at the discretion of the provider. What was described in that piece is not dissimilar to what occured to a couple I knew. Had lived in a serviced unit (LTO) for some years, husbands health deteriorated, they were told he no longer qualified to occupy the serviced unit and was moved to the resthome facility attached.
As said, it will pay to understand your LTO agreement as the licence is conditional....despite the claimed flexibility of care options, nevermind the costs.
Er no. You can stay in whichever housing so long as you pay for the extra unfunded support worker hours and don't go round assaulting people. Please stay relevant to the times that existed even 20 years ago. Just ensure you also have a place you like and can modify to your needs e.g. get a bidet, put a chair in the shower, have level entry etc (which discounts many NZ houses). You can get paid nursing care to a home as well and except for the hours available, which are less in a home, there is no big difference between a retirement village and a house that has been already modified. In fact in most cases elderly clients by comparison (when accounting for physical condition on entry) have longer lifespan expectancy and greater social interaction in a retirement village then otherwise so your fearmongering is even more wrong.
Only in cases of severe lack of nursing funding, physical abuse and no support workers adequate to the care plans is there a departure... but that would occur in a house as well. It is just family take on more responsibility to check if a client is in a house rather then the attitude of ignoring them and not checking regularly in retirement villages. Protip: have family care to check in on you regularly where ever you live.
See my comment above which completely covers your example and why it proves my points even more. Protip a needs assessment & care plan is how more support worker funding is allocated.
Its like you have never ever understood what a needs assessment & care plan is or how support worker funding is allocated. Then assumed it magically appears without any prior medical checks or approval. Because you think support worker funding falls from a money tree for the elderly eh and you can magically increase staff numbers to infinity and beyond without having to pay them.
Mayfair does now... in fact any that village that has nurses onsite and visiting support workers which is near every single one. Pay for the support workers and you can live where ever you want. Violent clients however have to be separated, much in the same way we do for criminals. Currently they are more restrained in hospitals & locked rooms as even in tailored dementia only facilities violent clients are often too unsafe for the minimal staffing numbers. On top of that a family is expecting the village or MoH to pay for nursing instead then they legally have to keep them in hospital if the village does not have the staff numbers and pay for them. See my comment above which completely covers your example and why it proves my points even more. Protip a needs assessment & care plan is how more support worker funding is allocated.
Its like you have never ever understood what a needs assessment & care plan is or how support worker funding is allocated. Then assumed it magically appears without any prior medical checks or approval. Because you think support worker funding falls from a money tree for the elderly eh.
Am well aware of what a needs assessment plan is and how it is funded. You can continue to ignore the fact that a LTO village environment and a rest home have seperate functions and the claim that they have become seamless is unproven by anything that has been posted here.
A needs assessment is pretty seamless. Rock up to a GP or call the assessor directly. State you need help dressing and toileting now with say a nerve or joint injury and voila more assigned time. Then just state when you want them to turn up for those things with your provider and book it in. If you manage your own support workers the time you schedule & hours they turn up is totally your own responsibility.
Geez it is like you have never had an elder care needs assessment and still think pay for workers and staff to work the hours magically appear from thin air at the drop of a hat. Such as in the example you quoted where the family were completely ignorant of the reality of how people & businesses get money for support worker time & medical plans. What do you think the workers live on and how they pay for their own housing? Or is it all out of their own heart and they are expected to live in modern slavery conditions. Obviously the family in the example did and you act the same. In the example they expected someone to manage food and dieting support hours FOR FREE without any staff actually being assigned to it and with no hours available. Seems pretty ignorant of reality or abusive of support workers.
But I get it, they are just unpaid servants for you. Who you never think of and certainly you don't expect them to afford their own lives and to have real employment choices. Where most people Never will want to work as support workers in the first place. So getting support staff ready for increased hours needs to be thought out by clients & family instead of being completely ignorant and thinking there is a support worker money tree & staff just waiting to serve you.
If the family paid for the support workers there would be no issue, if the family took on the support tasks with training no issue, if the family got the needs assessment and booked in the support hours instead of abandoning family until the last minute and then expecting instantaneous magical money and staff to appear there would be no issue. Not doing any of those things and expecting modern slavery or no support staff at all is where the village said sorry we cannot take on those roles & responsibility without the funding and knowledge of the medical care plan (reasonable as the staff would need to also know what they have to do when they get there).
Here is you thinking that a medical care plan that needs to list medications, dosages, actions to be done by support workers, patients medical condition, food plan (and any dietary considerations) is not important at all and so it can be ignored and treated as completely unnecessary for a high needs client. Yeah and in NZ we leave patients recovering from heart attacks to skip their meds and figure out how to feed themselves as well. To you it is totally ok to leave people unmedicated for their treatable conditions with open wounds in their own waste for days and who cares if no one has time to check on them.
Nah. Instead of that lets have them in hospital for the time it takes to write down that necessary medical information to hand to available support workers able to work those hours so they know what they need to do & have time to do it.
How eager and callous was the family to dump their ill family member without that necessary information and support. They might as well have been abandoning them to die a short painful death... Sue Brown... well that explains a lot. Protip: don't have family like Sue Brown who ignored the necessary steps and information that lead to the severe deterioration in the first place. If you are going to replace support workers trained to checkin on people with family, don't have that same family be as callous, lackadaisical and ignorant when it is necessary to hand over to support workers or request more support worker time for more responsibilities.
The economics of building and operating many things don’t work, this is just another example. This industry is not special.
The listed vehicles have all made a fortune, paid it out, and are now crying poor. Look at all the land they have on balance sheet. The biggest issue these guys have is reputational and it’s their own doing.
I feel because of retirement costs NZ’ers will look to live with elderly parents. Something that is pretty uncommon now but will be unavoidable in the future.
Some will look seriously at the aged care options available over the ditch which are currently a step change above NZ. It was an eye opener for myself when I placed my mother in residential care there last year.
Yes Oz Super is means tested however it excludes the family home. The Accomodation payment made in an upfront lump sum has a Govt guaranteed 100% refund when no longer required. The Care cost is also Govt controlled.
My mum is in Queensland, very happy.
There was a big Oz aged care inquiry (Royal Commission) a couple of years ago which highlighted a lot of consistency issues however there's now a lot of govt focus on the sector. The biggest issue is staffing (same in NZ), majority now overseas sourced Japan, Philippines etc & very good support in mums case.
I have family in Australia in residential care and here in NZ. I completely agree that the care options and assistance available from government in Aussie are far superior to NZ.
You do have to navigate a lot of red tape there but once you do the benefits available amazed me. Elder care here is a time bomb close to exploding!!
I don't think that's true. The dividends paid out by the listed companies have been pretty poor.
The issue is they assumed the good times would continue to roll, took on debt to keep investing, and then got caught out when interest rates rose and sales/profits fell. As a result they needed some combination of capital raises, divestments, renegotiated banking arrangements, and significant reductions in future investment plans.
For sure OCA have been selling some of their land, I'm not sure of the others.
Their business model depended on 1. Ever increasing property prices (eg Ryman independent residence cost used 67% average house price in location) & 2. Turnover - the reason why most have increased entry age to 75 in last few years.
They need a new model because the old one isn't going to work any more.
I don't know if they really need increasing property prices. The idea is you get to resell the unit every X years when previous owners 'vacate' - it's nice if the sale price goes up each time, but not necessarily required.
However, if you have a big investment pipeline funded from an assumption of increasingly expensive sales, things can quickly get out of line when prices stagnate and sales slow down.
There's clearly something to like about the model - MET were bought out a few years ago and still investing heavily for their new overseas owners, now ARV are being snapped up. I hold OCA who shot up after the ARV deal was announced (I also held ARV but sold out rather than waiting for the buyout to go through).
The listed operators are primarily focused on retirement living, not dying. The fact that they offer aged care at all is just an enticement to justify spending all that money on a licence to occupy a villa or apartment in the complex. They shouldnt be confused as a quasi-public health service. Although in the past many villages have operated that way by taking patients directly from the public health system - however, this is changing as retirement village operators shut their doors to non-village residents. This is a function of the increasing demand from village residents as they age, but also the Commerce Commission that has pinged them for promising "continuum of care" and then failing to deliver it.
It is not just money it is people. Birth rates falling of a cliff mean there will be no one around to do the heavy lifting.
"when I was born in 1949 there were about eight people of working age (25–64 years) for every person over the age of 65 years. Seventy-four years on, globally there are now about five [NZ - four] adults per old person because so many of us live on into extreme old age. By 2100 CE, when the children born in the first third of this century are elderly, and with a low TFR for the rest of this century, this ratio is expected to have dropped to about 2."
https://insightplus.mja.com.au/2024/8/health-care-in-for-a-roller-coast…
Have no issue with means testing (though do have an issue with how easily it appears to be avoided)...but if even at 7K per month (and thats probably closer to 8 by now) the private providers are unable provide then at what point do we decide that end of life care is only available to those with the means?....for that is the choice being offered by the market.
What is funded by MoH and what is required by clients/family/company to cover the gaps is huge and results in premature avoidable deaths, direct harm to clients & staff and huge layers of over funded MoH related bureaucracy. Nursing staff are funded by MoH only to below min wage, no public hols or leave funded, even sick leave not funded etc so massive cuts to hours are made by schedulers or outside funding is needed just to cover essential nursing tasks. In most cases clients will face brutal cuts that lead to severe medical events and degrading living environments.
Summerset has started to close its doors to taking people directly into their aged care/dementia facilities. They have started charging village residents another ORA for access to care facilities. So you pay once to get into the village, and then again if you need to move into the care facility. This means that quality aged care will soon only be available to people with the means to fund both those ORAs.
Australia has just announced a big revamp of aged care funding - and it will be through making people cough up more for their own care. Taxpayers shouldnt be funding inheritances - if you have the funds available (including the family home that you are no longer living in) then after 20+ years of receiving a taxpayer funded pension, you can pay some of it back by way of paying for your own aged care.
Changes made to Aged Care in Australia this week ....
‘Once in a generation’ aged care reforms will support older Australians to stay in their own homes during their final years.
Older Australians will receive more support to see out their final years in their own homes while self-funded retirees could pay an extra $13,000 a year for residential aged care, under “once-in-a-generation” reforms aimed at putting the sector on a sustainable pathway to cater for an ageing population.
Anthony Albanese declared his reforms would help older Australians “retain their independence and remain in their homes as they age”, after striking a $5.6bn deal with the Coalition to bolster in-home support while raising costs for part-pensioners and self-funded retirees who choose to go to a nursing home.
Under the deal backed by the Coalition partyroom on Thursday after months of negotiations with Labor, $4.3bn would be spent to support an extra 300,000 people receiving aged care services at their homes over the next decade.
This includes giving terminally ill people up to $25,000 to receive palliative care support to spend the final months of their lives at their homes, as well as $15,000 for older Australians to modify their homes so they are safe to live in.
The home services would include staff visiting to help with nursing care, occupational therapy, getting dressed and taking medications. Staff would also help with everyday living such as cleaning, gardening, shopping and meal preparation.
From July next year, residential aged care residents with “sufficient means” would pay more for non-clinical services, such as showering, haircuts and lifestyle activities, with the lifetime contribution cap lifting from nearly $80,000 to $130,000,
The changes would be grandfathered, meaning existing aged care residents would be exempted from the new fee structure, with the treatment of the family home unchanged under the means test.
According to scenarios provided by the government, a self-refunded retiree with an income of $70,000 and $500,000 in assets, excluding the family home, would see their contributions rise to nearly 45 per cent of total costs, from $49,400 to $62,800 a year.
A part-pensioner with $500,000 in assets would see their fees rise from $34,300 a year to $47,700, amounting to 34 per cent of the total cost.
A full pensioner who owns their own home and has other assets amounting to $150,000 would pay an extra $3000 a year, at $28,800.
This actually has a significant burden on the clients and their families for a huge benefit to the govt. The govt does not have to provide say, building services/maintenance & most accessible housing costs while most of that financial burden which increases significantly as people age in their own homes is now pushed back onto the families. Just compare the cost even of mowing a lawn and putting in a level entry & accessible bathroom suitable for the needs of someone with joint issues & falls risk and their carer support.
People quickly learn how valuable accessible housing is (that is maintained by others) once they have significant joint injuries, falls, or have to go through stroke recovery. Its not like you can climb up stairs with a walker when you struggle to stay upright in the first place or how to push a vacuum & mop when you cannot even use your hands to cook or fully bathe for yourself and have to relearn even how to smile.
In addition home carer support is already at much reduced hours compared to residential as there is significant training time also required for each new client environment for every worker, along with safety reqs & care plan training. This is continual as they swap workers regularly with the pay being so bad it actually would be a significant improvement to work in a supermarket checkout, hospitality as a waiter or at Mc Donalds. In addition most the tasks covered in a retirement village or rest home are not even funded by the government in home support. So already the human resource costs and staff time funding required by govt is more then halved and those costs fall on clients and their families (as the needs for those tasks don't change but now they have to find a way to cover the new unfunded costs even though they physically cannot). Note you cannot just have retirees move to apartments and expect carer support as there is No Staff or Visitor Parking in most apartments so if you think you will find carer support that wants or can travel to apartment dwellers regularly you will be in for a sharp shock. Especially as more street parking is being removed and the time spent finding parking or traveling is also out of the carer support time available.
So the changes are really great for the Ausi govt, but they have clearly placed a high burden on families and are framing it as if they are doing them a favour. Here is the main outcome of that strategy which is already known in populations that choose not to use retirement housing: more early preventable severe injuries & deaths, more isolation and more emergency callouts (especially when accounting for the clients starting medical condition e.g. comparing those more able bodied in both scenarios, comparing those with different levels of impairment in both scenarios etc). Throw in most families don't have a younger child unemployed anymore who can take on the full time additional carer support, maintenance, management and monitoring needs as well as they don't have the tens of thousands for redesign of housing to be fully accessible and it is a recipe to also reduce the pension costs.
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