A year since the Aged Care Royal Commission | Have the challenges facing procurement changed?

This week marks a year since the final report of the Royal Commission into Aged Care Quality and Safety. 

The challenge for procurement in the aged care sector is nothing less than to help redesign the operating cost model to ensure high standards of aged care remain affordable indefinitely.

The final report of the Royal Commission into Aged Care included 148 recommendations. This week Minister for Health and Aged Care, Greg Hunt revealed a financial commitment of more than $18.3 billion to fund this agenda for change over a five-year plan. It will cover home care, residential care, quality and safety, workforce and governance, Mr Hunt said. 

Further measures proposed include (The Aged Care and Other Legislation Amendment Royal Commission Response Bill.2) include:

•  a new funding model for aged care, $3.9 billion Australian National Aged Care Classification (AN-ACC) to be introduced from October 1, 2022. The scheme is poised to deliver increased funding to rural and remote residential aged care services, specialised homeless and remote Indigenous services.
• A registration scheme will provide national pre-employment screening for aged care workers of approved providers to replace existing police checking obligations and an expansion of the Serious Incident Response Scheme to home and flexible care from July 1, 2022.

The lasting impact of the COVID-19 pandemic has shone a light on the need for a higher standard of care for older Australians. But what challenges do procurement professionals in the aged care sector face?

Inevitably, better care will drive higher costs, and the vast majority of aged care operators are ill-equipped to accommodate this. Many of Australia’s care homes are small for-profit businesses with no real scope for leveraging economies of scale. Increases in government funding for aged care over the short and medium term will likely not be enough to cater to Australia’s ageing population. In the 2021 financial year, 88,800 more people left the country than moved here. It’s the first time since 1946 that Australia had a net migration loss. (Money Morning). The retirement of the baby boomers, is also poised to drive up aged care sector costs. 

To ensure that procurement professionals can continue to provide a high standard of aged care for the foreseeable future, teams will need to implement new technologies, such as automation and Procure to Pay systems, to establish efficient and robust processes. Some technology experts say the only way to address this imbalance in rising costs and expectation on improved care is through using technology.

Further issues to consider will be plugging the gap with staff vacancies and workforce retention within a strained workforce. 

 The Health Services Union (HSU) recently reported “90% of members are experiencing understaffing; 84% have  excessive workloads and 36% are working in facilities that have implemented 12-hour shifts, as reported in Hospital and Healthcare. 

As reported in Australian Ageing Agenda, The Australian Aged Care Collaboration this week called on the Federal Government to do more and is requesting: 

• a “workforce partnership supplement” for providers to spend on increasing wages, training, minutes of care, 24-hour nursing and COVID-19 prevention and workforce retention costs
• a minimum wage increase for aged care workers by funding the Fair Work Commission work value case, and award wage increases from July 2022
• a commitment to a multidisciplinary workforce by putting an allied health needs assessment and funding model in place by July 2024.

For procurement, the supply chain disruption caused by COVID-19 is continuing to make it difficult for aged care providers to quickly source key products and services. These disruptions are driving procurement professionals to re-evaluate existing vendor network and supply chain strategies.

Join Australia’s largest aged care procurement conference

PASA’s Aged Care Procurement Conference will again convene Australia’s largest gathering of aged care procurement leaders, health sector buyers and their teams. 

More than 200 attendees are expected to attend this conference at Royal Randwick Racecourse on June 8 and 9 2022 – live and in person.

On offer is clear policy guidance as well as practical advice, case studies and illustrations of how buyers throughout the health sector can do more. Contributors include the Federal Minister, the CEO of CoTA, leading aged care providers, top healthcare buyers and leading vendors on how to balance quality and cost.