An aged care provider in regional New South Wales is cutting back staff hours, saying that tighter government funding means operators need to run their facilities more efficiently.
Paul McMahon, Chief Executive, Southern Cross Care (NSW & ACT) (SCC) told HelloCare the company has reduced staff hours to the equivalent of 8.5 full time staff per fortnight at its Grafton and Casino facilities.
He said the company is making the cuts “to ensure SCC remains sustainable long-term, particularly in regional locations.”
The staff cuts come as research by aged care analyst StewartBrown shows that profitability declined across the sector in the nine months to 31 March 2018, and profitability was particularly squeezed in regional areas.
More than 43 per cent of aged care facilities reported a loss for the period, and 58 per cent of regional facilities failed to turn a profit.
Mr McMahon said the staff cuts are “spread across our 24-hour operations / seven days per week at each home” and they “do not impact resident care.”
He said the cuts were the result of tighter government funding, which is forcing aged care providers to run their operations more efficiently.
“Tighter government funding is driving all operators to run their operations more efficiently, and fortunately SCC was in the position where we could safely rationalise staffing without reducing care.”
“Funding is adjusting to demand and the entire sector is working through what is needed and where,” said Mr McMahon.
Health Services Union Secretary Gerard Hayes issued a statement saying that SCC’s working hour cuts were a response to “the Federal Government’s aged care funding freeze”.
He said regional aged care operations are “struggling to cope” and “the reduced working hours were a blow to local workers and to aged care residents.”
“The reality is now starting to bite in regional NSW communities where shifts are being slashed and services reduced.
“This will have a downstream effect on local economies, as local aged care workers will have less to spend in local shops. But more importantly, it means that our older citizens will not be getting the same level of support and care.”
“The aged model in Australia is broken. It’s time to rethink the way we fund aged and look after our older Australians,” Mr Hayes said.
But the Federal Member for Page, Kevin Hogan, dismissed Mr Hayes claims of a funding freeze. He told HelloCare, “We have increased Aged Care funding from $14.1 billion in 2013 to $18.6 billion in 2018. This is an increase of more than $4 billion.
“In the Clarence Valley, we have increased spending on Residential Aged Care by more than $18 million annually.
“This includes an extra $2 million per year for 36 new beds at the Whiddon Group in Grafton creating more than 25 jobs, an extra $3 million per year for 50 new beds at Whiddon in Yamba (35 jobs), $9.4 million per year for 114 new beds at Signature Care in Grafton (170 jobs), an extra $1.8 million per year for 30 new beds at Whiddon in Maclean (25 jobs) and an extra $2 million per year for 20 new beds at Dougherty Villas in Grafton (14 jobs).
“Funding at St Michaels in Casino has also increased by almost $1 million per year, with 34 additional beds.
“The more than 260 new permanent jobs in the Clarence Valley in Aged Care include nurses, cleaners, caterers, gardeners and maintenance positions.
“Any rostering decisions by the Aged Care operators are a matter for those operators.”
Mr McMahon said the sector is working with the Federal Government to explore ways to ensure greater financial security.
“It’s reassuring that the Federal Government is working with our sector to consider residential aged care funding in response to the ongoing decline in many providers’ financial performance and exploring subsidies to match actual care costs.
But Mr McMahon said there was also an onus on aged care providers to find ways to improve the ways they operate.
“While funding is tighter, it is a two-way street and as operators we need to be running more efficient and cost-effective businesses,” he said.
“Increasing competition is leading to continuous improvements and there are opportunities to balance the budget without impacting the quality of care. We like many operators are confidently working through this period of change and believe we will start to see a stabilisation of funding to match demand where it’s needed.”
A number of SCC’s regional aged care facilities operate at a loss, Mr McMahon said.
“We have 31 aged care homes, with two-thirds located in regional NSW & ACT. The [StewartBrown] report found 58 per cent of aged care operators are now reporting a loss in regional locations and we have a number of homes in this position.
“We have a policy of cross-subsidising our country locations knowing many will never be profitable. But this approach alone was no longer enough and we needed to look for opportunities where we could improve our operations without impacting care.”
He said that he would like to see greater government support for aged care providers in regional areas.
“We would like to see additional support for services located in rural areas that face higher costs together with skill shortages. Two thirds of our services are located in rural areas and our commitment to such areas is major element of our mission. Our commitment to regional NSW & ACT remains undaunted.”
Pat Sparrow, CEO of the Aged and Community Services Australia told HelloCare, “Aged care services are part of the social fabric of local communities not only for the essential care and support they provide but also as a valuable generator of jobs and growth.”
“The number of residential aged care providers recording financial losses is growing and the problem is even more acute in the regions.
“The viability issues facing providers under the current funding levels, make it increasingly difficult to pay staff, and other expenses, let alone invest in new facilities and services and continue to grow.”
“If not addressed by government we expect the number of unviable providers in regional areas to grow and sadly this means the jobs, growth and community goodwill these services provide will also be affected.”
Staff have been generally supportive of the changes at SCC, and families have been understanding, Mr McMahon said.
“We place utmost importance on communicating any changes with our staff, families and residents,” he said.
“Staff have shown great support and flexibility in altering shifts. We have sought to protect jobs wherever possible and in some cases have been able to relocate staff to other services.
“We have been transparent in explaining the rationale for the changes and have found residents and families to be understanding. We are making these changes to ensure SCC remains sustainable long-term, particularly in regional locations.”
I ran the numbers for St Michael’s in Casino who received almost $1 million for 34 additional beds. This equates to an extra $80 per day. If the total amount was spent on staffing, this would give them 2 hours per day (including oncosts).
Is this sufficient to remain sustainable?