KPMG

Key Themes Identified in Rural and Remote Aged Care Consultations

Department of Health

December 2015

ADVISORY

Contents

Executive summary2

1.Introduction5

1.1Objective of Study5

1.2Approach5

2.Residential Care and Home Care Providers6

2.1Introduction6

2.2Key Themes6

3.Multi-Purpose Service Aged Care Providers10

3.1Introduction10

3.2Key Themes10

4.National Aboriginal and Torres Strait Islander Flexible Aged Care Programme Providers13

4.1Introduction13

4.2Key Themes13

Appendix A Consultation Guide16

Department of Health

Key Themes Identified in Rural and Remote Aged Care Consultations

December 2015

8

2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

Liability limited by a scheme approved under Professional Standards Legislation.

Executive summary Introduction and Approach

KPMG conducted a number of one-on-one consultations with rural and remote aged care providers, in order to gather direct feedback and identify the key factors that influence the financial performance of rural and remote aged care providers. This information will inform the Aged Care Financing Authority (ACFA) and Department of Healths (Health) study on issues that affect the financial and operational performance of rural and remote aged care providers throughout Australia.

KPMG held consultations with 30 aged care providers across Australia, including residential and home care packages providers, multi-purpose service (MPS) providers and National Aboriginal and Torres Strait Islander Flexible Aged Care Programme (NATSIFACP) providers.

In these consultations, providers were asked questions regarding: service provider management; occupancy; clientele demographics; workforce; and financial performance. Providers were also invited to discuss any other key issues that were impacting on their financial performance.

Key Themes Identified for Residential and Home Care Aged Care Providers

KPMG consulted with ten providers across New South Wales, Queensland, South Australia, Victoria and Western Australia. Providers were contacted in the Northern Territory and Tasmania, but declined to participate as they had submitted a detailed submission to Health or attended a communication forum.

Key themes identified through these consultations were:

The change in community need has impacted on providers in terms of residents entering residential care with much higher care needs as a result of staying in their homes longer;

Issues are experienced with attracting qualified and experienced staff in remote areas. As such, providers often invest significantly in training to ensure their workforce have the right skills;

Retention of staff varies across providers. For staff that had a low turnover, they expect issues in the future due to the ageing of their current workforce (i.e. 65 years and older);

It is costly to access training off-site due to travel and accommodation costs and can sometimes be difficult to get staff engagement. Some providers worked with other providers in their region to bring trainers in to deliver a course to reduce costs;

Boards are often averse to borrow for capital developments or improvements, leading to providers relying on capital grants or cash reserves for these activities;

Having a good relationship with the community was highlighted as key for many providers, in terms of referrals, volunteering, and quality of Board membership;

Establishing relationships with other organisations both in the region and in the community (such as Regional Development Australia, TAFEs etc.) can benefit the provider from a grant funding, staff retention and reputational perspective;

There are a number of additional costs of operating in a remote area, such as: freight costs; labour transport costs; general higher cost of operating in a smaller region; and costs of bringing specialists to service their residents;

The low value and poor real estate market in rural and remote areas affects the ability to levy a RAD/DAP that was reflective of their accommodation costs ; and

A variety of approaches are taken by providers in regards to the RAD, with some willing to negotiate the price with residents, and others who will not alter their advertised price depending on individual circumstances.

Key Themes Identified for MPS Aged Care Providers

KPMG consulted with seven government providers across New South Wales, Queensland, Tasmania, Victoria and Western Australia, and one peak body in Victoria. The State governments were contacted in the Northern Territory and South Australia, but they did not respond to requests for a consultation.

Key themes identified through these consultations were:

Broader Hospital and Health Service (HHS) management sometimes limits the ability of individual MPSs to control their budget, which can lead to a limited incentive for the MPS to improve their performance as any savings are not retained by the MPS;

Access to specialist services can be challenging;

There is difficulty in attracting experienced staff, due to the nature of rural locations and the associated lifestyle challenges, including the small rental market, which makes sourcing accommodation for relocation significantly challenging;

The blended service offered by the MPS sites can help retain staff due to the variety of work on offer. It also allows more registered nurses to be used in the aged care facility, as they can be used across the different types of services offered by the broader MPS.

MPSs in rural and remote locations have a higher staff cost per resident. This is due to the need to have a certain number of qualified staff and a director of nursing employed, but having a smaller number of residents than in a metropolitan provider;

Training for staff can be difficult due to both cost and resource constraints. E-learning was embraced by a number of providers to address this limitation;

Fluctuating occupancy levels in some providers can have a large impact on financial performance, as staffing levels need to be maintained even if the current occupancy level is low;

Key cost drivers identified for rural and remote MPS providers were: the cost of travel and accommodation for specialised health services (and equally, the lack of availability of these services locally); higher staffing costs and the need to provide rural incentives; the higher cost of transport of goods and services; and the lack of availability of multiple local suppliers; and

In the more remote areas, it was identified by a number of MPS providers that there was a market failure with no non-Government aged care providers in the region, leaving the State Government MPS as the only option for aged care. This led them to feel that they had no choice but to operate.

Key Themes Identified for NATSIFACP Aged Care Providers

KPMG consulted with 12 NATSIFACP providers across New South Wales, the Northern Territory, Queensland, South Australia, Tasmania, Victoria and Western Australia.

Key themes identified through these consultations were:

Multiple benefits were identified where NATSIFACP provider belonged to a larger organisation, including: centralisation of key staff management functions at a broader organisation level; ability to access training; broader organisation budgeting, quality and risk processes were able to be used by individual providers; and in some providers, staff were able to shift between remote locations easily (roving staff);

Higher staff numbers are often needed to accommodate Indigenous cultural sensitivities, where staff may need to be absent for long periods of time;

Providers experience difficulty in attracting staff, which in some cases led to providers having beds empty due to workforce capacity. Some providers offered additional incentives, such as additional leave, whereas others operated a fly-in, fly-out staff model to keep staff motivated;

A large number of providers noted that job applicants often lack the required skills for the job, but due to difficulty in attracting qualified staff, providers would hire staff and up-skill / train them while they were employed;

Staff absenteeism was noted as an issue, leading to large wage expenses due to penalty rates being paid to staff to work additional shifts to cover periods of absenteeism;

Providers noted additional costs of operating in a remote area, such as: travel costs to take clients to specialists; travel costs for training of staff; freight costs; and the additional travel costs for tradespeople from larger regional centres to conduct repairs.

Providers also noted additional specific costs due to the Indigenous culture of the provider and its residents, such as additional cultural competency training for staff;

Providers valued the model of flexible care packages as they enabled flexibility for customer focused service provision; and

Providers felt that an Annual Forum would be beneficial so that they can learn from other NATSIFACP providers.

1.Introduction1.1Objective of Study

In the Aged Care Financial Authoritys (ACFA) report to Government entitled Factors Influencing the Financial Performance of Residential Aged Care Providers it was recommended that a more detailed study be un