Covid-19

Why rest homes will get millions from taxpayers

A taxpayer top-up for residential care homes to be announced today should spark a broader conversation. David Williams reports

On Tuesday, director-general of health Ashley Bloomfield announced the aged care sector would get a funding top-up, and then, seconds later, that he’d launched a review of rest homes with Covid-19 cases.

He acknowledged pre-emptive measures taken to protect residents at these facilities, and how the vast majority were free from the virus. But, noticeably, he mentioned how the virus spread “quite rapidly” at some facilities, while cases at others seemed to be bounded quickly, with no further transmission.

The residential care sector was already in the spotlight after a recent spike in cases. That included at Christchurch’s Rosewood rest home, from which 20 residents were moved from its dementia unit to Burwood Hospital.

The precarious situation at rest homes was thrown into stark relief on Tuesday, with four coronavirus-related deaths reported, the country’s deadliest day of the pandemic. Three were associated with Rosewood.

“It is a sobering reminder of what is at stake here,” Bloomfield said. Seven of the country’s nine Covid-19-related deaths were in residential aged care.

Rest home operators bought protective equipment before it was provided by district health boards. Photo: David Williams

Announcements about extra funding for the aged care sector would be made “later in the week”, the director-general said. Surely that must mean today.

(Bloomfield said on Tuesday the money would “help offset some of the additional costs they are incurring to both prepare and look after people who may have or who do have COVID-19, for extra security and so on”.)

The financial top-up will likely be viewed as a sticking plaster when a bandage is required. Or invasive surgery.

The Aged Care Association has argued for years it’s underfunded, that the per-bed, per-night fees from district health boards just don’t cut it.

Association chief executive Simon Wallace tells Newsroom care home operators are making a living but “not making a profit” – at least, those not co-located with a retirement village, allowing those returns to subsidise the care operation.

Before Covid-19 emerged, the association was preparing an election-year lobbying campaign to highlight value of their nurses, hundreds of whom leave each year to take higher-paid DHB jobs.

The campaign has been scuttled, of course, but, because of the pandemic it’s arguable rest home staffing is more likely to be discussed now than if the lobbying had occurred.

Wallace describes privately owned rest homes and hospitals as a moat, caring for 35,000 people, and protecting public hospitals from being overwhelmed. Unions, meanwhile, paint a picture of over-worked staff at under-staffed facilities. Both views seem to ring true.

So there’ll be a chunk of money delivered in today’s announcement. What the Government can’t lose sight of, however, is how best to protect some of society’s most vulnerable, and, as has been highlighted by Covid-19, the people who care for them.

Tens of millions?

The Aged Care Association’s members are a broad church.

Owners include religious groups, welfare organisations, trusts, families, and stock exchange-listed companies. Its smallest member has about six beds, while big corporates, like Bupa, have about 4000 beds spread over 48 care homes.

Wallace says his association wrote to Prime Minister Jacinda Ardern last week seeking a financial assistance package. Asked if the Government package could be in the tens of millions of dollars, he says: “I would think so, yes.”

The need is presented by Wallace in four parts: initial set-up costs to the end of March, expenses related to the alert level four lockdown, the costs of a 14-day isolation period for new rest home residents, and the measures taken by a rest home with confirmed Covid-19 cases.

“In their readiness, they’ve had costs related to PPE [personal protective equipment], they’ve had costs related to extra supplies like sanitation supplies, they’ve had extra security costs to manage visitor protocols.”

Wallace says it is best clinical nursing practice to have dedicated staff responsible solely for the care of residents who are isolated. “This ensures that they are not mixing with other residents whom do not require isolation.”

Cleaning happens more regularly. Wage bills go up when staff are off-work sick or isolated, or because they can’t find childcare, or adequate public transport.

Tablets have been bought to enable residents to video chat to loved ones. Extra shifts have been given to activity coordinators and diversional therapists.

Many rest homes have also had to pay caregivers more to retain them, Wallace says. Newsroom asks, isn’t that a normal cost of doing business?

Not in this particular situation, he says, some staff are anxious about working and need extra support because of Covid-19. “There have been some cases where providing that extra payment is what is needed to get people to come to work.”

“We lose hundreds of nurses each year to DHBs.” – Simon Wallace

This taxpayer-funded top-up might be welcomed by the residential care sector, but what of its staff?

Many are over-70 or are immune-compromised and can’t work. That likely puts pressure on their colleagues to work harder.

Yes, the Government has offered a wage subsidy, with full-timers eligible for up to $585 a week, for 12 weeks. But does this apply to all care workers? Are some being paid just the subsidy, and nothing more? Are yet others being forced to cut into sick leave or annual leave if they can’t work?

Asked if the subsidy is being applied consistently by all association members, Wallace says: “I don’t know, I can’t comment on that because I just don’t know the details.”

Sure, the pandemic is uncharted waters, but should there be discussions about some sort of industry standard for wage subsidies? Wallace: “I think a consistent approach would be helpful, yeah.”

He thinks Covid-19 has brought his industry’s important role to the fore. But that doesn’t change the fact it’s under-funded, and it was like that well before the pandemic arrived.

Rest home fees vary between DHBs but, Wallace says, on average the bed day rate from the Government is roughly $200 a day.  

“That same bed in a public hospital would be $600-$1000 a day. And we’re providing registered nurse-level care. We’re providing a high level of care and services for what we get funded.”

Annual fee negotiations happen within the aged residential care steering group, comprising representatives from the industry, DHBs and Ministry of Health. Talks mostly centre on price, Wallace says. The industry models its “cost pressures” and an annual increase is agreed.

Last year’s increase – 3.2 percent – was the largest in 10 years.

“That has to cover all our costs, it has to cover all our staff costs, all our operating costs, all our food costs, CPI, yeah, all of that,” he says, adding: “It’s never enough.”

Something the association lobbied hard for last year was pay parity for its nurses with those at public hospitals. The 3.2 percent increase couldn’t cover that.

“We lose hundreds of nurses each year to DHBs,” Wallace says. “And that is because the majority of our members cannot, because of the funding, meet those pay rates.”

Today’s Covid-19-related top-up won’t address that. But Wallace and other industry figures clearly have the ear of the Government, right now, and the chance to argue the financial fundamentals of the industry are flawed.

But they’ll be loathe to push too hard during a crisis – especially before the completion of the Ministry of Health review into rest homes, and urgent inspections ordered by Chief Ombudsman Peter Boshier.

* This story has been updated with Simon Wallace’s comments that it’s best practice to have dedicated staff for isolated new arrivals at rest homes.

Help us create a sustainable future for independent local journalism

As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.

As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

With thanks to our partners