Outdated law keeps aged care from growing with ageing population

New nursing home accommodation costs $40.32 per bed per day over 25 years to build and fit out, a new analysis has revealed, compared with a legislated cap on the per-bed payment of just $26.88 per day.

The $13.44 shortfall between the cap and the true cost of accommodation is preventing the aged care industry from building desperately-needed new nursing home places.

A multi-denominational coalition of eight national aged care provider groups has commissioned Access Economics to assess the true cost of constructing and fitting out high care aged care facilities.

Under the Aged Care Act 1997, a maximum Daily Accommodation Payment of $26.88 per bed can be paid by the Government or levied to eligible residents to pay for the cost of constructing residential aged care.

However, based on building and fit-out costs nationally, Access Economics has calculated that accommodation for a single aged care facility resident costs an average of $187,460 to build and fit out.

Amortised over 25 years, Access Economics has calculated that this equates to a break-even cost of $40.32 per day - not including the cost of land and the care provided to the resident who occupies that bed.

The coalition has asked Minister for Ageing Justine Elliot to amend this anomaly.

"Australia's aged population is growing at a rate never seen before, and yet it is no longer financially viable to build new high care aged care facilities," said the CEOs of the coalition member groups.

"There's no reason the current government should need to defend the previous government's flawed funding formula. We are delighted that the Rudd Government has taken the issue of viability in high care aged care seriously, and we look forward to working with it to ensure the formula is amended to meet the real costs of providing aged care in Australia.

"At the same time we are keen to protect the right of all those who need it to access aged care -- the Daily Accommodation Charge must continue to be means-tested, and the Government must continue to help out those who are unable to pay."

The Access Economics report is available at www.cha.org.au

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