Opinion: Realities of aged care worker settlement harsher than expected

Some rest home residents are being hit in the pocket as the impact of the pay equity settlement for aged care workers ...

Some rest home residents are being hit in the pocket as the impact of the pay equity settlement for aged care workers takes effect.

OPINION: Recent coverage of Blenheim's Aberleigh Rest Home has highlighted the challenges facing aged care providers around the country.  They are just one of many aged residential facilities around New Zealand being forced to make hard decisions to sustain their operations in the wake of the pay equity settlement.

Indeed, more than 100 of our members are looking at changing or restructuring their business models to address operational losses resulting from the settlement, some being forced to make staff redundant or cut back hours, others have closed – surely the opposite intended outcome of the settlement.

But what begs further explanation is why, if the pay equity settlement was "fully-funded", has it left providers such as Aberleigh severely out of pocket?

The settlement falls short of being fully funded because of the averaging formula used to finance providers to pay the additional wage costs. Using averages, not actuals, means that operators with higher than average numbers of qualified staff, experienced staff and good staff retention, will be more adversely affected.  

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Compounding the issue is a qualification equivalency process meaning some staff that were on Level 1 or Level 2 qualifications on the NZQA framework may now be on Level 3 or Level 4 at higher per hourly rates.  A good example is internationally registered nurses who are working as caregivers here in New Zealand.  The qualification equivalency process also came after  July 1 when funding had been locked in, so providers are faced with paying staff more but not being remunerated for this. Those mostly affected are smaller rest homes, often in rural areas, as well as those run by welfare, trusts or religious-based organisations, though some larger operators are affected as well.

As businesses, they recognise that to address the funding shortfalls they have to make hard decisions – the situation is not of their making.  The pay equity settlement arose from a court case which is specifically about recognising the value of the caregiver, not other staff.

We advised Government of our concerns prior to settlement, that the impact could mean some facilities might close and staff may be made redundant and that's proving to be the case.

We've been working with Government to seek some transitional support for adversely affected providers.  Currently, rest homes are being advised to contact District Health Boards for support – though some may not want to because they're afraid if they reveal they are financially unstable, they may receive fewer referrals from their DHB. We're doing what we can as an association for our members. We've always supported caregivers being paid more, but this is one of the downsides.

And, the realities are even harsher for those facilities which operate both aged care and mental health care services. Whilst we lobbied hard to have mental health care included in the pay equity settlement, the Government chose not to do and it is now subject to a separate claim.

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In the meantime, facilities that offer both services – again which tend to be the smaller ones in provincial centres – will be adversely affected, forced into a position of increasing mental health care givers' pay rates.

Pending closures, reduction in staff hours and redundancies will hurt smaller communities and rural areas where rest homes provide sustainable and meaningful employment for people that might not otherwise have jobs, not to mention the adverse effect it may have on the residents.

And, very often these smaller providers in our regional and rural communities, such as Nelson and Marlborough, are providing care for old people where other options might not exist.

Indeed, according to Nelson's Ageing Population report from the Nelson City Council, Nelson has one of the highest ageing demographics in the country with the number of residents aged 65 and over projected to more than double between 2013 and 2043, making up a third of the total population - the implications are significant for the Nelson/Marlborough DHB region's 25 aged residential care operators which currently care for around 1220 residents. By 2027, that number is projected to increase by around 700 requiring at least 460 more beds and 370 more caregivers.

Suffice it say, we can't afford to lose more rest homes.

But, the issue is wider than just an under-funded pay equity settlement. It's symptomatic of the wider challenges facing our aged care sector with not only the rapidly ageing population and shortage of caregivers, but a system and funding model that is outdated and inadequate.

One of our concerns in the Nelson/Marlborough region, and in other parts of the country, is that older people are not always being given access to the level of care they need. This is partly linked to an intensification of DHBs favouring home-based care over aged residential care. 

Our sector is not against people staying at home, but when they have been formally assessed as requiring aged residential care, where being in a rest home will enhance their health and well-being and where residents and families support this, then DHBs should not be putting up barriers.     

Ultimately, for many providers, the pay equity settlement funding mechanism has been the final straw in a system that is out of date and inadequate.

But what the settlement has done is acknowledge the critical role caregivers play in our society. Now, I would like to see our new government, whatever form it takes, get on with reshaping how we resource and manage our aged care sector to support a better future for all of us.

Simon Wallace is the CEO of the New Zealand Aged Care Association (NZACA)  

*An earlier version of this opinion piece said that by 2017 the number of people in aged care in the Nelson/Marlborough DHB region was projected to increase by around 700 requiring at least 460 more beds and 370 more caregivers. That projection is for 2027. 

 - The Marlborough Express


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