Understanding funding in aged care: understanding how the aged-care sector is funded is a challenging exercise. But what is clear is that providers receiving government funding should have to account for that funding.

Funding is a fraught word in the aged-care sector, as there is much to disagree about over funding. However, there seems to be one common belief--there is not enough money going into the sector to ensure a quality service. There is no such unanimity about whether any Government increase in funding should be passed on to the people actually delivering the care--our members and workers who have not yet joined NZNO or the Service and Food Workers' Union (SFWU).

If the only source of wage increases is to be Government funding--and so far we have not been able to persuade employers to share their fantastic profits with our members--then NZNO and the SFWU believe there is not enough money going into aged care to boost wages above poverty line wages. The word "poverty" is not used lightly--one consequence of the low wages in this sector is that most of our members won't be able to participate in the KiwiSaver scheme, which the Government says is intended to improve financial wellbeing, particularly in retirement. This is because the minimum contribution for KiwiSaver is four percent of wages. Our members simply cannot afford that much from their wages each week. For many, contributions to KiwiSaver would obliterate any wage increase of the last year.

Money not going to workers

Currently, there is no mechanism to ensure government funding goes where it is intended, and NZNO and the SFWU have frequently raised this issue with the Government. Health Minister Pete Hodgson stated in last year's Budget that "The aged care funding package in Budget 2006 should allow for significant pay increases for New Zealanders working in the sector". (1) We pointed out to him then, that there was no way of ensuring the money would find its way to our members. In August last year Hodgson, in a speech to NZNO's gerontology section conference, said: "I freely acknowledge that the catch up for nurses, but also for the many other staff working in the sector, is not yet complete". (2)

Aged-care funding comes from taxpayers. The taxpayer, via the Government, funds services for every older person assessed as being eligible for publicly funded health and disability services. Once that assessment has been made, and that is another fraught area, the older person is entitled to subsidised care.

Funding is fixed annually and the funding year runs from July 1-June

30. The funding round begins with the Budget, usually in Ray, and sets out the total amounts available to the sector. In last year's budget there were two amounts for aged care: $39.5 million Future Funding Track money, for all types of aged care, including home-based care; and $17 million per year for the next four years, just for residential aged care. After the Government has announced the funding, the money is then divided among the 21 district health boards (DHBs), which administer it on behalf of the Government. The DHBs then negotiate with providers on the exact amount of the increases for residential aged care. No private provider can receive funding for subsidised care unless the provider has entered into the standard Provider Contract with the DHB. That contract sets out all the requirements providers must meet to receive and continue receiving government funding.

Most private providers are represented at the DHB negotiations by a body called Healthcare Providers of New Zealand (HPNZ). At the start of the negotiations for the 2006/2007 year, DHBs offered an increase of 2.93 percent to providers/employers, which was rejected. HPNZ finally negotiated two different increases: 3.1 percent for aLL subsidised rest-home beds and 5.96 percent for all other subsidised beds. The funding is for subsidised residents only.

Sections D and E of the Provider Contract set out the service specifications, which include accommodation, facilities, equipment, food, laundry and cleaning services, garden areas, clinical equipment, primary medical care and "sufficient staff to meet the health and personal care needs of all residents at all Hines". (3)

The contract makes it very clear that funding is exclusively for subsidised residents and that providers must use the money for the services for which they received it.

Problems with providers

It is at this stage of the funding process we strike problems with some providers. We understand the Government and DHBs also expect the providers/employers to pass the funding increases through to their employees. Host employers in the sector also readily accept they are bound to pass on any increase and they do. Unfortunately, there are some employers who refuse to pass on increases to our members. Some get angry and abusive when we claim they are bound to pass it on. Some providers have told us they will not pass the money on because they want to invest it. Others have refused because they say the Government has burdened them with additional wage costs, eg the increase in the minimum wage and the extra week of annual leave.

As far as we can ascertain, providers don't have to account for every cent of this funding. This means some providers can and do put the funding to uses other than those for which it was provided.

The DHB Provider Contract should be amended to explicitly state every provider must pass on the total value of any funding increase to employees. Providers should also have to account for every cent of taxpayers' money they get.

A simple way to keep employers honest is to ensure any funding increase is passed on via collective bargaining. NZNO and the SFWU want a transparent funding system in aged care--that would be for our members and for those they care for.

References

(1) Cullen, M (2006). Budget 2006. Wellington: The Treasury.

(2) Elderly care top of Hodgson's mind. (2006) Howick & Pokurongo Times. September 4, 2006. Auckland: Reay Neben (publisher).

(3) Ministry of Health. District Health Board Provider Contract with Aged-Care providers, www.moh.govt.nz. Retrieved 23/02/07.

industrial adviser Rob Haultain