How will residents get the cash for ongoing care?
CommBank Chief Economist Luke Yeaman says big pressure for ‘user pays care’ is coming. Will village operators be required to cash flow say five years of dementia care for a resident?
Over the weekend, I was preparing a presentation for the LEADERS SUMMIT while also reading the latest SATURDAY digital magazine with Luke Yeaman as the cover article. And this train crash dawned on me.
There is a strong likelihood that a large number of village residents will need weekly cash to fund their care support but the village operator will have their cash tied up until they leave the village.
Why is it likely that residents will need the cash? Luke, an ex-Treasury heavyweight that advised Prime Minister and the G20, says simply:
One traditional village operator to our knowledge is on the same page – RetireAustralia. They offer a Trust Account system for residents moving in where a suggested $30,000 is placed to be drawn upon if care is required. Sensible.
The Federal Government’s Budget deficit will increase for the next 10 years. Productivity has stalled, and with it tax collections. The Government can’t afford the aged care system now, let alone in five years when the demand for aged care will increase by 75%.
The Government says it will pay for care and for a percentage of other services, especially if you are a pensioner. This is now unlikely to hold for very long politically. Luke says:
Just 11% of people over 70 do not own their own home, but 60% are on part or full pension.
Support at Home is historically just 20% ‘care’ services such as nursing and allied health. The rest is ‘home support’ like cleaning and domestic assistance and is required every week. A frail senior can clean their own home (perhaps) but what happens when dementia is involved?
The chart below is my train crash moment.
The data clearly shows that people living with dementia in residential aged care match the number of people living without dementia. Obvious really, but this also means that village residents who can’t get an aged care bed and they or their family insist they stay in the village will also have dementia at the same rates.
How will they look after themselves in these ‘non-care’ environments?
Luke says they will have to pay in the near future. Showering three times a week (it should be seven times) at say $120 a shower is $360 or $19,000 a year, for plausibly up to five years.
My mother had dementia and lived for 10 years at home with paid help, before her final two years living in an aged care home.
Then there is cleaning, shopping, companionship. Soon we are at $30,000 a year, times say 20 people in a village.
How many residents have this cash? Can village operators cash flow it?
Private aged care operators know this problem – they have built it into their business model that they attract residents who have an average occupancy of just four years. They also have contacts that allow them to dip into the DMF payout.
Non-private aged care operators have a population that averages nine years in the village with 42.6% moving out to residential aged care – but very soon they won’t be able to.
Many readers will be saying that this is a storm in a teacup, but as village veteran Jim Hazel (and ex-banker) says, bad things happen.
As many readers also know, we receive regular calls and emails from village Resident Associations distressed about the fact that village management leaves the village at 5pm when ‘sundowners’ appear, and are missing on weekends, leaving it to residents to be carers of residents with dementia.
This is real today and a challenge to basic instincts of genuine care for residents.
Do we wait until tomorrow for a solution to be regulated? Will that regulation include cash flowing support in the home for village residents?
Luke was referring to international influences on our economy but this comment equally applies to the emerging reality in the village sector:
Will the sector get on the front foot, or wait for this train crash?
