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Aged Residential Care funding model review

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 thirteen years. Whether they can no longer manage in their own homes, have dementia or require hospital-level support, a growing number of people will need aged residential care.

A review of the existing funding model for aged residential care is underway, under the guidance of a cross-sector Steering Group, and led by Ernst & Young, the Review will look at alternative funding models for aged residential care. 

Have your say

Stakeholder forums were held in Auckland, Cambridge, Wellington, and Christchurch in July, bringing together a broad range of representatives from the aged residential care sector.

A number of aged residential care providers, DHBs, clinicians, interested groups and consumers of aged residential care services discussed current and future models of aged residential care funding.

Now it’s your turn. We want to hear your feedback on what an aged residential care funding model could look like for New Zealand.

Please review the presentation below first, which includes guiding questions throughout, then submit your feedback by 21 September 2018. 

View the presentation:


To submit feedback, fill in the survey


If you have questions about the presentation content or the Review, contact

What is a funding model?

This Review focuses on the funding model used to fund aged residential care as it applies to the current models of care operating across the sector.

A funding model is a means to allocate financial resources.

Funding models influence how consumers, funders and providers behave, through the incentives they create.

District Health Boards are the principal funders of aged residential care. DHBs have a contract with rest home or hospital owners to provide long-term residential care to residents, who are eligible for government funding.

Why a Review?

The current funding model was created nearly twenty years ago. Questions have been raised by the sector and others as to its relevance, and whether or not it is fit for purpose. We’re looking at the relevance of the model in both the environment today, and as we plan for anticipated future growth in the aged residential care sector.

 “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.”

Chris Fleming, DHB Lead Chief Executive for Health of Older People

What the Review will cover

The Review will examine the existing funding model, along with its strengths and weaknesses. The Review will look at policy and funding relationships between aged residential care providers and health services such as general practice, pharmacy and allied health services. The Review will then develop and prioritise future funding model options.

Aged Residential Care facts

  • DHBs currently spend about $1 billion per year on long-stay aged residential care. Aged care residents contribute a further $0.8 billion towards the costs of their residential care – excluding any premium charges or other financial arrangements paid directly to aged care providers. 
  • Around 1 in 6 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.
  • Maori 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 10 years. Nonetheless, with significant population ageing, the number of aged care residents is expected to increase by up to 72% from now until 2031.

Related links

  • ARC demand planner: View our Demand Planner for District Health Boards, residential care providers, and any other interested parties to use to predict future demand for Aged Residential Care services.
  • Healthy aging strategy: A Ministry of Health publication presents the overarching direction and action plan for the next 10 years, in regards to the health and wellbeing of older people.
  • NZ Health Strategy: The New Zealand Health Strategy sets the direction of health services to improve the health of people and communities.
  • Improving the lives of people with dementia (Ministry of Health, 2014)

Further information

Media contact: Jana Keir, Senior Communications & Engagement Advisor, TAS, 027 202 0676.

General enquiries contact: