Nursing homes financial future hinges on charging wealthier residents more for care, providers say

Wealthier nursing home residents must pay more out of their own pocket for food and other day-to-day services, or risk the financial collapse of the sector, key providers warn.

Providers representing about 20 per cent of the nation’s aged care beds say the $58.98 a day fee cap is inadequate to cover the costs of day-to-day services.

Wealthier nursing home residents should be charged more for day-to-day food and services than the current daily fee cap allows to help save a sector in significant financial peril, a growing number of aged care providers say.

Providers representing about 20 per cent of the nation’s aged care beds say the $58.98 a day fee cap, the maximum they can claim for a resident regardless of that person’s wealth or whether they are a self-funded retiree, is inadequate to cover the costs of day-to-day services such as meals, cleaning, laundry, heating and cooling.

Catholic Health Australia, Opal Healthcare, Anglicare, and Southern Cross Care (Qld) say costs for those items have risen sharply since the Covid-19 pandemic, leaving many providers operating at a loss.

The operators say the Basic Daily Fee cap, set at 85 per cent of a single person’s basic pension, should be removed for self-funded retirees, but kept in place for aged pensioners.

“Aged care providers are facing soaring costs but simply cannot meet them with this out-of-date fee cap in place,” Catholic Health Australia chief executive Pat Garcia, who first called for the change in a pre-budget submission in February, said.

Pat Garcia. Picture: Supplied

Rachel Argaman.

Opal HealthCare chief executive Rachel Argaman has joined the push, saying with the current population of people aged 85 and over projected to grow from 534,000 in 2021 to 1.28 million by 2041, an increase of more than 140 per cent, “we need to find a way to augment existing funding”.

“Taxpayers already provide 75 per cent of costs through government funding,” Ms Argaman said.

“To maintain a quality aged care system that can properly look after everyone, including those who can least afford it, it makes sense to ask those who can afford it to contribute more for their care.”

The call comes amid a financial crisis in Australian nursing homes – 66 per cent of private providers currently operate at a loss, with facilities losing an average of $28 per resident each day.

Aged care is one of the federal government’s largest spending programs, with $27bn budgeted for in-home and residential care this financial year, rising to almost $35bn by 2025-26.

The federal government is responsible for funding aged care, and how it manages the sector’s parlous financial situation will be closely watched in the upcoming budget.

Tom Symondson, chief executive of Aged and Community Care Providers Association, the peak body representing providers, said the current financial state of the sector made it important to open up a “national conversation” about aged care funding sources, including consumer contributions.

“We believe every option should be on the table as part of these discussions. We need to consider asking those who have the means to pay more for their care. It is only fair,” Mr Symondson said.

Tom Symondson.

Patricia Sparrow. Picture: Supplied

Council on the Ageing chief executive Patricia Sparrow said “any conversation on the way aged care is paid for needs to look at the system as a whole and ensure that consumer protections aren’t eroded”.

“All aged care residents regardless of the ability to pay need a minimum aged care guarantee so we don’t end up with a ’have’ and ‘have-nots’ system,” Ms Sparrow said.

The Basic Daily Fee cap was introduced in the 1980s to reduce the incentive for nursing homes to admit people who could have been cared for in hostels.

“Meeting all the costs of meals, cleaning, maintenance, laundry and other day-to-day services for less than $59 per day is almost impossible and most providers around Australia are losing money in trying to meet these costs under the current cap,” Anglicare chief executive Simon Miller said.

“We believe the safety net should stay in place for those who need it to ensure every Australian has access to dignified aged care.”