Home | Industry & Reform | We need productivity gains in aged care… but what if the biggest gains make the least profit?

We need productivity gains in aged care… but what if the biggest gains make the least profit?

The Intergenerational Report 2021 called for productivity gains in all sectors as the most significant way of securing the economic future of Australia. So, would this also apply to aged care? Well, there’s spiralling demand with a shrinking, poorly paid workforce, so there’s really no choice.

But there’s a sense that productivity gains in aged care is a dirty word. Staff are already working their bums off, underpaid for what they do, and often working longer hours than they are paid for, in shifts where not all rosters are filled. How could we possibly ask them to do more?

It’s mostly for this reason that the sector has declined to engage in productivity gain thinking. More hands-on care simply needs more staff, they say, and that the usual productivity-increasing drivers have limited effect.

But aged care is way more than hands-on, as any older person will tell you, and the biggest productivity gains are likely to be in other domains - what you do, who you spend time with, in places you like, who watches out for you and does your life make sense to you.

Meeting needs in these domains is less likely to be done by the current workforce mix. Instead, it depends on including different kinds of people with different skills, motivations, life circumstances and relationships with the older person — into what becomes a very different looking 'workforce'.

'Circles of support' built around frail older individuals describes an approach style that some providers are using to tackle this. Members of circles are invited for their ability to meet a need, and can be paid or unpaid, in part shaped by the social norms of life. Circle members are connected using technology, that constantly enables shifts in support as needs and interests turn up. Circles are quite unique (but very familiar outside aged care) in the way they spot needs and invite people in to fulfill them, in how they connect the formal and informal, and in how they protect people.

At the heart of circles is that communities want to be engaged in older peoples’ lives (while the current aged care approach works hard to convince us otherwise). That older people themselves can also contribute to these productivity gains. That workers from other sectors might like to do 'slivers' of aged care that fit into their circumstances, skills and passions. That specialist businesses might like to sell and deliver direct to older people. And that the aged care workforce expects more of their employers.

A recurring theme from the Royal Commission was that the workforce was not happy with the deal older people were getting from aged care. Employees everywhere are coming together and starting to speak out on issues that impact on their values. It’s only a matter of time before aged care employees take on employers who don’t re-invent what they do and skill employees to do it. And employers would do well to embrace this trend because of the workforce that comes with it.

The learnings here are that productivity in aged care can be significantly increased by broadening who gets to be in the 'workforce', and in valuing productivity in life-quality domains, neither of which may produce much commercial benefit for the provider. At the nub of this is that these are two of the criteria that distinguish aged care from commercial business. (The others are delivering broader community benefits, and not prioritising the maximising of profit for investors.)

So, it is central to growing productivity gains in aged care to see it as something more than a commercial business, while witnessing a trend to make it one. Government 'makes' the market. It pays two-thirds of the $21 billion annual cost, and it decides what will be offered, to whom, at what quality and quantity. Providers please the government by caring for as many older people as possible at the level and quality set by the government within the funding. Profit is made from efficiencies in delivering the Government’s service requirement, and the skill-level in managing the sub-contractor relationship. Leadership says that more productive aged care will come from improving how we do these two things.

But look how different provider effort to increase productivity would be if older people were the customers. In this case, providers would need to do three things. Skill the staff to work in 'circles of support' around individuals. Change the workplace so that all of the potential 'workforce' is included and can be effective in their tasks. And build the providers’ technology-enabled systems to allow 'circles of support'.

Providers are onto technology, but mostly to make their current operations more efficient. And we will see some good gains here. But the big gains will be when providers realise that they can use technology to expand who does the producing, and what’s on offer. While people have always cared, circles only became feasible at scale with the use of technology.

For all of its extensive caring experience and skills, it is stark that aged care doesn’t have the vision, skills, systems, incentive and infrastructure to land these next big productivity gains.

They might even be quite resistant to developing them, as research shows that aged care very commonly breaks up naturally occurring circles. And there’s not much incentive for the providers if they risk losing funding for their effort. The strong agreement during and after the Royal Commission that aged care needs to increase workforce skilling doesn’t help much either as it seems to only focus on skilling to improve current practice.

So, there’s plenty of productivity upside for aged care. But to do this it does require providers to reconsider why they exist in the first place, and for government to reconsider what it is subcontracting for.

Mike Rungie specialises in the intersection between good lives and aged care. He is a member of a number of boards and committees including ACFA, Every Age Counts, Global Centre for Modern Ageing and GAP Productive Ageing Committee.

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