Aged-care system warning

Chatsford Retirement Village. Photo: ODT files
Chatsford Retirement Village. Photo: ODT files

A Dunedin rest-home operator says the system is broken and is about to get worse after a report revealed the dire aged-care situation in the South.

An interim report by aged-care consultancy Ansell Strategic into the financial performance of the sector found the profitability per bed had fallen 83% in the past five years.

The report revealed that in the former Southern District Health Board area each bed was losing $15.21 per day.

The situation meant 18 beds were closed between January 2022 and September this year.

Nearly double the current volume of beds would be required by 2041 to meet the expected demand for aged-care residents.

Aged Care Association New Zealand board member and chief executive of both Birchleigh Residential Care Centre and Chatsford Retirement Village Malcolm Hendry said the statistics were not surprising and had been known for some time.

From his experience in the industry, the model for aged care in the South was broken.

"We have seen our profitability deteriorate massively in the last five years, to the point where we are now having to make really serious decisions as to what we invest in.

"I’ve been in the industry 16 years and I’ve never seen it this tough."

He was disappointed and scared by what seemed to be a blindness to the demand for aged care by the baby boomer generation.

If demand continued at the same level of population growth, there would be nowhere to go for many families.

Mr Hendry said the only reliable way to secure revenue was to charge residents more for premium rooms, which created a "two-tier aged-care system" that not everyone could afford.

Smaller rural facilities did not have the capacity to offer premium rooms.

The current funding model of the aged-care sector did not align with Te Whatu Ora Health New Zealand’s remit to provide equal access to healthcare for all, he said.

"You’ve got some people who won’t be able to afford aged care, and others who will."

The report described the findings as "concerning".

A total of 291 aged-care facilities around the country participated in the survey, representing 22,580 beds, about 54% of all residential aged-care beds.

The Otago and Southland regions represented some of the least profitable areas in the country with a loss of $15.21 per day for each resident in care.

According to the report, Otago and Southland has a total of 3351 aged-care beds.

HNZ predicted demand for residential aged care would rise 97% by 2041-42, meaning the South would need an extra 3065 beds.

Mr Hendry said the worst was yet to come as it would take at least four years to construct the beds needed to accommodate more.

"I think there will be quite a lot of pain before we get back to some sort of equitable solution for the people that need aged care ... It’s not a tap that you can turn on and create 1000 aged-care beds this year."