Funding crisis could worsen aged care bed shortfall

The current Aged Care Act impasse and ongoing financial crisis are expected to leave the aged care sector thousands of beds short over the next five years with providers and consumers both likely to shoulder the pain.

First reported by David Crowe, the chief political correspondent for The Sydney Morning Herald (SMH) and The Age, residential aged care will have a net deficiency of 21,200 aged care beds by 2030.

This is primarily due to the constricting financial pressures forcing many homes to close. StewartBrown projections suggest 32,700 beds will be lost by 2030, swallowing up any gains made through an additional 11,500 beds created. 

“The financial losses over the past five years – an aggregate of over $5 billion – have created a lack of investment in the sector for new build and refurbishment, which is causing a further erosion of supply to meet future demand,” Grant Corderoy, Senior Partner, StewartBrown, told The SMH. 

Supply is also outstripping demand in the home care space despite the Government releasing an additional 24,100 home care packages in the most recent Budget. That figure is roughly 20,000 short of what it needs to be.

There are fears the $5 billion lost by aged care providers will only grow in the coming years, especially if the Labor Government and Coalition fail to pass legislation for the new Aged Care Act. 

“People have been holding on by a thread, and we have started to see the trickle of closures grow,” said Tom Symondson, CEO, ACCPA, shared with The SMH.

“We’ve started to see that with some operators, even if they don’t close the home when someone moves out, they don’t fill the bed and they shut it.

“That is starting to increase and we are well past it being a trickle to it being a waterfall or a torrent because people have been hanging on too long. How many industries do you know that have lost $5 billion over five years that are in a good shape? Because that, to me, indicates we’re not in a good place at all.”

Most industry insiders hoped that the Bill for the new Act would be presented to Parliament in August. Despite the Coalition ticking off on the Act after major negotiations regarding the removal of criminal penalties and changes to lifetime contribution caps, this was not the case.

However, it is expected that wealthier aged care consumers will pay more for food and accommodation in residential care, providing a much-needed funding boost for the sector. This might not meet the projected $37 billion needed by 2050 to build enough places and services.

Draft changes to the Act feature several options for user-pay agreements, including charging some older Australians $19 a day for everyday costs plus a separate $30 charge for accommodation each day. The Government would continue to fully fund direct care. 

Federal Government spending on aged care amounted to roughly $1,000 per person last year, while the Aged Care Taskforce expects this rise to $3,000 per person per year over the next four decades.

With a projected shortfall of aged care beds and home care places, funding changes need to occur in the short term to prevent more providers from shutting down and increasing that shortfall.