Financial pressure on Otago and Southland rest-homes is likely to increase next year when the Southern District Health Board transfers $1.2 million from residential to community care.
The sector is already under strain as the DHB has referred fewer elderly people to rest-homes.
Next year the DHB intends to implement a more formalised system of home and community support, which is yet to be fully spelled out. The 90-bed reduction takes effect next October, as part of the aged-care plan under development.
Southern DHB funding and finance general manager Robert Mackway-Jones said hospital-level, dementia, and psychogeriatric residential care funding was all unaffected.
Demand was rising for the higher-intensity services such as hospital-level.
"Rest-home-only facilities are likely to be impacted more than those that offer the range of services." Otago and Southland had 1700 rest-home beds, of which about 1200 were filled.
The rest-home residential budget for 2011-12 was $34.17 million, and so far this year is overspent by 4%. Part of that was due to Christchurch earthquake rest-home residents, for whom top-up funding was now coming in, a report to last week's board meeting said.
The $1.2 million funding change surprised New Zealand Aged Care Association Otago Southland board member Malcolm Hendry, who said: "That's a fair chunk of money. It's quite short-sighted, I think, to be thinking that [the DHB] can just let these facilities close and not need them in a relatively short space of time as demand starts to ramp up again."
The boost in demand because of the ageing population would offset the move to keep people at home.
Increased rates of dementia also put pressure on rest-homes, because sufferers did not need specialist dementia care in the early stages.
The "philosophical view" the elderly ought to be kept at home was dubious both economically and for social reasons, he said.
Association figures showed that of 66 aged-care facilities in Southern DHB, 32 were rest-home only, 26 of those with 40 beds or fewer.
It required significant investment to transform a rest-home into a multilevel care facility with hospital-level or specialised dementia care, Mr Hendry said.
