The Ministry of Health has two options according to Switzer Residential Care general manager Jackie Simkins — it can increase funding for rest homes to a realistic level, or it will have to lower the standards of care it demands.

"Something has to change, one way or the other," Mrs Simkins said last week.

"Switzer is very fortunate to have the strong support of its community — we'd be in real trouble without that — but we're facing an alarming funding crisis."

The situation had worsened significantly, thanks to last year's new multi-employer collective agreement (MECA) with DHB nurses, which increased registered nurses' salaries by 9.5 to 12.5 per cent, and the $1.20 increase in the minimum wage that took effect on April 1.

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The DHB had increased aged care funding by 0.43 per cent, supposedly to compensate for the MECA agreement with DHB nurses, an increase that did not even meet the effect on Switzer's payroll of the rise in the minimum wage.

Mrs Simkins wrote to the Northland DHB expressing those concerns on April 15. By yesterday she had not had a response.

She described the wage increases paid to DHB registered nurses as well deserved and long overdue, but they had made it even more difficult for the aged care sector to compete with the DHBs for staff.

The ministry had also given the DHBs an additional $38 million to recruit registered nurses. As a result, even more registered nurses were leaving the aged care sector to work for DHBs. She understood that the current annual registered nurse attrition rate in the aged care sector was 41 per cent.

She did not dispute that RNs had the right to work where they wished to, but between them the DHBs and the ministry had created an environment in which aged care simply could not compete.

"This is not equitable," she said. "This situation places vulnerable older people at risk."

The majority of RNs working in aged care were now immigrants. Their recruitment, orientation and training was expensive and their length of employment with aged care providers was reducing because they could earn more working for a DHB.

"This trust receives $148.24 per day for our rest home beds," Mrs Simkins said.

"For that we provide accommodation, power, laundry, three meals a day, morning and afternoon tea, medications, GP visits, 24-hour care (with a registered nurse available 24/7), continence products, transport to and from appointments, diversional therapy, assessment and care planning.

"In addition there are the costs of achieving compliance and maintaining our buildings and equipment.

"I would challenge anyone to find accommodation for the night in a hotel, and be able to eat, let alone have care provided, for $148.24.

"Our rest home beds lose money every day. We are only able to provide the service because it is supported by the hospital and dementia-level service funding. Accruing funds for repairs and maintenance, capital expenditure and development, is a challenge.

"The Ministry of Health and DHBs need to be more realistic about the standard of the services that aged care providers can achieve within the current poor level of funding.

"The long-standing and ongoing reluctance of DHBs and the MOH to provide appropriate levels of funding to enable providers to maintain the appropriate skill mix and levels of staffing needs to be addressed now if we are to be able to continue to provide a high standard of care for the vulnerable older New Zealanders who find that they need our support."