Better staffing and higher wages in nursing homes won’t cost the health system cost any more – and may well save money.

Increasing staff numbers, improving skill mix and raising wages in nursing homes would not cost the overall health system more financially, according to a Flinders University economic analysis.

In fact, the analysis suggests that not making these improvements will cost Australia more.

Economists at Flinders University Australian Industrial Transformation Institute, looked at the implications of improving staffing to the safe levels recommended by the Australian Nursing and Midwifery Federation (ANMF).

The economists also tested a separate scenario incorporating a 10 per cent wage increase for aged care workers.

The ANMF recommendations were set out in its national staffing and skills mix report in 2016.

It found that care is currently at 2.84 hours of direct care per resident but needs to be 4.3 hours on average.

The ANMF report outlined three central issues in aged care with remedies that Flinders University subjected to cost analysis:

• that nursing homes are under-resourced and staffing levels need to be significantly increased from 2.84 hours per resident to 4.3 on average
• that the sector is under-skilled and the minimum skill mix to ensure safe residential care would be 30 per cent registered nurses (currently 14.8 per cent), 20 per cent enrolled nurses (currently 10.2 per cent) and 50 per cent assistant in nursing/personal care worker (currently 70.3 per cent)
• that the sector is under-valued with wages at least 10 per cent below the public health system.

Benefits outweigh the costs

The Flinders researchers measured the direct wage costs from an increase in staffing and skills mix along with the indirect costs required to support these workers.

They also factored in the direct benefits including cost savings from such a restructuring and indirect benefits including savings for the public hospital system.

“The modelling shows that while there is an increase in costs of $4.8 billion, this is offset by indirect benefits to the value of $2.1 billion thereby reducing the pressure on government’s budgets,” they said.

“There is an estimated value of further intangible benefits of $2.8 billion. The total figure of $4.9 billion in other benefits accrued clearly offsets the increase in 
costs incurred by implementing the ANMF recommendations.

“Importantly, this conclusion is based on the assumptions used in the analysis, which could reasonably be considered conservative.”

Not implementing the report will be costly

The report warns that not implementing the ANMF recommendations would carry significant costs.

“If the recommendations are not pursued the stresses already existing in the system (the ageing of the population and the increased demand for services) will intensify at a considerable cost to the sector.

“Moreover the benefits of implementing the recommendations will grow over time to an estimated $9.4 billion in 2036.”

Additional modelling by the Flinders University researchers found that a wage increase of 10 per cent for aged care workers “would be expected to produce some additional 
financial offsets and indirect and intangible benefits”.

“The narrowing of the relativity gap in wages between the aged care sector and the rest of the health system will likely lead to the attraction of more qualified and experienced people into the sector.

“It will reduce staffing attrition and improve effectiveness of service delivery due to a more positive workplace culture and improved retention of experienced staff.”

ANMF Federal Secretary, Annie Butler, said the report shows that ’aged care ratios make economic sense’.

“Significantly, and for the first time, the analysis has quantified previously unrecognised benefits of the implementation of mandated minimum staffing and care levels.

“The Morrison government must address this before the next federal election. The Aged Care Royal Commission is important and necessary but it should not mean a delay in reforms, the most critical of which is the urgent need for improved staffing levels.

“If we continue to delay doing what we know is right it means at least another 18 months of pain and suffering and, potentially, too many undignified deaths.”