Submission to the Royal Commission into Aged Care Quality and Safety Staffing levels and a new residential aged care funding model
In this brief submission, CPSA offers an analysis of the nursing home staffing levels debate within the context of the impending implementation of the Australian National Aged Care Classification (AN-ACC) as a replacement for the current Aged Care Funding Instrument (ACFI).
The federal Department of Health engaged the University of Wollongong to undertake a Resource Utilisation and Classification Study (RUCS). The purpose of this study was to determine the characteristics of residents that drive residential care costs, and use this information to inform the Government’s consideration of future reform options. The RUCS has produced a proposal for the implementation of the Australian National Aged Care Classification (AN-ACC). The RUCS was completed in December 2018 and the proposal for the AN-ACC contained in it was supported by the Australian Government through the then Minister responsible for aged care, the Hon Ken Wyatt MP.
This submission will argue that the AN-ACC in the form proposed by the RUCS would be a deeply flawed new funding instrument because of its reliance on care resourcing assumptions and practice which have been challenged and, CPSA believes, comprehensively discredited by evidence provided at hearings of the Royal Commission into Aged Care Quality and Safety. The rationale of the AN-ACC in the form proposed by the RUCS is adequate, but it is based on assumptions which are wrong.
The staffing levels debate
The question whether or not nursing home staffing levels should be centrally determined and mandated pits providers against consumers. The consumer slogan in the debate is ‘mandatory staff-to-residents ratios now!’, while providers respond with the ‘too blunt an instrument!’ rebuttal.
While the debate is polarised, two things are not in dispute. First, at any given time in any given residential aged care facility the number of staff and the mix of professional qualifications among those staff is the result of a rationing decision. Second, such rationing decisions must necessarily be made in every nursing home for every shift.
Consumer concern centres on the adequacy of staffing levels, which consumers say is lacking. This claim is not based on firm evidence. Information on staffing levels in residential aged care is not published either in aggregated, de-identified form or more specifically for individual providers or services. It is even unclear if such information is gathered in any systematic way. The claim of inadequacy with regard to staffing levels is therefore based on anecdotal evidence, but there are plenty of anecdotes.
Provider concern about prescribed staffing levels is more complex. First, if staffing levels are inadequate, they must be raised and this would increase costs of operations. As a result, providers tend to deny that staffing levels are inadequate, or deny it and add that any raised staffing levels would require higher subsidies. Second, the unspoken and overriding objection providers have to prescribed staffing levels is that these would enable the regulator to calibrate the amount of subsidies paid to providers with great accuracy and the opportunity for these subsidies to contribute to profits and surpluses would likely be greatly reduced.
The regulator, the federal Department of Health, has not committed to either the ‘mandatory-staff-to-residents ratios now!’ slogan or the ‘too blunt an instrument! rebuttal in the argument about staffing levels. Neither has it given its opinion about the current adequacy of staffing levels. Perhaps this is wise, but more likely its posture is prompted by the realisation that an admission of inadequacy of staffing levels would inevitably lead to increased subsidies paid to providers in order to render staffing levels adequate.
It is obvious that a coincidence of interests exist with regard to staffing levels in residential aged care. Both the regulator and the regulated have an interest in maintaining the status quo and the fiction that current staffing levels are adequate, because neither wants to end up footing the bill that comes with increasing staffing levels in residential aged care.
RUCS and AN-ACC
As the RUCS notes, ACFI has a number of weaknesses which render it ineffective in accurately calculating the cost of care per resident. One of those weaknesses is that ACFI “does not focus on what drives costs of care.” Indirectly, this refers to salary and wages, which on average absorb over 75 per cent of ACFI revenue. The ACFI does not include an algorithm or protocol which ensures staffing costs are explicitly considered and reflected in the cost of care it calculates and the subsidies that flow as a result of that calculation.
The RUCS set out to rectify the failure of the ACFI to calculate care costs with reference to staff and wages. In order to attribute direct salary costs, these “were allocated based on the average number of minutes of individual time recorded per day for each resident.”
The importance of this shift in approach cannot be overstated. Instead of treating staff costs as implicit in assigned care domains under ACFI, the RUCS has attempted to capture the duration of care procedures and processes to determine the staffing costs associated with these procedures and processes.
The AN-ACC proposed as part of the RUCS appears to offer an opportunity to settle the staff-to-residents debate. It assigns staffing costs on the basis of staff time required to discharge care requirements. This means that it implicitly determines staff-to-resident ratios. What the AN-ACC does not do is mandate that the funding it calculates is required to pay for adequately qualified staff to care for residents must actually be paid out as salary and wages.
The AN-ACC does not mandate ratios. It only determines them and does so by implication rather than by explication. However, it would be a relatively simple thing to calculate the required minimum staffing levels for each shift in each nursing home on the basis of AN-ACC. If mandatory minimum staff-to-residents ratios were to be introduced in residential aged care, the AN-ACC can facilitate this.
However, there is a question mark over how the RUCS was conducted and what this means for what the RUCS proposes in relation to the AN-ACC. The proposed funding model for AC-ANN has been developed using current residential aged care staffing levels. It has been tacitly assumed that those staffing levels are adequate as to staff numbers and staff qualifications in the delivery of safe, quality care.
The RUCS commenced at a time when the inadequacy of staffing levels in residential aged care may have been less apparent than it is now. While the issue of staffing levels in residential aged care was already contentious before the institution of the Royal Commission into Aged Care Quality and Safety, Commission hearings thus far have confirmed that staffing levels cannot be assumed to be generally satisfactory. There is a lot of sworn evidence that staffing levels in residential aged care are inadequate.
The RUCS does what ACFI does not do. The RUCS acknowledges that staffing is the principal cost driver in residential aged care and the RUCS based its residential funding proposal pre-dominantly on staffing costs by conducting a service utilisation data collection occurred over a four week period, when staff involved in delivering care to residents recorded the amount of time spent undertaking different types of activities during each shift.
This approach is sensible with one proviso. The service utilisation data collection occurred in an ACFI-funded environment. While staffing costs may not drive the ACFI, the ACFI does drive staffing levels. ACFI is what funds salaries and wages in residential aged care. This means that if the evidence presented to the Royal Commission into Aged Care Quality and Safety is right, the RUCS has collected service utilisation data within an environment in which staffing levels were very likely inadequate.
The reliance the RUCS placed on current ACFI-funded practice in relation to staffing levels is perhaps most visible in its adoption of the 50/50 split between shared staffing costs and variable staffing costs.
The RUCS distinguishes between variable staffing time spent on individual residents (for example, assistance with eating) and shared staffing time spent on a facility’s population of residents generally (for example, surveillance and administration).
Reliance on the validity and truth of the assumption that current staffing levels under ACFI are adequate is evident from the fact that only data allowing the calculation of variable staffing costs were collected as part of the RUCS’ staff time data collection process. This means that the calculation of shared staffing costs was done by taking total staffing costs and subtracting from those the variable staffing costs. This then produced the 50/50 split between variable and shared staffing costs. Obviously, this approach takes it as read that total staffing costs reflect adequate staffing levels.
Another way in which the RUCS shows it assumed current staffing levels were adequate is that it exclusively uses shared costing for night shifts based on the belief that at night no time is spent to deliver individual care. It is likely that the proportion of time during night shifts spent on general care duties is greater than during day shifts. However, the assumption that at night no time is spent on individual care, which should raise a variable cost instead of being covered by a shared cost, is not consistent with the evidence given by nursing staff at the Royal Commission into Aged Care Quality and Safety.
While the reliance the RUCS placed on staff time under the ACFI is problematic, the RUCS also assumes that the qualifications of staff working under the ACFI are right. Evidence led at the Royal Commission has cast doubt on the appropriateness of that assumption. Medication management and wound management are functions frequently carried out by staff without the necessary nursing qualifications.
As a result, there is a very important and significant risk that the proposed funding model, AN-ACC would not provide sufficient funding to cover the cost of adequate staffing levels
This undesirable ACFI legacy would not necessarily be limited to the staffing cost component, but could also extend to other costs such as equipment and supplies. For example, ACFI also drives the rationing of continence pads in residential aged care, an item that should not be rationed. Again, AN-ACC, basing itself on what happened under ACFI, cannot guarantee that it determines adequate funding levels for continence pads and other equipment and supplies to be provided when needed without rationing.
CPSA is concerned that significant reform of residential aged care funding is going to be implemented when, having regard to evidence given at the Royal Commission into Aged Care Quality and Safety detailing inadequate staffing levels in nursing homes, this reform will entrench inadequate staffing levels.
CPSA suggests that, if the Royal Commission into Aged Care Quality and Safety makes findings and recommendations regarding staffing levels in residential aged care, it should specifically recommend a review of the RUCS and the proposed AC-ANN to ensure the ills caused by the current ACFI are not perpetuated.
 On average, 82 per cent of ACFI revenue is used for salary and wages and other “direct costs”, which are typically equipment and supplies, such as continence pads: Table 4, Stewart Brown, Aged Care Financial Performance Survey – Sector Report (Nine months ended March 2019).
 p6: Report 1: The Australian National Aged Care Classification (AN-ACC), Australian Health Services Research Institute, February 2019.
 Stewart Brown, Aged Care Financial Performance Survey – Sector Report (Nine months ended March 2019)
 p10: Report 1: The Australian National Aged Care Classification (AN-ACC), Australian Health Services Research Institute, February 2019.
 p6, Report 1, The Australian National Aged Care Classification (AN-ACC), Australian Health Services Research Institute, February 2019: “The service utilisation data collection occurred over a four week period between March 2018 and June 2018. During this time, staff involved in delivering care to residents recorded the amount of time spent undertaking different types of activities during each shift. Purpose-designed bar-coding technology was provided to facilitate this data collection.”
 Report 1: The Australian National Aged Care Classification (AN-ACC), Australian Health Services Research Institute, February 2019.
 p15, Report 1: The Australian National Aged Care Classification (AN-ACC), Australian Health Services Research Institute, February 2019.