The COVID-19 pandemic has had a devastating effect on many industries. The Health & Community Services sector, especially the aged care industry, is no exception. Every aged care facility is different, and many factors have affected their experience over the past 24 months, but one thing is clear: the issue of employee retention and attraction in the sector is now critical.
According to a new report published by National Skills Commission, the aged care and disability care sector has more than 74,000 job vacancies. In the UK, a report by Skills for Care, reported 110,000 job vacancies in the adult social care sector. When you consider the difference of population in care, Australia’s number is nothing short of alarming.
Reasons for the current staffing challenges
As the COVID-19 pandemic began in February 2020, residents in many aged care facilities were infected and often sadly, significant numbers died. The shutdown of borders by the Federal Government meant that many foreign workers left Australia to return to their home countries. However, what is even more significant is when staff began to test positive, up to half the workforce were soon quarantining at home, which meant that the aged care facilities required agency support.
The race to secure the best agency staff was on with many out-of-work hospitality workers beginning to fill jobs in the sector to help retain staffing levels. With little experience and having to deal with outbreaks in multiple facilities, that source of labour dried up quickly. What we are seeing, now that higher paying hospitality roles have returned, is many of these workers leaving the aged care sector entirely.
In a report published by the Australian Government in 2020, the proportion of facilities with a vacant Registered nurse position was 38% and personal care workers was 51%. Currently what we are seeing are these numbers up around 45% and 60%, respectively. In the UK, since March 2021, vacancy rates have risen higher than pre-pandemic levels and the use of agencies is once more on the rise. The turnover rate is higher in key support roles including nursing and carers, at 38.2% and 34.4% respectively, while the overall turnover rate is 28.5%.
In an article published in the Sydney Morning Herald in May 2022, the Fair Work Commission had heard a case to raise workers’ pay by 25% in order to attract a sustainable future workforce. However, with only one major operator backing this, we have not yet seen this increase rolled out across the sector.
A further contributory factor is the compulsory vaccination mandate for workers that came into force in 2021. The mandate required that all aged care workers and anyone entering an aged care facility to be fully vaccinated unless exempt.
Impacts and increased risks for aged care providers
As life returns to some normality post the pandemic, the implications for the management of aged care homes are quite complex. The potential effects of staff shortages have the most significant impact on the quality of care but also impact staff and care providers themselves.
Quality of care:
Staff shortages create significant risks when residents don’t receive the level of care they need, leading to more serious incidents and potentially fatal accidents.
This potential increased reliance on agency staff could see claims arise from insufficient training and unfamiliarity with equipment, leading to inadequate care.
Staff taking on additional roles and responsibilities with which they are unfamiliar and not fully trained may increase the risk of injury to them, and also the residents they care for.
This could all lead to non-compliance with policies and procedures and an inability to fulfil staffing ratios for residents.
Insufficient staffing may result in an increased exposure to acts of violence and aggression from some residents. Further, a decrease in observations to effectively risk assess residents’ needs/changing presentations and an inability to keep care plans and risk assessments updated.
Impact on staff:
High burnout rate. A lot of staff have left the industry altogether, often quoting job exhaustion.
Increase in Workers’ Compensation claims due to having to take on more. The body is becoming more susceptible to injury. The mental health of workers is also being tested with workplace stress due to the challenging environment.
Significantly increased workloads leads to mistakes, corners being cut and fatigue, causing inattention and more injuries.
Impact on aged care providers:
Critical staff shortages can affect the ability of under-resourced facilities to continue to provide care and attract new service users. As a result, organisations are in danger of closing down .
Resourcing issues and reduced quality of staff could have an impact on the likely number of negligence claims, which could also result in an increased focus from the Regulators (ACQSC) with higher numbers of investigations .
To attract new talent, many care providers are increasing pay rates for staff, especially for nurses and personal carers. With staffing the largest line of cost for most providers, this puts a huge strain on organisations with already thin margins.
Managing the risks
All of what has been mentioned above are naturally receiving increased scrutiny from insurers. As the situation has evolved over the last two years, we have seen insurers exit the aged care market altogether. For those that remain, they are keen to monitor the impact on the aged care sector claims trends and the subsequent potential for significant losses.
Claims can arise across various different policies, including:
Employment Practices Liability
Directors & Officer’s Liability.
Robust risk management is critical in mitigating these potential risks and reducing punitive reactions from insurers, if they translate into increased claims frequency and severity.
Key areas to consider include:
Clear and robust incident and claims management reporting procedures, bespoke to the operational structure of your business.
Ensuring that major incident response plans are in place.
Updated risk assessments are reviewed regularly and in line with changing legislation.
Well-maintained records relating to employee training, risk assessments and compliance with policies and procedures.
Engage your broker
As the sector continues to evolve post the pandemic, insurers’ appetite for the aged care sector risks remains selective. It’s clear that rates have been increasing, along with the tightening of coverage and reduced capacity across various lines of business. The current industry retention and attraction challenges will only add to insurer caution.
Engaging with your broker early, at least four to five months before renewal, will be critical to a more successful renewal outcome. Now more than ever, the outcome of renewal negotiations will reflect the quality of underwriting information, as well as your relationship with your broker and insurers.