The national supply of Aged Residential Care (ARC) beds, measured the Te Whatu Ora (formerly TAS) ARC Quarterly Reporting Survey, peaked in December 2021 at 41,100. By December 2022, the supply stood at 40,700, some 400 below a year previously.

There was a turnaround in the quarter to 31 March, with a net addition of 120 beds to 40,820. However, this supply was still 280 down from the December 2021 peak.

Source: ACA estimate is based data collected in the NZACA ARC Nurse vacancy and bed closures update survey, October 2022. 

Note: A more recent survey by ACA on the ARC workforce indicates there has was little change in vacancies to May 2023. The latter survey was undertaken before the Te Whatu Ora “reducing pay disparities” funding to increase RN pay in aged residential care could be expected to measurably reduce RN vacancies in ARC.

Source: ACA estimates of costs at 2023/24. The $287 is ACA’s estimate of the average TLA bed-day rate for hospital level care in ARC, for 1/9/23-30/6/24, arrived at by applying Te Whatu Ora’s formula for calculating the 2023/24 bed-day rate to average 2022/23 rate of $258. The formula involves “reducing pay disparities” funding for ARC nurses and a 5% cost pressures uplift for 2023/24.

The ACA’s estimate that in 2022/23 the bed-day price for hospital-level would have to be $80.35 higher to restore a break-even return on capital of 9%. This means the hospital-level bed-day rate in ARC should have been around $338 in 2022/23. Applying the Te Whatu Ora formula for calculating the 2023/24 bed-day rate to this figure, a preliminary estimate is that the 2023/24 bed-day rate should be at least $372.

The estimate of cost of public hospital bed of $1,700 per day is ACA estimate based on cost data in Pharmac Cost Resource Manual Version 3, (October 2018) and the New Zealand Casemix Framework For Publicly Funded Hospitals Including WIESNZ23 Methodology and Casemix Purchase Unit Allocation for the 2023/24 Financial Year (The NCCP Casemix – Cost Weights Project Group WIESNZ23 v1.1 June 2022). At time of writing the Indicative Price for 2023/24 remains “TBC”, so we have applied an indicative increase of 8% from the 2022/23 to 2023/24 price. We will refine this estimate after WIESNZ23 v1.2 is published.

The cost of hospital level care in ARC facilities is less than a quarter of the equivalent bed-day cost in a public hospital medical ward bed.

Notes:
Allowing for “reducing pay disparities” funding for ARC nurses and a 5% cost pressures uplift for 2023/24, the ACA estimates the average hospital-leve care bed-day rate is $287 for 2023/24.

The ACA’s estimate that the bed-day price for hospital-level would have to increase by $80.35 to restore a break-even return  on capital of 9%.  This means the hospital-level bed-day rate in ARC should be around $368. This is still less that a quarter of the equivalent bed-day cost in a public hospital medical ward bed.

The ACA calculated the number of ARC facilities without an associated RV facility based on Ministry of Health data on ARC facilities and Retirement Village Association data on RVs and RVs with an associated ARC facility. The calculation is shown in the table below.