Aged Residential Care funding model review
The existing funding model was developed in the 1990s and may no longer be the best way to fund aged residential care (ARC).
A major review of the funding model for services is currently underway.
It is being done by Ernst and Young, supported by a cross-sector steering group, and sponsored by DHBs and the Ministry of Health.
The Review will offer ideas for future funding model options and is due to be completed in early 2019.
Around 33,700 people per year require aged residential care in New Zealand.
This number is anticipated to increase to 58,000 people over the next 13 years.
A growing number of people will need aged residential care (ARC), whether:
- they can no longer manage in their own homes
- have dementia
- require hospital-level support.
As Chris Fleming, DHB Lead Chief Executive for Health of Older People says:
“The existing funding model was developed in the 1990’s and while fit for purpose at the time, has failed to keep pace with the changing needs of the resident population.”
The Review will:
- examine the existing funding model, along with its strengths and weaknesses
- look at policy and funding relationships between aged residential care providers, and health services such as general practice, pharmacy and allied health services
- develop and prioritise future funding model options.
- DHBs spend about $1 billion per year on long-stay ARC. Aged care residents contribute a further $800 million towards the costs of their residential care – excluding any premium charges or other financial arrangements paid directly to aged care providers.
- Around one in six older people live with one or more long-term conditions.
- While people are living longer, the proportion of their years spent living with some form of disability-related dependency is increasing.
- Māori and Pacific Peoples tend to spend a greater period of their lives with a disability-related dependency, but are less likely than older New Zealanders to live in an aged residential care setting.
- There were 607,000 people aged 65 and over in 2013. This number is expected to grow to 1.6 million by 2063.
- The proportion of older New Zealanders living in aged residential care has been decreasing over the past ten years. Nonetheless, with significant population ageing, the number of aged care residents is expected to increase by up to 72% from now until 2031.