As published in the Autumn 2023 issue of Aged Care Today – the magazine of Aged & Community Care Providers Association (ACCPA).

As life returns to some normality post the pandemic, the implications for aged care providers are quite complex. Staff shortages are having the most significant effect on the quality of care but they are also impacting governance and ability to comply with continually changing legislative requirements.

While every aged care provider is different, and many factors will have affected their experience, the issue of employee retention and attraction in the sector is now critical across the industry, and there is a potential for greater reliance on agency staff.

According to a National Skills Commission report published at the end of 2022, the aged care and disability care sectors have more than 74,000 job vacancies, while job vacancies for nurses and aged care workers have doubled in the past three years.

The strain on the workforce carries significant risks for aged care providers, particularly in relation to insurance costs.

Impact on care and compliance

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.

Insufficient staffing may also result in an increased exposure to acts of violence and aggression from residents, along with a decrease in the required observations to effectively
risk assess their needs and changing presentations, and an inability to keep care plans and risk assessments updated.

In addition, there might be increased risks of injury to the staff themselves, when taking on roles and responsibilities with which they are unfamiliar, particularly if they are agency staff with insufficient training in relation to certain equipment.

Impact on staff

Having fewer staff increases the burden on everyone and is likely to result in burnout and a high turnover rate, creating a host of extra expenses and issues for management.

There may also be more Workers’ Compensation claims due to greater levels of stress and increased risk of injury, with significantly increased workloads leading to mistakes, corners
being cut and fatigue causing inattention.

Impact on aged care providers

Critical staff shortages can affect the ability of under-resourced facilities to continue to attract new service users or avoid forced shut-downs as a result of imposed sanctions. As a result, organisations are in danger of losing funding or may even have to consider 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).

To attract new talent, many care providers are having to pay higher rates for staff, especially for nurses and personal carers; or where there are staff shortages, costs for agency labour hire to meet care needs are becoming a large expenditure. With staffing the largest line of cost for most providers, this puts a huge strain on organisations with already thin margins.

Impact on insurers

These scenarios naturally receive increased scrutiny from insurers, with some insurers exiting 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 policies, including:

• Workers’ Compensation

• Public Liability

• Medical Malpractice

• Employment Practices Liability

• Directors & Officer’s Liability

• Statutory Liability

It’s clear that insurance rates have been increasing, along with tightening of coverage and reduced capacity across various lines of business. The current industry retention and attraction challenges will only add to insurer caution.

How to manage the risk

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.

Clear and integrated incident and claims management reporting procedures, bespoke to the
operational structure of your business will be important, along with ensuring that major incident response plans are in place.

You should update your risk management framework and review it regularly in line with changing legislation, and have well-maintained records relating to employee training, risk assessments and compliance with policies and procedures.

These practices will not only help you manage your risk in a workforce crisis, but it will be
important in relation to the outcome of your insurance renewal negotiations in 2023, improving the quality of underwriting information and attracting potential insurers to take on your insurable risk.