Shortage of rest-home beds looms

CATHERINE HARRIS
Last updated 05:00 04/01/2014

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New Zealand could have a severe shortage of rest-home beds within four years.

A Grant Thornton report in 2010 estimated that the country would need an extra 12,000 to 20,000 aged-care beds by 2026, but the Aged Care Association says that forecast fails to take into account the 50 or so rest homes that have closed in the past five years.

Association chief executive Martin Taylor said private-sector returns were insufficient to meet that target. "I see the smaller rest homes closing," he said. "I see retirement villages masking those closures for a number of years, and then, I think, around 2017, starting 2015, you'll start seeing chronic shortages at some DHBs [district health boards]."

Boards would increase in-home care, but it would not solve the problem, he said.

Nachi Moghe, of independent research house Morningstar, said a shortage of aged-care beds was on the cards. He said that based on a recent government study, demand for retirement units would almost double to 3000 units a year over the next 15 years. The current build rate of 1100 units a year was well below that, "causing a massive shortage of retirement homes in the country if supply problems aren't resolved".

Taylor said the shortage of beds had been masked by a drop in rest-home usage over the past few years, and increased use of hospital care or home-support services. That would change as more baby boomers retired and the population grew. DHBs were revising their figures, but they were looking at the past five years to predict the next five, "and even doing that, some of them are showing shortages".

The building boom in the retirement village sector would not solve the problem, Taylor said.

New Zealand's three listed retirement village companies are ramping up their provision of beds, with Ryman Healthcare lifting its build rate to 700 retirement units and beds a year. Summerset is aiming for about 300 units annually from next year, and Metlifecare is planning 200-plus units a year. Many of these beds will be for dementia or hospital care, which earn a higher subsidy.

Taylor said retirement villages could afford to build aged-care beds because they could cross-subsidise them. "No-one wants to go to a facility that can't offer them the care when they need it."

Outside retirement villages, the Grant Thornton report showed a quarter of rest homes in 2010 were breaking even and another quarter were making a cash loss. Not-for-profit rest homes were doing better as they were generally slightly larger and did not pay tax. Taylor said those that were not doing well were often rural and smaller.

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BY THE NUMBERS

The number of people turning 75 every year is expected to double to 16,000 in the next 15 years.

Over 85s, the biggest users of aged care, are expected to double in number to 116,500 by 2026.

Bed shortages may begin to appear this year in some regions.

Replacing old facilities is an issue for rest homes, and user-pays charges may become common.

Sources: Morningstar, Grant Thornton 

- BusinessDay

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