On this page

About the Aged Care Funding & Service Models Review

New Zealand’s aged care sector, including aged residential care (ARC) services and home and community support services (HCSS), is facing well-documented challenges, including financial pressures, workforce shortages and ensuring equitable access to services.

Ageing is an important driver of health care costs globally and the challenges we are facing are not unique to New Zealand.

Aged care within the community is a significant part of New Zealand’s health system, receiving nearly $2 billion in funding in 2022/23 (8% of Vote Health).

In 2022/23, around 32,000 people were in ARC and a further 80,000 older people were receiving services to support them to live at home or in the community – services such as personal care, cooking, cleaning and respite care.

Health NZ contributed $1.352 billion to ARC providers in 2022/23 and ARC residents’ fees contributed a further $1.1 billion. In the same period, Health NZ provided $643 million to HCSS providers.

In July 2023, Health NZ began a review of funding and service models for aged care services.

Its purpose is to provide recommendations that will, over time, improve the sustainability of services and ensure equity of access and outcomes for older people across New Zealand.

Our future aspiration is for an aged care sector that balances the need for a cost-effective system with a high-quality continuum of care that is: 

  • person and whānau centred 
  • financially sustainable  
  • effective at reducing avoidable hospital admissions and bed days 
  • providing restorative care so people can live as independently as they can   
  • nationally consistent while meeting the needs of local communities; and 
  • delivered by a competent workforce that is valued and supported. 

A programme delivery team, including Sapere Research Group, resources from Health New Zealand | Te Whatu Ora, and our expert advisory group are responsible for the day-to-day planning, analysis, design and delivery of the programme. 

The review has two phases.

Phase One – Demand and supply analysis

Phase one of the review ran through the second half of 2023 and was completed at the end of December 2023.  

A programme advisory group was established to provide a collaborative forum for a range of voices to inform and enhance the analysis and review work for phase one, and to enable a better understanding of the challenges and opportunities.  Membership included community and whānau, employee representatives, providers, non-governmental organisations and funders. 

The main output of phase one was a report by Sapere Research Group on the current state of aged residential care and home and community support services.

As expected, the report highlighted some major challenges facing older people, whānau and their communities as well as providers, workers, needs assessors and funders.

The phase one report built on a lot of earlier work, such as the 2019 EY Aged Residential Care funding model review, the Settlement Party Action Group from 2019-2020 on Home and Community Support Services, the 2021 Older Māori and Aged Residential Care report, and the Health Ageing Strategy 2016-2026.

The Sapere report titled A review of aged care funding and service models - A strategic assessment of aged residential care and home and community support services (PDF, 3.9 MB) identified five key issues:

  1. Aged Residential Care (ARC) and Home and Community Support Services (HCSS) are under-funded.
  2. The funding models used to distribute funding to the sector are no longer fit for purpose.
  3. There are material ethnic inequities in accessing aged care services.
  4. The aged care sector continues to face significant workforce pressures.
  5. Issues with aged care are exacerbated in regional and rural New Zealand.

See Downloads below for a copy of the Sapere report.

The work programme has been guided by recent health strategies, research, reports and work programmes. For example:

Phase Two – Service and funding model redesign

Phase two of the review began in January 2024.

It is focused on developing recommendations for service and funding models that will result in a more integrated care model, efficient use of resources, and fit-for-purpose regulatory and funding regimes.

It will involve extensive stakeholder engagement, including eight workshops nationwide in May 2024, an online workshop in June for those unable to attend face-to-face workshops and an online survey to capture views from the public and those in the sector.

Some of Health NZ’s partner organisations will also facilitate workshops for target groups.

It’s vital we fully understand the challenges faced by older people and their whānau as well as across the sector and work together on solutions.

Downloads