Funding black hole to hit aged care

NURSING homes and other aged care providers are facing a $750-million funding black hole over two years and homes in rural and regional areas could be the worst affected, research by The Centre for International Economics revealed on Friday.

Commissioned by Leading Age Services Australia, the research showed that changes under the Federal Government's aged care reform package would hit almost 89% of service providers with funding losses of more than $125,000 every year.

>>See a copy of the report

LASA chief executive Gerard Mansour said the changes to the government's funding model would reduce the money available for nursing homes to care for elderly people by up to $23,000 a person each year.

"Many nursing homes and in-home care providers are already under financial pressure and LASA has serious concerns that if the way aged care is funded is not addressed, there could be an impact on staffing levels and on the important services which are the very foundation of quality care," he said.

"The average loss per aged care facility is more than $125,000 each year, with some facing revenue shortfalls of up to $560,000. Smaller and rural facilities are potentially the most affected.

"As running costs continue to rise, aged care providers - unlike most businesses - cannot increase care fees as they are set by the Federal Government."

Mr Mansour said the aged care sector could not accept the government's "new regime which redirects money from resident care to other elements of the Living Longer, Living Better (LLLB) aged care package".

He said the LASA was willing to work with the government to commit another $1.1 billion over four years to counter the losses.

Comment was sought from Aged Care Minister Mark Butler.

It is understood Mr Butler was in a Standing Council on Health ministerial meeting in Sydney on Friday.

That meeting, involving all state and Commonwealth Health Ministers, agreed to meet on a regular basis to discuss aged care.

Key findings:

  • Annual revenue losses rise from $98 million in the second half of 2012 to more than $350 million in 2014.
  • Losses for each affected resident is $20,000-$23,000 per annum or $56-$63 per day.
  • The total revenue loss from July 1 until the end of December 2014 is $751 million.
  • Average annual loss per facility is $125,143.49 per annum.

SOURCE: CIE research commissioned by LASA

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