Aged care association responds to union report on public funding for private providers

The Aged Care Association has said the private sector is crucial to the ongoing supply of aged care beds. It was responding to a union coalition report that criticised public money going to private providers.

The union report claimed that 80 percent of the increase in public health funding over the past three years went to the private sector. It also claimed that the private sector accounts for 76 percent of aged residential care revenue. Aged residential care covers rest home, hospital, dementia, psychogeriatric and short-term care in facilities that house older people. The report said public money was enabling private profit and noted that some major providers are owned by overseas private equity firms, which are investment funds.

Tracey Martin, chief executive of the Aged Care Association, said that since Te Whatu Ora (Health New Zealand, the public health agency) closed its last community-based centre in Reefton two years ago, the entire aged care sector had been privately owned. She said 60 percent of residential care providers are charities, not-for-profits or small owner-operators.

Martin said New Zealand has about 40,000 aged care beds and will need 66,500 by 2048. She estimated that building the needed capacity would cost the government about $26.6 billion in capital alone. She said a hospital-level aged care bed costs about $400,000 to build.

Martin agreed there needed to be more transparency in how the sector spends its money. She said the association advocates a split funding model that would separate care costs from accommodation and living expenses.

The sector includes about 690 facilities. A Ministry of Health report, A place to grow old: Securing the future of aged care, describes New Zealand's aged care system as at a turning point. The report points to rapid population ageing, increasing care complexity and long-standing fragmentation in the system.