“People Love Working at Bupa” - An alternative view by Gregg Sheehan
“We have committed to Bupa being a place where people love to work and where they are healthier because they work with us. We are proud of the affinity our people have with Bupa’s purpose and the customer care they provide every day.”
So, where did it all start to go wrong at the Bupa facility at Liston Heights in Taupo?
The company only “cares” about people when there is a profit to be made, and it seems that it has to be a substantial one at that. If it perceives any lowering of profitability from (as far as I can tell), a 23% return on investment, it is quick to “disinvest its operations” as evidenced by its “forced” closure at Gisborne. (As it happens it is simply repurposing its facility into one focussing on disabled care.)
“In order to continue to operate in New Zealand , we are required to make a reasonable return on our investment by our parent company. Where this is not the case, the company will seek to disinvest its operations and this has indeed been the case in Gisborne, where we have been forced to close our Care Home as it was no longer financially viable.” (from the Bupa document handed to staff telling them to choose to do the 4 on 4 off shift regime or risk having their jobs "disestablished)
Or it could be that rather than provide more and better care in order to make its facility more competitive and appealing to the aged population in Gisborne, Bupa have found an opportunity to branch out into a more profitable enterprise.
“Mr Brown said declining occupancy rates due to an oversupply of rest home beds in the Gisborne district, as well as a need for a rehabilitation service in the region were reasons for this new direction.”
We can only make guesses at what the ‘return on investment’ might be for the Taupo facility because the company has not chosen to open its books for us to see just what the actual figures are. The guess I have made is based on the findings of the Thornton Report. (Aged Residential Care Service Review September 2010 - Grant Thornton). An in depth analysis of the operation of aged care homes in New Zealand at the time.
“The Thornton report quotes EBITDAR (earnings before interest, taxes, depreciation, amortisation and rent) per rest home resident of $5,068 from a care cost of $16,859 and in hospital level care a return of $9,647 against a care cost of $31,829. Returns of 30% - which even before tax, are extraordinary. And, when Thornton compared “not for profit” rest home operators against the “for profits”, EBITDAR were 68% higher in “for profit” operators.”
In their document however the company does come up with some figures to support their claim that “occupancy levels continue to plummet”, by suggesting that occupancy levels “have declined about 10%” over the last two years. By my reckoning there are 2 spare beds in the rest home, 3 spare in the hospital and 3 in the dementia unit. Dire times indeed!
Bupa claim that current levels of direct care provided by registered nurses, enrolled nurses and caregivers are 356, 130 and 1120 hours per week respectively. They further claim that these levels are higher than those recommended in the “Indicators for Safe Aged Care for Consumers”. In the table (from the publication referred to) below it can be seen just what the recommended hours are:
Using the current occupancy of Liston Heights this would suggest the following:
While it can be seen that the level of Caregiver hours is slightly more than that recommended for safe aged-care, the RN hours amount to less. The EN hours may perhaps be optional but there needs to be an RN on at all times. The only real room for movement would be in the day shift staff (who are essentially management and possibly won’t come out of their offices to do the work of the RN on duty anyway). To be fair they should be dropped out of the equation for RN staffing levels as it is debatable whether all of them even need to be qualified RNs. This would bring the RN total hours per week down to 168 and allow the EN hours to perhaps top up the care level inputs of qualified staff.
In any case the levels calculated for all types of care staff still fall short of the numbers claimed as being the “existing hours per week” by the Bupa management.
Profitability of the organisation
Getting around to the profitability or otherwise of the establishment, I find that even using the current staffing hours claimed by Bupa and multiplying by the guesstimated rates for staff of $26/hour for RNs, $18/hour for ENs and $16/hour for Caregivers, the wage component for care costs (when apportioned appropriately over each care group), amount to $30,140, $21,202 and $16,204 for hospital, dementia and rest home residents respectively. If these are adjusted to the levels proposed by Bupa they reduce to $23,405, $16, 886 and $13,040.
Assuming that the reduced levels represent a degree of profitability that Bupa Head Office are happy with we can extrapolate the component of direct care that is not wages based on the extensive work carried out by Grant Thornton in his report, Aged Residential Care Service Review September 2010. I have estimated these at $10,870, $9,778 and $5115.
After adjusting for inflation for the 3 years since 2010 at a rate of 2.5% per annum (leaving the less significant categories of operating costs as modelled by Thornton), I can estimate the following figures:
When figures for income are compared with costs it is evident that there is still quite significant profitability at the current Bupa reported staffing levels (even if these are not exaggerated - see table 2 above).
While it is understandable that the Bupa organisation would like to maintain the profitability of the latter scenario, the question needs to be asked if it should be at the cost of the health and wellbeing of its current staff. Also, if it is true that there are more staff than currently recommended, where are they deployed? Are they providing more care for the aged? Surely this is an admirable outcome?
Profits made by Bupa do not have to be paid out to shareholders, so they are ploughed back into assets - which make even more profits which are turned into yet more assets. The taxpayer helps fund this expanding juggernaut, twice - first as the taxpayer and then as the resident. Bupa claims to have a history and policy of helping to create more affordable and better health care, yet, if their performance in the aged-care sector in New Zealand is anything to go by, they are charging no less nor providing more care than any other organisation.
At the same time they are happy to take advantage of vulnerable staff and see them try to live at a subsistence level. While a person supporting a spouse on an hourly rate of $16 would earn $448 per week on a 4 on 4 off roster. They could get $384 plus an accommodation supplement up to $160 if applying for unemployment benefit.
If Bupa is truly interested in providing affordable and improved health outcomes they could hardly do better than use some of their profits in bringing the sector workers up to parity with their counterparts in the DHB while increasing direct care hours in order to provide a safer environment.
Is this current crisis the result of greedy staff or poor management on the part of Bupa. While the staff have all contracted in good faith to work the hours they currently have, Bupa have known all along that they were growing capacity while occupancy was unable to keep up.
“In New Zealand, revenues and profits increased year-on-year with resident numbers rising. However as capacity grew at a faster rate, occupancy figures slipped to 90.9% from 94.0% in care homes and to 87.5% from 91.1% in care villages. Government spending caps in New Zealand continue to present some financial challenges.” Bupa Half year statement for the six months ended 30 June 2013
In 2010, Thornton predicted two possible scenarios, suggesting actual trends may sit somewhere between.
“Scenario A projects that the downward trend in rest home bed days will continue until 2012 before it begins to rise with the growth of the aged population. Scenario B projects a much faster rate of reduction that also persists for longer, until 2015.” Aged Residential Care Service Review September 2010 - Grant Thornton
Whatever the situation, there is still enough fat in the system to allow Bupa to maintain the local staff as they are, accepting normal attrition if they wish, until the certain increase in occupancy takes place in the coming months or years.
Bupa was originally set up as a provident society to make things more affordable for the people it served. Somewhere it has lost its direction, as can be seen by this current fiasco, which is putting profit margin before the welfare of its most vulnerable and undervalued asset - its staff.
NB: It would be possible to save 28 hours/week of RN time if the management staff opted to work 4 on 4 off.
My first memory of being bullied was as a 5 year old going to the corner shop with sixpence that my mother gave me to get us a Crunchie Bar. A 'big' girl was outside the shop and threatened to run me over with her doll's pram if I didn't give her my money. I handed over the sixpence and went home crying....