AGED care facilities face a revenue black hole of $750 million in the next 2½ years as a result of federal funding changes, a detailed analysis commissioned by the industry shows.
In a blow to federal government aged care reforms unveiled in April, the report for a leading industry organisation estimates that 89 per cent of aged care facilities would face ”unrecoverable” losses in revenue under funding changes beginning last month.
There are growing doubts about the financial viability of the reforms, which promised a $3.7 billion revamp but contained only $576 million in new funding over the next five years.
The redirection of funding away from residential care costs and the introduction of the more user-pays Living Longer. Living Better plan enabled the government to announce significant reforms at minimal extra cost.
But Gerard Mansour, the chief executive of Leading Age Services Australia (LASA), said that under the new financing plan there would ultimately be a reduction in care funding for each affected resident of $20,000 to $23,000 a 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,” Mr Mansour said.
The average expected loss per aged care facility was more than $125,000 each year, with some facing shortfalls of up to $560,000, concludes the analysis, which was undertaken by the consulting firm the Centre for International Economics.
”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. He called for an additional $1.1 billion over the next four years to counter the redirection of care funding.
An earlier analysis by the firm Grant Thornton forecast that the changes would result in an effective cut of about $500 million this financial year, a figure rejected as ”a fiction” by the Minister for Ageing, Mark Butler.
He has said that the government last December increased funding by $2.3 billion to meet cost increases in aged care.
Mr Butler has also announced that growth in payments for nursing home services would be pegged back after what he said had been several years of rises in payments.
The National Aged Care Alliance has called for an independent and comprehensive investigation into the cost of aged care to be established urgently.
Mr Mansour said aged care providers believed the government had to change the way it funded aged care from a system which was artificially constrained by budgetary limitations, to one which matched care funds to people’s needs.
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