Juggling act

In an aged care sector under scrutiny, which also faces increasing resourcing challenges, providing good-quality care remains an imperative, according to Benetas CEO Sandra Hills OAM MAICD.

I’m often asked how we continue to provide sound care while maintaining financial sustainability. There is a delicate balance to be managed each day, working with aged care residents while challenged by staff shortages, resourcing, limited budgets and the ongoing impacts of the pandemic.

Our customers and their families assume that aged care providers are adequately compensated for the services they provide. Client expectations around levels of care have continued to increase over the past few years, but there hasn’t been a corresponding increase in funding. There is also greater accountability, transparency and participation in the design and delivery of services than ever before. This is necessary to ensure commitment from service providers to improved quality of care — however, it doesn’t mitigate the fiscal challenges we face.

The Royal Commission into Aged Care Quality and Safety recommended the establishment of an independent body to cost a fair price for the provision of aged care services. There has never been a cost-of-care study into the provision of aged care services undertaken, despite providers, peak bodies and others calling for one. This is a foundational piece needed by our sector.

This month, following the passing of the Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022, the Aged Care Pricing Commissioner’s functions were transferred to the Independent Health and Aged Care Pricing Authority. It is encouraging to see they are now consulting across the sector, and it is paramount that we get pricing right to support our sustainability.

The recent federal election has seen the challenges in the aged care sector come to the fore. The new government introduced two bills focused on general aged care reforms and care/ quality commitments in the opening day of parliament. We providers welcome the sentiment of the bills. However, we need politicians to understand the macro factors impacting us. For example, one of the bills is proposing round- the-clock enrolled nurses at every residential aged care home. This target is challenging for providers to meet, given there are workforce shortages. When staff are available, the nurses often choose to work in other health sectors for more money.

How do we get the balance right?

We use a framework to make decisions and this determines how we allocate funding and resources. The framework is set through the interplay of our board and our executive team, setting and reviewing priorities.

1. Board and committees

This group is responsible for setting and overseeing the strategic directions of the business along with ensuring financial sustainability, managing risk (including reputation) and meeting accreditation standards.

2. Executive and leadership team

This is the “engine room”. They have a system in place to regularly scan the environment and provide advice to the board. This includes updates about the regulatory environment, social and economic factors, and, importantly, the trajectory of issues and how these might affect the strategy and operations of the organisation.

A current and relevant example for many aged care providers at the moment is seeing business drivers being impacted by the COVID-19 pandemic, as well as the recommendations of the aged care Royal Commission.

In this case, these factors have led to:

• Reduced confidence in the sector by the public resulting in reduced residential care occupancy and an increase in the desire for services in the home or community. Therefore, irrespective of quality of care, people don’t want to move into a residential care home.
• Inability to attract and retain an adequate, suitably qualified workforce to meet demand and provide the standard of care required. This impacts service delivery and associated revenues.
• Inadequate payment by government to providers for the level of care provided (in relation to the actual cost of providing good/ sound care). This presents dilemmas for providers striving for financial sustainability while also needing to meet accreditation standards and consumer expectations.

Boards need to look at immediate, medium and long-term goals and the likelihood of risk to care. Without quality care, you won’t have long-term financial sustainability. This tiered consideration of goals and underlying need to commit to quality will assist them to make choices about what to put down now and pick up later, or continue with.

Reputational risk is crucial. For example, if you have unclear policy direction from government regarding the long-term funding of a particular program and there is decreasing demand for the service, you may decide to continue the service, or gradually scale it down until further notice. To continue an underfunded service is a greater risk over time than disappointment from customers if the service is cancelled.

In any event, an impact analysis, stakeholder management and communication strategy will need to be developed. It is always much easier to discontinue a service if it is not totally aligned with your strategy, has decreasing need, is making a financial loss, or if similar services are available elsewhere.

In short, directors and management need to have their eyes on the organisation’s vision and mission — both long and short-term outcomes — if they wish to achieve and balance this with risk.