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Give us a rest

Providing accommodation for the frail aged is a difficult business. Profitability is marginal at best. Government subsidies for wages and running costs fall short of the real costs of care. Construction costs outstrip the capacity to raise capital in many regional areas or low socio economic communities. Financial survival is only possible by admitting wealthier residents to compensate for those unable to pay.

Running an exclusive frail aged home for the poor and homeless is becoming almost too hard. Last year it cost about $15 million to build a 100 bed aged care home. With little or no government assistance, funding came from residents. They either provided a loan (accommodation bond) or were levied daily accommodation fees.

Local house prices have inflated the size of the bonds being charged. Investor owned companies are cashing in on the property market. Their core business has less to do with aged care than maximising return from the assets of the frail elderly. The average bond charged is now $127,000.

But house prices are far lower in regional areas and certainly well below average in poorer communities. Given that the cost of a new bed is near $130,000, it is obvious that aged care providers will seek the higher bond paying residents. This exacerbates the plight of those without houses or with few assets from which to pay accommodation charges.

In aged care, ‘money talks’. This presents a major dilemma for those committed to serving the poor.

As it stands, aged care homes will need to attract a combination of fee and non fee paying residents to remain viable. This balance will be determined by the capital debt of the home. Organisations that previously ran hostels and homes exclusively for the poor will find the nature of their service altering. It doesn’t follow that the need for their service changes. Rather, as people age they lose not only their physical and mental capacities, but also become less wealthy. So much so that by the time they require constant support for their frailty and sickness they are likely to be on low incomes with less disposable assets.

Up to 90 per cent of aged care home residents are pensioners. Their need for emotional, spiritual and physical support heightens as their capacity to pay for it declines. This means that any benefits from cross subsidising poorer residents with fees from those better off still results in a marginal business proposition. It only becomes more sustainable if residents are required to draw down more deeply into their hard gained assets.

This raises the ire of those who have struggled to “pay their way” throughout their lives, especially when they only have modest assets to show for it. Surely there is a role for public subsidies to offset the costs of poorer residents. Under the present arrangements, a balance can still be struck but it is tenuous.

The government has an obligation to all elderly people, regardless of their circumstances. Where prospective residents have low income and assets, government assistance must match the average contribution other residents can make. This means that government subsidies need to be realistic. The Commonwealth aged homes policy has skewed public benefits towards direct care funding and away from accommodation costs. In other words, the public contribution towards care costs is in exchange for individuals paying for their accommodation. Under this model, low income and homeless people contribute 85 per cent of their pension. Better off people are also charged an income tested fee on top of the 85 per cent pension amount. Again the incentive is to admit fee paying residents while meeting the minimum required quota of low income residents.

At present, people unable to make a contribution to their accommodation in residential facilities receive a $16 per day concessional subsidy. Most commentators consider this to be $4 per day short. This places the access for low income people at risk. Where a provider has a choice, the incentive is to take a resident who offers them more in real terms.

The St Vincent de Paul Society’s mission will see it seeking to admit as many residents as possible who are unable to make a contribution to their accommodation costs. This will become extremely marginal if the government subsidy falls short of the capital costs of the person’s room. So it is in the interests of everyone that the government steps up to the mark and keeps its accommodation subsidy at realistic levels. Changes underway in the aged care program will see only the sickest and frailest admitted to aged care homes. Many more elderly people will need support in their own homes. Home and community care services are rapidly expanding.

Organisations like Vinnies have a long history of visiting people in their homes and responding to basic needs. With an ageing population, this home visiting will take on an even wider brief. Not only will home visits be able to offer basic support, but connected to an organisation that also has professional home based aged care services, they will add even more value to the person in need. Possibly a new phase in the Vincentian way! Moreover, conducting residential aged care homes provides an integrated approach to services for the elderly and in turn better meets their needs as they become more socially isolated and frail.

This is a future that Vinnies can grasp with enthusiasm. It obviously involves adaptation and innovation. It also requires strong advocacy for the poor and marginalised. But it definitely reaches out to a group in the community who are vulnerable and at risk.

Francis Sullivan is the director of Catholic Health Australia.

This article was taken from The Record – Spring 2006.

About Vinnies

St Vincent de Paul Society is a lay Catholic organisation working towards a more just and compassionate society.

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