Apr 06, 2022

More aged care homes at risk of closing if providers forced to pay higher wages

Aged care homes at risk of closing

Treasurer Josh Frydenberg dodged questions on the weekend about whether the government would fully fund pay rises for aged care workers.

“When it comes to government provision of residential care we take responsibility for that,” he said on the ABC’s Insiders program.

“There’s an independent pricing authority that determines, based on all the input costs, what that increase in subsidy will be,” he said, but failed to be drawn further on the topic.

With nearly 60% of all aged care facilities already operating at a loss, the treasurer’s comments have raised concerns nursing homes will be forced to close if operators have to chip in for the widely expected pay rise.

The Fair Work Commission is expected to finalise an increase for aged care workers soon, after unions lodged claims for a 25% pay rise.

The Opposition party has pledged to fully fund the increase.

The latest report from aged care accountancy expert StewartBrown revealed that in the September 2021 quarter, the average operating results for residential aged care homes across Australia was an operating loss of $7.30 per bed per day, despite the additional Basic Daily Fee supplement of $10 per bed day.

More than half (56%) of homes made an operating loss. 

Leading Age Services Australia chief executive Sean Rooney told the Herald Sun that at least half-a-dozen facilities had already closed this year due to “chronic underfunding”.

“The ability to consistently meet the needs of people in care has been compromised.”

Mr Rooney said the treasurer was “confused”.

Of the new funding model, he said, “It’s still allocating a pie and if the pie is not big enough, it doesn’t matter how you slice it.”

The Independent Hospital and Aged Care Pricing Authority (IHACPA) will only inform government decisions on funding increases in residential aged care from 1 July 2023 for the 2023-24 year.  

StewartBrown senior partner Grant Corderoy told the Herald Sun it would be a “disaster” if providers had to chip in to cover higher wages for staff. He expected “more homes to close” if they did have to pay higher wages.

Opposition aged care services spokeswoman Clare O’Neil told Herald Sun that Frydenberg’s comments were a “desperate diversionary” move.

She said “many aged care homes will close” if the government doesn’t fund the cost of wage rises later this year.

The situation risks escalating into a “national catastrophe” if it fails to do so, she added.

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