Aged Care Association hits back at report on public money going to private sector

The Aged Care Association says the private sector is crucial to the ongoing supply of aged care beds, after a scathing report by a coalition of labour unions criticised the amount of public money going to private entities.

The report claimed 80 percent of the increase in public health funding from the government over the past three years had gone to the private sector, accounting for 76 percent of aged residential care revenue.

The sector consists of about 690 aged residential care facilities providing about 43,300 beds.

Tracey Martin, chief executive of the Aged Care Association, said since Te Whatu Ora shut down its last community-based centre in Reefton two years ago, the entire sector was privately owned.

But Martin said it would take a huge investment to overhaul the current system which had been in place for 80 years.

"It seems to be that the purpose of this report is to actually completely change the whole way that the health system delivers health and to get government, any government, a new government, to fund more public provision," she said.

"Fair enough. At the moment we've got about 40,000 beds. We need to have 66,500 by 2048. It costs about $400,000 per hospital-level bed to build. So if the government wants to get into the business of providing aged residential care, they're going to have to stump up with about $26.6 billion in capital alone to build it."

The report took issue with public money enabling private profit, particularly as some of the major providers were owned by overseas private equity firms.

Martin said in fact, 60 percent of residential care providers were either charities, not-for-profits or small owner-operators.

But, she agreed with one of the report's criticisms - that there needed to be more transparency in how the sector spent its money.

"We have been arguing for what we call a split funding model, where the cost of care and who's paying it is quite clearly itemised, where the accommodation and the living expenses are split out so that the New Zealander can see what they are paying for and the government can see what it is paying for."

Many residential care providers were operating at a loss, Martin said. Some were making up the difference needed for things like ongoing maintenance and other business costs by charging for extras on top of the bed-rate.

"That creates a problem because we've got a growing number of seniors who haven't got any extra money. And so obviously if they're being forced to put beds at a higher price, it cuts people out of getting them."

Others just pushed out maintenance.

"I've got members who are quite large charities who've got about $10 million worth of deferred maintenance at the moment."

That was the "big challenge", she said, "Not who's paying for it."