Doubts over feds' aged care package

Aged care providers in Western Australia have expressed concern that the federal government’s latest funding package, which allocates $1.5 billion towards aged care over the next five years, may leave some providers worse off due to financial restructuring.

The funding is part of a set of reforms announced last month, called Securing the Future of Aged Care for Australians, compiled in response to the 2004 Hogan Review into residential aged care.

The package will create an additional 7,200 community care places, at a cost of about $411 million, and will increase high care funding per resident, per day by about $10.

However, the government has withdrawn two existing supplements from care funding, which are paid by users according to their financial status and are worth about $7 per resident per day.

According to Uniting Church Homes chief executive Vaughan Harding, the withdrawal of existing subsidies is an unintended, yet damaging consequence of the new reforms.

“The net impact would be, our services could receive less money than before, which is an unacceptable outcome in an area where costs have not kept pace with indexation provided by the government, and demand for services is growing substantially,” he said.

Mr Harding, who manages WA’s largest aged care provider, says the cost of building a new residential care facility in Perth has increased by about 40 per cent in the past 15 months, a factor the federal government’s financial modelling failed to account for.

“We have one large facility that has just been completed, and we know from our builder that it would cost us 50 per cent more to build if we were starting today,” he said.

Aged Care Association Australia WA president Stephen Becsi said the costs of design, construction and fit out of a residential aged care facility were well above the $105,000 calculated by the federal government.

“Industry analysts put the real cost of building a facility at between $140,000 and $220,000, depending upon which state you’re in,” he said. 

“Clearly, when the government is funding aged care providers to construct new residential aged care facilities, it is not covering the costs.”

Amana Living chief executive Ray Glickman agrees that financial modelling, in relation to high care, is grossly underestimated and that funding is unlikely to generate the capital required by providers to build new high-care facilities.

Of even greater concern, Mr Glickman said, was the government’s move to roll supplements together or abolish them, effectively removing an incentive to take on residents on lower incomes in low care facilities.

“We seriously feel that those who have a high stock of low care places will be worse off,” he said.