How will aged care providers spend the government’s $10 basic daily fee supplement?

The supplement was announced in the May federal budget as part of the government’s $17.7 billion response to the Royal Commission into Aged Care Quality and Safety. It is intended to be spent by providers on improving the care and services they offer residents, particularly in relation to food and nutrition.

To receive the funds, providers must agree to submitting quarterly reports on food and nutrition spending, and the quality of those daily living services. Providers will have to complete a report containing nine questions, including how much is spent on pre-prepared food, how many hours cooks or chefs are employed on site, and how much is spent on allied health support, such as dieticians and speech pathologists, who can help improve residents’ nutritional intake.

However, with the latest report from independent aged care accountants, StewartBrown, showing that 54% of aged care homes are operating at a loss (69% in rural and remote areas), it’s likely some providers might spend the supplement just to keep their doors open.

Grant Corderoy, partner with StewartBrown, told HelloCare many providers are losing $8 or $9 per day on daily living costs such as food, laundry and maintenance.

“Because they’re losing, in a sense that means that they’re using ACFI direct care surpluses to supplement the loss they’re making in basic daily fees,” he said. 

“So, the $10 supplement could be used to recoup in relation to your everyday living.”

For providers not already delivering adequate food that is high quality and to the residents’ satisfaction, their “first priority” should be to supplement spending on food and catering to ensure they do meet those objectives, said Corderoy. 

But “if they feel they are meeting those objectives, then there’s no requirement to spend it on food”. 

“Then how providers use it is really up to the providers’ discretion,” he continued. 

“It could just go to the bottom line. They could receive the supplement and not spend any of it,” Corduroy added. 

But he said “it’s more than likely” providers will use the supplement to improve everyday living services and care.

The fact the outcomes will be linked with the star rating system will be an added incentive for providers to use the funds wisely. 

“The providers would want to be doing the right thing because it would directly affect their star rating,” Corderoy pointed out.

Anton Hutchinson, whose family has owned Canberra Aged Care for over 30 years, told HelloCare the quality of their food and nutrition is already high. The home spends about $13 per day per resident on food and employs chefs seven days a week. 

Because the home doesn’t require additional spending on food or nutrition, it is free to spend the supplement on “the whole business”, Hutchinson said.

Hutchinson believes the government is trying to “weed out” providers that don’t spend enough on food, and is rewarding those who are “doing the right thing”, such as their own.

“But it’s still a long way short of where we need to be.”

Ciarán Foley, Chief Executive of Allambie Heights Village, is “cynical” about the extra $10 a day, saying it amounts to an extra cappuccino and pastry a day or employing one additional worker.

“It goes nowhere near the royal commission’s recommendation regarding 200 minutes of care per resident, of which 40 minutes have to be allocated to a registered nurse.” 

He continued, “In my view, our older Australians are worth more than a cup of coffee and a pastry per day.”

Foley said conversations about aged care focus on the funding of aged care providers, but in reality the government is financing the care of older Australians. He said it’s a point that is often overlooked.

The government is “subsidising the residents and they’re asking operators to engage in work and engage in accommodation and care that the government does not wish themselves to provide.”

He added, “That’s why over 70% of our industry is working … at a financial loss.”

Will the $10 be spent on increased staff costs?

With providers having to cover the 0.5% increase in the superannuation guarantee and the recent 2.5% increase in the minimum wage delivered by the Fair Work Commission from 1 July, the supplement could well be directed towards the increase in wages.

Though the 2.5% pay increase for aged care workers is “long, long overdue”, it comes at a “considerable cost” to providers. For a 100-bed home, it amounts to a $140,000 increase in wages, Hutchinson said.

He would like to see the government fund higher wages for staff on top of the supplement.

Corderoy agrees the government should be contributing more to staff costs.

“I think there’s no doubt the government’s funding is still well short of providing for the increase in employee entitlements,” he said.

“I don’t think anyone would say aged care staff don’t require higher remuneration. It’s going to be up to the providers to be able to financially provide it. Most providers would love to if they had the financial wherewithal.” 

The government’s strategy of pushing the aged care worker remuneration determinations onto the Independent Hospital Pricing Authority will simply push the decision out until July 2023.

“That’s too long,” Corduroy said.

“The government has correctly identified that we need to attract staff and retain staff, and have staff with qualifications – they’re all very important things … but the thing they’re forgetting is we need to pay them more,” he said.

Foley said there’s no doubt aged care staff should be paid more. If operators were able to set their own prices, they would be able to pay staff “the highest rate”, he offered.

How do you think aged care providers will spend the government’s $10 basic daily fee supplement? Share your thoughts below.