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Sector voices:

The biggest challenge facing aged care in New Zealand today



here are so many different areas tugging at the Ministry of Health’s purse strings, all with legitimate claims to funding. How do you prioritise funding for a bowel cancer screening programme, funding for low cost primary care clinics, or funding for youth suicide prevention programmes? To be responsible for making these decisions and allocations is an unenviable position indeed. Yet, as the growing ageing population continues to swell, the calls for more funding for aged care are becoming increasingly shrill. So when we asked leaders from different corners of the aged care sector to write about what they perceived to be the biggest challenge currently facing aged care in New Zealand, it was inevitable that underfunding should rank more than a passing mention. A variety of issues emerge – attitudes to ageing, social isolation, changing needs, to name a few. However, the overriding concern appears to the lack of adequate funding. The sector leaders included here make strong cases as to why the sought-after health dollar needs to be directed in their direction to address the current demands on the system. Then, as Julie Haggie says in her contribution of the impending baby boomer influx, “And then comes the wave.” Jude Barback, Editor

INsite asked industry leaders what they perceived as the biggest challenge facing aged care. Here is what they had to say.

ALASTAIR DUNCAN Strategic Industry Leader, Service and Food Workers Union Nga Ringa Tota


ith the sharemarket rising almost as fast as the ageing population, the sector is finally beginning to capture the headlines – but for all the wrong reasons. On the business pages, we see the record returns being made by listed providers as they and the other corporates continue to expand their

market share. For the elderly, the choices seem to be even more alluring … as long as you have the bank account and the mobility to genuinely choose their lifestyle options. But so far, the only additional investment in the sector seems to be aimed at the legal profession as the litigation to try and overturn last year’s landmark equal pay ruling continues. When Business NZ branded the Kristine Bartlett equal pay case a “Pandora’s box”, the allegory was perhaps apt, but not for the reasons they cited. Since Judy McGregor’s Caring Counts report lifted the lid on the sector, a conversation has begun that is long overdue. Now the workforce, through the New Zealand Nurses’ Organisation and Service and Food Workers Union have begun a nationwide campaign to extend the legal proceedings to include every unionised worker, and by extension, nearly every employer. For carers, the challenge is stand up and to validate the work they do by adding their names and their energy to the call for equal pay. Some will do that through the legal framework, some through community activism, and later this year, all will be able to vote for the political party that is most responsive to their needs. For employers, the challenge is similar but less clear. Do they continue to seek to overturn the Employment Court decision on the basis sector cannot afford the cost, or do they embrace a decision that is as much about dignity and human rights as it is about pay? Wouldn’t the operators, staff, and residents be better served if that energy, and the ACA war chests, were directed in an election year toward the funder rather than continue to deny staff the right to equal pay? Already we see the first signs that smart providers are seeing the test case not as a challenge but as an opportunity. In 2013, Metlifecare and Bupa worked with their staff and unions to engage and share common ground. In-home support providers such as Access 4

April 2014 |

have been vocal in their support for implementing the Caring Counts recommendation on training and staff development. Working with staff, alongside residents and families, is a much smarter strategy than the politics of opposition. In 2014, the unions are reaching out to the many non-unionised workers in the sector, inviting them to add their voices to the call for equal pay and the funding that it will require. We know some of those carers will feel conflicted between their loyalty to their employer and their residents. How employers responded will be critical if we are to focus the legal, industrial, and community campaign into a tool that delivers for all.


spent on home-based

support services in 2013 financial year

Ultimately, the courts will make their ruling – but by then, it will be clear whether the sector has the maturity to work with their staff or against them. And that leaves the Government. It was a National Government that first signed the 1972 Equal Pay Act and it is a National Government that has now joined the proceedings to overturn the decision. Choices are coming for all players and for voters. That’s the real challenge. | April 2014


JULIAN COOK CEO-designate, Summerset


April 2014 |


he recent census showed that the population of those aged 85 and over has risen nearly 30 per cent since the 2006 census – a staggering increase some have dubbed ‘the silver tsunami’ and one that the country seems ill-prepared for. There is increasing concern that the state will be unable to care for the incoming tide of dependent baby boomers. Government statistics show that this country will need an additional 12,000 to 20,000 aged care beds, on top of the current 32,000 to meet the projected increase in demand over the next 15 years. Each District Health Board (DHB) sets the maximum cost of each different type of aged care bed. Nationally, the average cost of a rest home-level care bed is set at $119 per resident per day. Hospital-level care is $205 and dementia level care $173. If we assume the percentages of each care level remain the

same, 20,000 extra beds will cost the tax payer more than $3 million a day. In a year, that figure is above $1.1 billion. This figure is startling, but it doesn’t include the cost of building the facilities that will house these beds. It costs on average nearly $180,000 to build a single bed. For 20,000, that’s $3.6 billion. It also doesn’t include the replacement of current stock. In 2010, when a DHB and aged care sector commissioned review into aged care by Grant Thornton was published, more than half of the existing beds were more than 20 years old. The accepted life of a bed is 20 to 30 years. If we were to need 40,000 new care beds to enable us to look after our elderly population, it would cost society more than $7 billion. This isn’t something we can do on the cheap – our older people deserve care that treats them with dignity and respect, in care facilities staffed by dedicated nurses, diversional therapists, caregivers, and housekeeping staff. But we’re lucky. The state isn’t going to be building these beds on its own. There are retirement village operators to help. If the current trend continues, retirement villages will be a large part of the solution to our ageing population. We are able to invest in building new care facilities and beds at our villages, and make it easier for people to age in place, too. Not only are we able to build communities where a lot of the social isolation associated with ageing is addressed, our homes are Lifemark-designed to pre-empt the challenges of limited mobility and reduce the risk of


spent on aged residential care

in 2013 financial year

falls and accidents. We help people to live life to the fullest, which means lower rates of depression, lower hospital admissions, and thus, lower cost to the state. The continuum of care model we operate, where residents can move from independent living to care should the need arise, means that couples can stay together and residents don’t have to leave their communities in order to receive care. Retirement villages are providing New Zealand with high quality aged care, and we are paying for the facilities ourselves. We are a large part of the solution to questions around how this country is going to look after its ever increasing elderly population. | April 2014



Chief Executive, New Zealand Aged Care Association


lmost everyone agrees the aged care sector is underfunded, even Government Ministers from time to time. It’s not just the aged residential care sector; it’s the entire aged care

sector. Everyone agrees because the facts are hard to deny: low wages across, high acuity, and increasing demand. There is even a 2010 government-funded report that confirms building aged care beds is uneconomic. But is underfunding the biggest challenge for aged care? Or is it a symptom of something else? We believe underfunding is a symptom of particular drivers in the public ‘mind’, which in turn, impact on the prioritisation of government spending. These drivers are grounded in varying levels of discrimination based on a comparative valuation of age groups. Put simply, ‘baby’, ‘young’ and ‘new’ are seen in a positive light, whereas ‘elderly’, ‘old’ and ‘superannuatant’ are seen as less positive. The practical manifestation of these views means the elderly are not valued as highly in comparison to the non-elderly when competing for the public dollar. For example, what would gain more resonance with the public: $100 million for children vs $100 million for the over 65s, or $100 million for child poverty vs $100 million for elderly poverty? Another level of discrimination relates to 8

April 2014 |

the type of care provider. The view amongst many is ‘for-profit is bad’ but ‘not-for-profit/ public is good’. This value judgement never takes into account the quality of the service delivered or organisational efficiency, but is the main reason why caregivers in public hospitals are on higher wages than their private sector counterparts. Going beyond the health sector, these value judgements become more pronounced. What is going to directly affect more lives: giving $30 million to compete with billionaires in a yacht race, or $30 million to improve the quality of life of 35,000 elderly in care? Or increasing the top tax rate by 0.5 per cent so you can pay private sector caregivers the same rate as their public sector counterparts?

The good news is we believe these ageist views are undergoing change. In the last two years, there has been a growing public view that low caregiver wages and the employment conditions of homecare workers are fundamental injustices. These views are being supported and strengthened by litigation, media attention, and lobbying from providers, unions, and other NGOs. The question is when will these changing views prevail over age discrimination and reach a level where government priorities must shift to accommodate them? We believe that time has arrived and 2014 should see political parties better value the elderly and the people who look after them.


over 65s received elective surgery since 2008 | April 2014



Chief Executive, Home and Community Health Association


April 2014 |


or most providers, the biggest challenge is providing safe care for clients; the second is attracting, training, and retaining enough staff to provide safe care for our clients; the third is financial survival. They are, of course, interdependent. The Government trumpets an improving economy, but community health and social services are frantic and collapsing. The message from the Minister of Health remains depressingly constant: ‘cut deficits’, which translates to ‘cut allocations per client; cut wages, cut safety and quality, do more for the same or less’. District health boards trying to live within their means place high and complex clients on minimum, and at times, dangerously low support allocations. In many areas, they expect providers to do care work that requires much higher levels of competency or input than the organisation is funded for and can safely provide. Many of our providers feel like they are porters on a hope train which has no driver. In the worst regions, the needs of the individual older person receiving care is definitely now secondary to economic efficiency. One of the consequences is that in more than half of the DHB regions, we are unable to now reward our workforce for gaining training and experience, despite the obvious need. The latest rise of 50c in the minimum wage equates to a 3.4-3.6 per cent increase in provider expenditure, without any increase from DHBs or the Government. Providers who have been trying to pay a margin above the minimum wage, to recruit staff and to recognise increased competency, now have to limit or stop training because they cannot pay the additional 50c-$1.00 more per hour for qualification attainment. But it is exactly that training which enables our staff to care for people with more complex skills in the community. Last year, the Government openly recognised the inequity of rates paid across New Zealand and provided 2 per cent targeted as a rate increase for the lower paying half of the district health boards – 11 of the 20. The worst paying of those funders would need to pass through a 15 per cent increase to bring them up to the median, so two per cent was not going to make much difference. The remaining DHBs were able to use the increase to meet service volume increases. Providers who received the rate increase were able to use it to partly meet a combination of the 2013 minimum wage increase and the one per cent increase in the employer Kiwisaver contribution. It can’t be spent twice. This year, they will go into debt. The contribution to cost pressure funding in the upcoming budget looks to be just over half of one per cent, and there is no mechanism to ensure that DHBs pass that through to their contracted service providers.

What is the answer? There are several: 1. Genuine understanding and planning at a regional and national level will be more likely to ensure that services outside of the hospital itself remain sustainable. We need thoughtful planning to support safe care, not reactionary tenders aimed solely at saving money; 2. Serious intellectual grunt is needed around service and workforce planning: about the ranges of options for home support; about how many support workers, nurses, allied health staff, and service coordinators we are going to need; about projected levels of client service demand; and about the best ways to support family caregivers.


3. The involvement of home support services in integrated service planning and delivery can have great outcomes including reductions in the use of hospitals, but it is a rare event.

4. We need more consistency in service models, funding allocations, and funding rates across regions. We believe that home support clients do not have access to the same levels and types of service across the country. The hours of support allocated to the client vary from region to region, depending on the funding decision of the DHB board and the level of needs assessment undertaken. In many regions, only a percentage of clients have had a clinical needs assessment (interRAI) to determine their care needs.

of all elective surgery was performed

on over 65s in 2013

5. Some DHBs are trying bulk funding. This can potentially provide more flexibility in the service model, but the experience of providers in several regions is that it is being used as a financial press, or the science behind it is not well understood. The number of clients with complex care needs is increasing, but either the funding pool remains static or the maths behind case mix data is flawed or variable. Only a rational and more consistent funding approach can enable this service to cope with the demand 6. Demand for community, primary, secondary, and tertiary care is already on the increase. In 5–6 years, we will start to see more dramatic and sustained growth. That needs much deeper strategic thinking around projections of need, workforce availability, and service availability. This needs to happen regionally and nationally. Without strategy and planning, there will be insufficient welltrained and incentivised workers to respond to the needs of clients. Inconsistency in client access to assessment and support will continue or get worse and the resilience of provider organisations will be further weakened. And then comes the wave. | April 2014



April 2014 |

ALAN EDWARDS Chief Executive Officer, Metlifecare


ith the number of people aged over 65 years expected to nearly double in the next 30 years, we can no longer ignore the discussion about how we are going to care for our elderly. Meeting their housing and care needs is one of the key concerns we need to address. Isolation can have a devastating effect on people. With increased isolation, the risks of loneliness, depression, and anxiety grow rapidly. For the elderly, it manifests more readily as the ability to get out of the home freely is often impaired. The social, physical, and emotional benefits of living in a community such as a retirement village, with people of a similar age and surrounded by support, are manifold. Residents retain their independence but know that someone just like them is living next door. They have access to activities, companionship and care, if needed. Residents are more able to live life the way they chose. While the number of people living

in retirement villages in New Zealand is growing steadily, there is still a large percentage of the population who may be unable to afford this lifestyle as it currently stands. Making access to a retirement village

5% of New Zealanders

over 65 live in

retirement villages available to more people is something we believe provides an ideal solution to the social housing needs of our elderly – and housing in general.

Potentially, there may be some solutions via partnership arrangements between the Crown, local authorities, and retirement village providers. This partnership approach to housing for our elderly would not only provide more people with age appropriate housing, but would also deliver numerous social benefits including companionship, increased security, and peace of mind whilst freeing up homes in established suburban areas. The 85+ demographic is growing rapidly as is the requirement for additional aged care beds. Meeting this growing demand presents many challenges, not the least of which being meeting the cost of delivering the care. Additionally, the industry faces a growing scarcity of human resources at all levels. Demand and supply dynamics will push the funding challenges further as the industry grapples with fair and reasonable remuneration within the care environment. We have an ageing population, and it is our collective responsibility to ensure they are able to live with dignity and respect, with access to care and support as required. A significant amount of work remains ahead of us to find the most appropriate solutions to the challenges that face our industry. | April 2014


GRĂ INNE MOSS Managing Director, Bupa Care Services NZ


e are privileged to be trusted to give help, support, and aroha to the people receiving residential aged care. There is a great deal of responsibility that comes with this trust and providing the help, support, and aroha is not easy. There are many factors and variables. Firstly, no resident is the same, no building the same, no family the same, no staff team the same (and thank goodness for that, otherwise the world would not be the flawed but beautiful thing it is!). The health of our population and the population’s needs are changing. We are living longer lives. Life expectancy has increased. Technology, training, drugs, diagnostic procedures, equipment, building design, research – these and more are changing the face of our health system. Residential aged care does not stand alone, it is part of this changing and evolving system. Our residents are changing, their needs are changing, their expectations are changing, and as an industry, this is the biggest challenge we face. Our residents are coming to us with higher clinical needs and their length of stay is shorter. Meeting needs is multi-facetted. It requires welltrained, kind, and caring staff. It requires funding. It requires partnership with families and with funders. It requires leadership from those within the sector and across the health system. It requires gaining an understanding of the needs of residents, evidence of performance, openness, and transparency. It requires recognition of cost shifting, rising costs, and the need


April 2014 |

9% of New Zealanders

over 75 live in

retirement villages to reward and motivate caregivers who are at the heart of meeting the needs of these residents. There is no one way to meet the challenge and the industry cannot meet the challenge alone. However, the people in the industry are the most caring, kind, and passionate people that I have ever met. This gives me the real hope that we will collectively find a way to ensure that the elders of the community as they grow in numbers and as they live longer will find that the help, support, and aroha they gave the generation behind them will be returned.

* STATS SOURCE: Tony Ryall speech, 7 March 2014 16

April 2014 |



don’t agree with everything NZACA’s Martin Taylor says, but in this supplement, he nails the true long-term issue that affects the aged care sector: the perception of our elders. The early national battlegrounds for this year’s elections are issues affecting young families (especially education – with debates raging over new teacher roles and breakfasts in schools), national identity (the flag debate), and transport (cycle paths). The dignity, care, and respect for the elderly hasn’t yet come up for pre-election discussion in the mainstream media. Taylor rightly summarises that $100 million of funding for children is a lot more palatable than $100 million for the over-65s. Our esteemed contributors have talked about the issues – especially the underfunding of the sector by the Government – but it is this issue of dignity, care, and respect I want you to take away from this supplement. If the Kristina Bartlett vs TerraNova case goes the way it is currently leaning, the sector will be forced to increase pay for the lowest pay workers, and I believe this will be the catalyst for wholesale funding changes. In effect, funding will be thrust upon the Government’s agenda. In the short to medium term, funding will be addressed, and then the cycle will repeat itself: funding will eventually drop below expectations (and possible inflation), potentially crushed by the weight of the silver tsunami of retired baby boomers, only for the sector’s cries for more funding to be eventually met through another catalyst in years to come … and on it goes. So back to the real challenge: perception of our elders. No amount of spending will change the fact that, in our current society, with its emphasis on the young, flashy, and material, the wisdom and dignity of our oldest generation will continue to be a nonissue, a wasted resource, while other more pressing and in-your-face issues arise. Who cares about old people when teachers aren’t getting paid? Who cares about old people when we can talk about a new national flag? Our current elders are often dignified in their silence or otherwise resigned to their fate. Perhaps this will change as more baby boomers, with their louder voices, increased wealth, and higher expectations, land in residential aged care? The voices of our seniors will grow even louder when the current Gen-Xers (myself included), reach retirement age. My fear when it comes time for me to look at post-retirement care options is the same fear held by anyone already in underfunded care: who is listening to my concerns, and do they care? Surely, as a society, we can do better? The change in attitude needs to come from us, and from our children, and our children’s children. This is the challenge. Will you accept it?

Shane Cummings, Editor-in-Chief, INsite magazine | April 2014



April 2014 |

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