fbpx

The Community Business Bureau (CBB) wholly owns The Salary Packaging People (TSPP).  Explore the TSPP website to find out additional information on novated leasing and salary packaging.

a mans hand pushing a colourful arrow made up of puzzle pieces on a wooden table

5 key drivers that will impact the future of aged care

There’s no question that this is a critical time for the aged care sector and the organisations that operate within it. Professionally, I have been involved in the sector for many years, serving in executive and non-executive leadership roles – there has never been a more formative period for service providers.

In this article I will explore what I believe to be the key emerging drivers of aged care service provision.

  • workforce and culture,
  • consumer focused services,
  • clinical and quality care,
  • portfolio growth and renewal, and
  • community impact.

So, join me for a look at these key drivers that will impact the future of aged care.

External influences

Before we delve into these drivers, let’s set the scene. It’s important to acknowledge that the future of the sector is further complicated by some prevailing external influences.

Arguably the most topical external influence is the Royal Commission into Aged Care Quality and Safety. Its findings did not come as a surprise, though it will undoubtedly have a revolutionary impact on the sector. The renewed emphasis on person-centred care and quality of life is absolutely imperative and a big win for the sector’s consumers – organisations will need to consider the Royal Commission’s recommendations (and subsequent policy reforms) alongside their every move.

However, it would be remiss to forget about the other external factors that will play a role in shaping the future of aged care.

Australians are living longer, and our population is steadily rising. For example, take the average life expectancy of Australians: in 2021 it is 83.64 years, but by 2050 it is projected to increase to 87.15 years (United Nations – World Population Prospects). Of course, a growing and ageing population creates a need for extra aged care services and staff. The Employment Outlook to May 2024 report (Department of Employment, Skills, Small and Family Business) forecasts a demand for an extra 45,100 jobs in aged and disability care – 31,100 of which could be in Residential Care Services alone.

This is an exponential increase in demand, and service providers can expect to encounter growing pains as a result. But then quality control, supporting operations, and dependencies become other issues altogether once we grow past a certain point. So that begs the question: how do we scale sustainably without compromising on quality, safety, and staff wellbeing?

Considering the recommendations of the Royal Commission, and the plans to transition aged care into an NDIS-style model, providers can expect to contend with margin compression more than they already are. Margin compression refers to the effect on margins when the cost of delivering services rises faster than the price of the service (income).

Indeed, the cost of service provision is on the rise because of the need to hire increasing numbers of highly skilled staff to meet demand and quality standards. Plus, the reforms will potentially regulate pricing as was the case with the NDIS; this presented many issues for organisations, many of whom struggled to breakeven between these two developments.

As with any industry, the government continuously seeks to improve the quality, safety, and accessibility of services and operations. We can expect the Royal Commission’s findings to inform new and improved government regulations, policy direction, and sector reforms in the next few years and possibly an ‘APRA style forced consolidation’.

Lastly, we cannot forget about COVID-19. The sector is still in recovery mode – last year, the AICD’s annual Not for Profit Governance and Performance Study shared that the pandemic exacerbated the already declining profitability of aged care operators. In fact, the StewartBrown Aged Care Financial Performance March 2020 Survey Sector Report claimed that approximately 60% of Residential Aged Care organisations recorded an operating loss for the previous nine months.

The key drivers

So now that we have discussed external influences, let’s talk about the drivers – and the metrics and outcomes that organisations will need to strive for in response.

Workplace culture has always influenced the enthusiasm and care with which services are delivered. If your culture fosters low morale, dissatisfaction, high turnover, or even bullying, this will be reflected in staff interactions with consumers. In other words, low morale = poor consumer experience. Poor experience equates to low occupancy and/or market share – two key metrics that your organisation must track and seek to increase.

Unfortunately, the Royal Commission declared that workforce is currently a ‘chronic issue’ for the sector, so something needs to be done. As an employer, your organisation must have a compelling workforce value proposition; that is, consider how you will attract good staff to your team. Management burnout is sweeping the sector because of external factors and rising ‘compliance’ demand, affecting morale and capacity. As a starting point, aged care providers should consider the following ideas:

  • Now more than ever, it will be crucial to implement measures that cultivate a positive workplace culture. A good starting point is to conduct anonymised staff surveys, but ensure you see them through: transparent reporting of results and next steps is key to this.
  • Learning and development planning will be a necessary mechanism to remain compliant with regulations, policies, and sector reforms; staff must be suitable for the nature of aged care work, and capable of providing safe, quality services.
  • Consider measures for remote working, given the need for aged care in remote areas and Aboriginal and Torres Strait Islander communities. Plus – what will happen within your organisation if COVID-19 travel restrictions are reinstated?
  • Rethink your approach to safety and wellbeing: can you staff access an employee assistance program? Can you explain the trends in data about your staff turnover? Do you understand the implications of the lost time injury frequency rate within your organisation?
  • Lastly, enterprise agreements can go a long way towards creating happier, staff that feel more secure and cared for. Consider implementing a new agreement or updating your existing one.

To stay competitive, organisations will need to undertake extensive consumer experience work. Here, providers will need to consider everything that customers encounter during their interactions and exchanges with your organisation: food and nutrition, lifestyle, and hospitality – and all elements of communication.

With the aged care sector’s focus on choice and control, there’s never been a better time to deep-dive into everything from service design to delivery to understand the experience you consumers are having with you. Consider also how you can further enable consumers to provide feedback and speak up if something isn’t right. Remember, organisations who do not empower their consumers to exercise choice and control will receive no mercy in the public domain.

Building a reputation as a consumer-focused provider that people trust will facilitate increased occupancy and market share, improving the sustainability outcomes of your organisation through enhanced financial performance.

Clinical care is health care that encompasses the Prevention, Treatment and Management of illness or injury as well as the maintenance of psychosocial, mental, and physical wellbeing; it should aim to prevent deterioration of health and enhance quality of life.

A clinical governance framework is mandatory – this articulates how an organisation intends to ensure high quality and safe care. More than that, your governance approach must address the needs, goals, and preferences of consumers.

That said, governance must have a transparent culture. It’s not enough for a board to accept data at face value, it must be interrogated to determine its validity – an effective and reliable ‘Assurance Mechanism’ is critical otherwise mismanagement and misconduct can slip through the cracks with poor accountability. To facilitate this assessment, ask:

  • How do we as a board know that our organisation’s care is safe and effective?
  • How do we know we have a safety culture?
  • How do we know our care is consumer/person-centred?
  • How do we know our people are capable?
  • How do we know we are measuring, monitoring, and reporting on key clinical risks?

Complementing governance is quality. All aged care providers must comply with the Aged Care Quality Standards. One way to ensure compliance with this framework is effective clinical governance that will support the achievement of good clinical outcomes for consumers. So, it really is in an organisation’s best interest to rethink their approach to governance.

Additionally, providers should ensure they are engaging in a robust continuous improvement initiative. It should be an ongoing, objective process that evaluates how well an organisation works, and identifies ways to improve its processes. As a general rule, the principles of quality management are:

  • Customer focus – keep the customer at the fore of everything you do
  • Leadership – ensure leaders are appropriately skilled and on the same page about organisational vision
  • Engagement of people – involve stakeholders, staff, and customers in decision making and service design
  • Process approach – use the Plan, Do, Check, Act (PDCA) tool (or similar) when investigating quality
  • Improvement – proactively (and reactively) seek opportunities to enhance elements of your business or services
  • Evidence-based design – use data to make informed decisions when exploring new opportunities
  • Relationship management – regularly supporting and liaising with stakeholders and suppliers can maintain solid relationships and keep them accountable (don’t forget, they can be a part of the consumer experience).

To be sustainable, organisations need to explore growth and diversification opportunities. As a starting point, consider how your services can fit into the continuum of care: the idea that a single provider can deliver a comprehensive plan of care that adjusts to the needs of the consumer over a period of time. It encompasses a variety of levels and aims to reduce the number of times an ageing individual moves around to different providers as their needs change. How much do you provide? What existing resources and capabilities could you leverage to capture more of the continuum?

How can an organisation ensure its impact is ethical, positive, and responsible? Through governance (yes, more governance), environment, and sustainability policies. Here are some points:

  • Good governance will support the engagement of external and independent clinical audits and reviews of practice, with full transparency. In addition, a strong code of ethics needs to guide operations and service provision.
  • To combat margin compression through a reduction in overheads and become more eco-friendly, organisations will need to explore renewable energy and invest in more efficient plant and equipment.
  • Consider implementing pandemic leave provisions if COVID-19 flares up again; this may necessitate a greater reliance and focus on cash reserves.
  • Prevent the exploitation of vulnerable workers (i.e. modern slavery) through ethical recruitment practices.
  • Foster greater representation across a workforce – with regard to gender and ethnic diversity – which will ensure consumers can access culturally appropriate care. With growing ethnic diversity in our ageing population, a competitive organisation will have the capacity to cater to these consumers.

In summary, these are five key drivers that will shape and define the aged care sector into the future. By now, you’d have noticed a recurring theme: governance. This will be a critical element of your business model that will determine your success in the sector.

Elevate your impact with expert support

Discover the not for profit experts that are committed to building the capacity and sustainability of our sector.
  • Tags: