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Sheer frustration has led 15 aged care providers in Otago voice their concerns about a lack of funding as the industry faces the ‘‘perfect storm'' of cost increases.
The informal group of rest-homes from Dunedin, Mosgiel, Milton, Wanaka, Alexandra and Oamaru has written an open letter of protest to the Southern District Health Board and the Government over the 1% increase in funding they received this year, following an increase of 0.89% last year.
New Zealand Aged Care Association Otago, Southland board representative Malcolm Hendry, chief executive of Chatsford and Birchleigh rest-homes, said the issue came to a head when the rest-homes realised they risked losing all their funding if they failed to sign the contract for the 1% increase.
They decided to write the open letter and send it with their contracts signalling they did not find the increase acceptable.
‘‘It was sheer frustration. It's squeezing providers in a situation they have no ability to control.''
As a result, some residential care providers could go out of business, he said.
The Government, through the district health boards, allocates funding each year to residential care provides and stipulates how much a provider can charge a resident. In Otago the daily rate was about $120, Mr Hendry said.
In the past year, rest-home providers had faced increased costs in KiwiSaver employer contributions and the minimum wage and increasing insurance premiums. The 1% increase did not go any way towards meeting all those costs, leaving them to continue to provide the same level of care on a reduced income, he said.
They chose to publish the letter in the Otago Daily Times because they wanted the wider public to be aware of what was happening in the sector.
The Government needed the residential careproviders to take the load off public hospital system, he said.
Associate Health Minister Jo Goodhew said the Government had increased funding for aged care faster than it had increased overall health spending.
District Health Board funding of aged residential care increased by 25% between 2008-09 and 2012-13, while the overall increase in health expenditure during this time was 17%.
The Southern District Health Board could not comment last night.