Families face care bills

21:50, Jun 13 2012

The cost of building new retirement villages to cater for the predicted growth in the country's ageing population could fall on residents and their families, says a Blenheim rest home operator.

Oceania Group marketing and village operations general manager Jeremy Leach said health board funding to run rest homes did not provide sufficient financial incentive to justify the capital expenditure of building new homes.

The Oceania Group, which owns Redwood Lifestyle Care and Village in Blenheim, operates a business model where residents buy their assisted living suites outright.

When the client dies or moves on, Oceania buys the suite back less 10 per cent a year for a maximum of three years [a maximum reduction of 30 per cent].

They are effectively putting capital into the rest home, Mr Leach said.

"Somebody has to pay," he said. "So we have to look at contributions from residents and their families to help fund the kind of choices people want."


The Aged Residential Care Services Review in 2010 estimated the country's population of over 65s will grow by 84 per cent - from 512,000 to 944,000 – by 2026.

The report predicted an increase of between 78 per cent and 110 per cent in new beds to accommodate that increased demand. This added pressure would be felt as early as 2012.

However, Bupa Care Services managing director Dwayne Crombie said the industry was still not building to meet future demand.

The sector needed more investment from the Government but some of the costs could fall at the feet of residents, he said. "Government pays for your economy seat and if you want to sit further up the plane then you have to top up."

Bupa Care Services was looking to spend $60-$70 million a year on new aged-care beds and retirement village units, Mr Crombie said.

However, their only property in Marlborough, Waterlea Rest Home, was not on Bupa's immediate radar, he said.

Oceania's Mr Leach said privately owned rest homes might not benefit from sufficient economies of scale to invest in their properties.

Ashwood Park Retirement Village owner Ross Bisset said rest homes in Blenheim were already at full capacity.

"From the Grant Thornton report, capacity nationwide is not going to cope with the increase in population," he said.

Martin Taylor, head of New Zealand Aged Care Association, which represents rest home providers, said immediate action was needed.

Increasing the capacity of rest homes was a three-year process, which involved finding a suitable location and applying for resources consents, he said.

"If we want more beds by 2015 we need to start planning for them now and that is not being done."

The Government had to invest in building new rest homes, Mr Taylor said.

The care services review also warned that workforce demand in the sector would increase between 50 per cent and 75 per cent by 2026.

Mr Taylor said the sector might look to overseas workers to fill these positions. "Kiwis won't do the work because it is low paid but even overseas workers are going to other countries now for higher wages."

Mr Leach said the industry always faced challenges around maintaining staff.

Mr Bisset said if new rest homes were built, the biggest problem facing the sector would be finding the extra staff.


A 2010 Aged Residential Care Services Review commissioned by health boards and providers estimated:

New Zealand's population of over-65s would grow by 84 per cent from 512,000 in 2010 to 944,000 by 2026.

An increase of between 78 per cent and 110 per cent in new beds to accommodate that increased demand.

The added pressure would be felt as early as this year

The Marlborough Express