The True Cost of Aged Care – Who’s Really Paying the Price?

26 June, 2024

As our society ages, the costs associated with nursing home care are becoming a burden that many vulnerable elderly people and their families are struggling to bear. It’s staggering to think that some are being charged up to $3 million just to secure a place in a nursing home, while the industry claims financial hardship.

In addition to these astronomical accommodation costs, residents face daily fees for essential services like meals, cleaning, laundry, and management, which can total over $100,000 annually. Despite these exorbitant fees, half of all Australian nursing homes are reporting financial losses. This begs the question: where is all this money going?

Beverley Baker, president of the Older Women’s Network, suggests that these homes are claiming poverty to maximize shareholder profits. Her assertion that the industry is more interested in extracting as much money as possible from taxpayers and the assets of residents is a harsh indictment of the sector.

The revelations are particularly troubling considering they come just three years after the Royal Commission into Aged Care exposed widespread abuse and neglect in the system. Substandard care, including cases of malnutrition, assaults, and even maggot-infested wounds, were highlighted, yet little seems to have changed. The latest findings from the Productivity Commission documented tens of thousands of cases of sexual abuse and neglect in 2022-2023. Many homes still fail to meet the required 200 minutes of daily care per resident.

Despite these shortcomings, the industry is pushing for higher accommodation fees under upcoming aged care reforms.

Every nursing home resident also pays a basic daily fee of $61.96 and potentially an additional means-tested care fee of up to $33,309.29 per year. On top of this, 40% of homes charge “additional” or “extra service fees” of up to $100 a day. These fees are not subsidized by the government, adding to the financial strain on residents and their families.

To address these issues, one proposed solution is to regulate nursing homes similarly to health insurance funds. This would involve mandatory transparency about financial transactions, including management costs and benefit levels, overseen by an independent entity. Another idea is to guarantee nursing homes a profit per resident linked to the quality of care, with higher incentives for providing care in under-serviced areas.

Ultimately, what we need is greater visibility into where taxpayer and resident money is going. Transparency and accountability are crucial to ensure that the funds are used to improve care standards rather than line the pockets of shareholders. Reforms must be pushed to shed light on these financial dealings and ensure that the care provided to our elderly population is both compassionate and sustainable.

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