Examining future demands in residential aged care: a major report on the residential aged-care sector predicts huge growth in the elderly population and thus the demand for facilities. The report canvassed most stakeholders in the sector, with the exception of those representing the aged-care workforce.
Subject: Aged (Care and treatment)
Nursing home care (Forecasts and trends)
Nursing homes (Buildings and facilities)
Nursing homes (Forecasts and trends)
Nursing homes (Human resource management)
Author: O'Connor, Teresa
Pub Date: 10/01/2010
Publication: Name: Kai Tiaki: Nursing New Zealand Publisher: New Zealand Nurses' Organisation Audience: Trade Format: Magazine/Journal Subject: Health; Health care industry Copyright: COPYRIGHT 2010 New Zealand Nurses' Organisation ISSN: 1173-2032
Issue: Date: Oct, 2010 Source Volume: 16 Source Issue: 9
Topic: Event Code: 010 Forecasts, trends, outlooks; 440 Facilities & equipment; 280 Personnel administration Computer Subject: Market trend/market analysis; Company personnel management
Product: Product Code: 8050000 Nursing & Rest Homes; 8366000 Homes for Aged NAICS Code: 623 Nursing and Residential Care Facilities; 623312 Homes for the Elderly SIC Code: 8051 Skilled nursing care facilities; 8052 Intermediate care facilities; 8059 Nursing and personal care, not elsewhere classified
Geographic: Geographic Scope: New Zealand Geographic Code: 8NEWZ New Zealand
Accession Number: 241179369
Full Text: New Zealand will need between 26,500 to 37,500 new aged residential care beds by 2026, according to a major review of the aged-care sector, released last month. By 2026, between 12,000 and 20,000 more people will need aged residential care. In the 20 years from 2006 to 2026, New Zealand's over 65 population is estimated to increase by 84 percent--from 512,000 to 944,000.

These are among the key findings of the Aged Residential Care Service Review, jointly sponsored by District Health Board New Zealand's lead chief executive for the health of older people, Chris Fleming, and chief executive of the New Zealand Aged Care Association (NZACA), Martin Taylor. The review was commissioned to assess "the cost, capacity and service implications of the increasing number of New Zealanders needing residential aged care".

NZNO has some reservations about the review, notably the absence of aged-care workers' perspectives. Industrial adviser Rob Haultain said unions representing aged-care workers were shut out of the process. "The voice and experience of workers in the sector have been ignored. In the public health sector, health unions would automatically have been involved but because aged care is a public/private partnership, the same rules don't apply," Haultain said.

NZNO's exclusion 'extraordinary'

In an analysis of the review, NZNO researcher Leonie Walker said NZNO's exclusion from the review was "extraordinary, considering the expertise and membership coverage the organisation possesses."

The review, undertaken by consultancy Grant Thornton, canvassed the views of 360 aged-care providers representing 61 percent of all aged-care beds in New Zealand. A steering committee managed the review, assisted by an expert advisory panel of clinicians, academics and provider and DHB representatives.

In its workforce analysis, the review "assumes that current staff-to-resident ratios are appropriate and does not attempt to establish ideal staffing levels."

This is a major flaw, according to NZNO. "Workers would strongly disagree with the assumption staffing levels are appropriate," Haultain said.

Waitemata DHB nurse practitioner (NP) in aged care, Michal Boyd, a member of the expert advisory panel, does not agree workers' voices were excluded. "There were focus groups held throughout the country with many nurses who worked in aged care in attendance, and caregivers and enrolled nurses were welcome to attend. There was also a survey of facilities, which would have included information provided by many nurses working in aged care."

On the issue of staffing levels, Boyd said the problem was "we don't really know because we don't have data to support a statement one way or another. Staffing is an important aspect in the care of older people. However, leadership appears to be a very important factor as well. There are many other critical factors, such as the availability of GPs after hours."

Boyd said the expert advisory panel's brief was to discuss possible new models of care.

Analysing the section dealing with demand for facilities, Walker said the population modelling was based on good data. But she listed a number of factors that potentially could influence demand in both predictable and unpredictable ways. These included:

* Differing projected age profiles of different ethnic groups, eg Maori and Pacific populations will increasingly have a much younger profile.

* Some evidence of an emerging "baby boom", changes to taxation and child care support, could impact significantly and rapidly on child bearing age, family size and therefore the overall age profile.

* Changes in immigration policies and patterns.

* Changing medical practice, eg current research into treatment and prevention of dementias and other neurodegenerative diseases.

* The potential impact of health promotion initiatives, eg related smoking and alcohol, which had yet to be realised at a population level in most countries.

The review estimates the current sector workforce as 34,450. Last year, two thirds of the workforce worked part-time. The sector has a "distinctive bulge" of care workers aged between 40 and 59. "These results pose a potential issue for the sector, as the majority of the care workforce ages and whether they will be replaced by a younger workforce," the review states.

Haultain believes unless wages in the sector are considerably boosted, younger people will not be interested in caregiving.

The workforce has "disproportionately large numbers of employees of ethnic descent compared to the New Zealand population ... Well over 85 percent of residents are European, while just 56 percent of employees are of New Zealand European descent," the review states.

Migrant workforce 'vulnerable'

The growing migrant workforce is particularly vulnerable, according to Haultain, "because it is a workforce that finds fighting vigorously for wages' justice very difficult for a whole range of reasons':

The review reveals that rest-home caregiver hours range from around eight to 13 hours per resident per week, white nursing hours vary from one to four hours per resident per week.

Retaining the nursing workforce would require more consideration than attracting support workers, according to the review.

The review states "there is always potential ... to make productivity gains which will lead to lower demand for workforce". Substitution of cheaper labour for expensive labour, consolidation of facilities and economies of scale, improved processes and working practices, and advances in technology could lead to productivity gains.

In her analysis, Walker says the workforce section is one of the weaker sections of the review. "Potentials for productivity gains ... will inevitably impact on quality of care. Of concern is the statement (made in at least three different places in the report) that improving quality of care and patient outcomes is cost negative due to increased longevity. The workforce implications are profoundly different for the different models of care and these have not been explored in sufficient detail," Walker states.

According to Walker, productivity gains will be finite, as many tasks in aged care cannot be done faster, and for smaller facilities with few RNs, staffing cannot be reduced indefinitely.

Haultain said one part of the review referred to the need for fair and sustainable remuneration for the workforce, another suggested substitution of cheaper labour for expensive labour. "That contradiction is alarming. The vast majority of the aged-care workforce is paid at or a little above the minimum wage. Are wages going to be driven down even lower?"

The review projects that workforce demand over the next five years will be slow or stable but will then grow rapidly by 10,000 to 15,000 FTEs by 2026.

The review points out that pay is not the only factor influencing labour supply, with working conditions, job content, training, career opportunities and sector image also important factors. Providers stated they could not compete with DHB pay rates and had to rely on other strategies to attract nurses and caregivers, including overseas recruitment and training packages.

The review identifies some workforce pressures, notably RNs being subject to competing demands from the acute care sector. The longterm supply of RNs was an issue for the whole health sector, not just aged residential care.

The review pays little attention to the impact of wages on quality of care in the sector and this is a weakness. NZNO's professional services manager Susanne Trim said the increasing complexity of residents' health care needs and the limited numbers of registered and enrolled nurses working with caregivers meant it was difficult to maintain standards of care.

Demand for dementia beds set to soar

The review estimates current demand for dementia beds at 2500 and expects this to increase to 6300 beds by 2026. It notes that dementia has the highest rate of demand "but an unsustainable rate of return, therefore it is unlikely to attract any future investment".

Around 350 nurses and 1400 caregivers work in dementia care now.

The review explores four service configurations. The first is improving the current approach through addressing key issues in the current model. The second is enhancing professional services in the community, including developing professional services to promote shifts in funding for acute hospital and other services to other kinds of services focused on prevention and quality of life considerations. The third is an individualised funding approach, whereby individuals are given an amount of money for their care and can decide where and how to spend it. The last option is the development of low income community housing for the elderly, including joint housing options for older people between their own home and residential care.


These options are not mutually exclusive. The provision of multi-disciplinary teams in the community and low income housing for the elderly were seen as the two most significant gaps in the continuum of care, the review stated.

Walker said the case for enhanced professional services in the community, supported by better access to primary care, medication reviews etc seemed compelling. But clearly identified perverse funding incentives, eg over reliance on prescribing, should be urgently addressed.

She pointed out the opportunity to use an increasingly highly qualified, regulated nursing workforce in a more effective way had not been discussed "yet NPs and innovative district nursing/outreach services have already demonstrated cost savings for the DHBs".

Haultain was concerned about the individualised funding option because of potential for abuse. "By the time many older people have to make decisions about their care, they are not able to make constructive decisions. And they could be vulnerable to families, friends or fly-by-night operators taking their funding," she said.

An extensive part of the review is devoted to sector costings. The total annual operating costs for aged residential care per resident was $30,002 for rest-homes; $49,905 for hospitals and $38,798 for dementia units.

Analysis of the provider survey shows financial returns for rest-home and dementia operators are particularly low and redeveloping older facilities was not a viable option for most operators.

Research undertaken by NZACA indicates the level of participation by not-for-profit operators is declining. The survey indicates the majority of New Zealand facilities are in the 26-50 bed range, well below the highest performing range of 76-100 beds. "This suggests there is capacity to improve efficiency through further consolidation and redevelopment of smaller facilities," according to the review. It also notes the limitations of operating in environments where scale efficiencies cannot be achieved, eg rural settings.

Walker said the costs and investment section of the review was "heavily biased towards the needs of private, for-profit providers. Not many sectors expect a 12 percent return after tax--with virtually no risk ... It is axiomatic that services required to deliver a service and produce a profit will cost more to the end user unless costs, ie wages primarily, are lower, service delivery is more restricted, and productivity gains can be realised."

Unidentified risks related to "cherry picking" commercially lucrative service provision at the expense of the total sector have not been explored and this could be considered a serious deficit, according to Walker.

Overall, the review was timely, balanced and thorough, covering most stakeholders, Walker said. "But the conclusions, particularly the executive summary, do not always match the detail in the report; rather, they are informed by the ideological and political stances of the funders of the review."

The review contained 15 recommendations, a number concerned with profit implications for the sector; others calling for pilot initiatives related to service models; and some calling for further demographic analysis and more funding to meet future demand for residential aged care. The review wants membership of the steering committee to be reviewed and for the committee to ensure the review's initial recommendations are implemented.

By co-editor Teresa O'Connor
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