KPMG says Living Longer Living Better will deliver $3 billion extra in bonds – for High Care only

Last week we highlighted concern by aged care operators that Bond receipts will fall under the new Aged Care (Living Longer Living Better) Bill 2013. A reader directed us to the KPMG Scenario Analysis commissioned by the Department of Health and Ageing. We got a copy.
KPMG actually concludes High Care operators will receive $3.4B extra in bonds in 2014/15 from residents. They forecast it will generate $93.5 million in additional surplus (increased investment income or avoided cost of debt) to the sector bottom line.
However KPMG also identifies that Low Care operators will in fact lose Bond receipts of $403 million, reducing their bottom line funding by $68.4 million.
There are 34,000 people receiving Low Care, so $68 million equates to $2,000 per year per resident - which is substantial, especially for regional operators with a high proportion of Low Care residents.
This is a problem for the likes of Catholic Health Australia, who pointed out to the Senate Standing Committee on Community Affairs that it’s mostly the not-for-profit providers who provide Low Care and they will lose the $68 million. The Senate Committee agreed and recommended early monitoring and if funding problems are occurring that transition grants be supplied to operators as recommended in the original Productivity Commission report.
ACSA has jumped on this too, asking the government to commit to transitional support including loan guarantees and bridging finance. ACSA has also asked for:
• All reference to the Workforce Supplement be removed from the legislation given the major concerns about it
• The Aged Care Pricing Commissioner remain independent of Dept of health and Ageing and its decisions be binding – not simply advisory
• Co-payments for Hone Care be removed for this legislation and be phased in more slowly
• The lifetime cap of $60,000 (indexed), being the maximum additional total lifetime payment anyone needs to pay for aged care under a means test be further analysed for impact on consumers and the sector
Will the legislation go through? Julie McStay of Hynes Legal pointed out in her latest newsletter that the Coalition only supported one amendment in the Senate Standing Committee, the renaming of the dementia supplement. It looks like they will not be holding up the legislation – it would take a future workload off their desk.