Nurse work force planning

Part 1 - Executive summary

BACKGROUND

1.1 Payroll data supplied by the Department of Human Services (DHS) as at February 2002 shows that approximately 24 600 equivalent full-time nurses were employed in Victorian public hospitals. Approximately 80 per cent of nurses working in acute public hospitals are Division 1 qualified¹. As at June 2001, there were approximately 71 000 registered Division 1 and 2 nurses in Victoria, with large numbers of these nurses employed in private hospitals and aged care sectors.

1.2 Along with most other developed economies, Victoria has had difficulty in recruiting and retaining nurses within the hospital system.

1.3 On 31 August 2000, the Australian Industrial Relations Commission (AIRC) ratified the nurse Enterprise Bargaining Agreement (EBA). Key provisions in the EBA included the introduction of mandatory nurse-to-patient ratios and improvements to pay and working conditions for nurses.

1.4 The Victorian Government commissioned a major study to consider a range of strategies for improving recruitment and retention of nurses in Victorian public hospitals through reviews of local, national and international experience. The Nurse Recruitment and Retention Committee (NRRC) tabled its final report in May 2001. Some of the Committee’s recommendations were included in the AIRC’s arbitration decision.

1.5 Based largely on the EBA and the NRRC’s interim report of April 2000, the Victorian Government launched the Victorian Nurse Recruitment and Retention Strategy in September 2000. The Strategy included 10 nurse work force initiatives overseen by the Nurse Policy Branch of DHS.

1.6 The Treasurer’s Speech in relation to the 2002-03 State Budget indicated that an additional $464 million would be provided over 4 years to enable public hospitals to treat 30 000 more patients and employ 700 extra nurses and health workers.

AUDIT OBJECTIVES AND SCOPE

1.7 The overall objective of this audit was to determine whether effective and efficient arrangements are in place for planning and managing the supply of, and demand for, appropriately qualified nurses across Victoria.

1.8 The audit assessed:

• whether DHS is implementing appropriate actions to improve nurse work force planning processes;

• the effectiveness and efficiency of public hospital nurse work force planning and management at the local level;

• the effectiveness and efficiency of initiatives to encourage appropriate recruitment and retention of nurses; and

• effectiveness and efficiency of linkages between DHS, hospitals and nurse education providers in relation to work force planning.

1.9 This audit focused on acute public hospitals as they are the major providers of health services in Victoria. The audit included coverage of:

• DHS as the Statewide health policy maker and planner;

• acute public hospitals as employers of nurses; and

• universities as the suppliers of Division 1 nurse education and Vocational Education and Training (VET) providers as the suppliers of Division 2 nurse education.

AUDIT CONCLUSION

1.10 We concluded that considerable effort and resources have been devoted to addressing the nursing shortage within the public hospital system through the Nurse Recruitment and Retention Strategy. This has resulted in an increase in the number of nursing staff within public hospitals and in hard-to-fill nursing specialties. However, the benefits from initiatives such as Refresher and Re-entry Programs will reduce over time as the pool of ex-nurses, both registered and unregistered, diminishes.

1.11 Nurse registration data for 1995 and 2001 reveals an ageing work force with a significant increase in the proportion of nurses over 40 years. There has been a heightened level of interest in the nursing profession as demonstrated by increased applicants for nursing courses. However, the total number of students places in nursing at universities has declined marginally in recent years, with a slight increase in the number of full-time students.

1.12 With sources of the supply of nurses either declining or not markedly increasing, the role of hospitals in nurse retention becomes critical. Hospitals need to create an attractive working environment for nurses. Departmental incentives may need to be considered to encourage hospitals to achieve high standards of performance in this area.

1.13 While the Nurse Recruitment and Retention Strategy has been successful in the short-term, ensuring a sustainable supply of nurses that meets demand in the longer-term will require responses to:

• mismatches in supply and demand for nurses;

• the changing nature of nursing work and the scope of nursing practice; and

• changing nursing skill mix requirements.

1.14 In relation to each of our audit objectives, we concluded that:

• For the latter part of the 1990s insufficient attention was paid by DHS to the emerging shortages in nursing. While valid reasons existed for delays in conducting nurse work force studies such as the implementation of the 2000 EBA, DHS is not in a position to determine current nursing shortfalls by specialty and geographic location or to be able to forecast nurse demand and supply. DHS has indicated that addressing this issue has recently been confirmed as a major priority area; (paras 5.3 to 5.8)

• Work force planning at the hospital level was generally limited, with little forecasting of work force requirements beyond the following year; (para. 6.32)

• While the Nurse Recruitment and Retention Strategy has resulted in additional nurses entering the public hospital system, a full assessment of the Strategy’s impact was hampered by limitations in relevant data; (para. 7.39)

• It is too soon to determine the impact of restrictions introduced by DHS to limit nurse agency usage and costs, given that nurse demand fluctuates seasonally and the effects of increased nurse demand over winter are yet to be felt; and (paras 7.73 and 7.74)

• There were poor linkages between DHS, education providers and public hospitals in relation to nurse work force planning. (para. 8.16)

AUDIT FINDINGS

Department of Human Services’ work force planning

1.15 DHS is now placing greater attention to nurse work force issues. However, there was a lack of reliable and up-to-date data on the nurse work force to underpin DHS’s work force planning processes. The NRRC found that “Currently the Department of Human Services has no consistent data on the number of nurses working in the public hospital system”. DHS has commenced data collection to address these gaps. (para. 5.9)

1.16 We consider it is now timely to conduct a number of limited nurse work force studies including the collection of new categories of data such as nurse attrition rates. Such collections and studies could ultimately provide a more comprehensive understanding of the nurse labour market and feed into a large-scale study, the outcomes of which would influence the development of focused work force recruitment and retention initiatives. (para. 5.37)

Hospital work force planning

1.17 Of the 17 hospitals visited during the audit, only a third had a work force plan and half had a forecasting model in place. The absence of key work force planning data such as attrition rates reduced the effectiveness of forecasting models. (paras 6.31 and 6.32)

1.18 Systems supporting work force planning such as rostering systems were of variable quality with a number hospitals still working with paper-based systems that involved substantial duplication of effort. Less than 20 per cent of systems could automatically import payroll or human resource details, and only a quarter could automatically provide work force management data such as overtime usage. In addition, the majority of hospitals had either recently changed or planned to change payroll systems. Hospitals were experiencing major difficulties with the performance of these new systems. (paras 6.36 and 6.37)

1.19 Management reporting on recruitment and retention issues was not extensive and generally of limited value. Two-thirds of the hospitals reviewed had no reporting on nurse retention and, of those who reported, most believed the reporting was not timely. (para. 6.40)

Recruitment and retention initiatives

1.20 We examined in detail 3 DHS initiatives, namely, the provision of Refresher and Re-entry Programs, Postgraduate Scholarships and Continuing Nurse Education Programs. These programs were successful in quickly addressing, in the short-term, nurse recruitment and retention issues. (paras 7.18, 7.30 and 7.34)

1.21 Management of these programs could have been enhanced through improved data collection for evaluation purposes and communication and feedback mechanisms to hospitals and universities. In relation to the Refresher and Re-entry Programs, DHS should develop guidelines and funding arrangements to ensure that:

• there is a clear commitment by hospitals to fund places for nurses who complete these programs; and (para. 7.18)

• nurses agree to accept positions within the public hospital system after course completion for a specified period. (para. 7.18)

Restrictions on agency usage

1.22 The restrictions on the use of private sector agency staff in public hospitals, which took effect from 4 April 2002, were also examined. Our audit confirmed the recent and substantial increase in agency costs within the public hospital system that preceded the implementation of this policy. (para. 7.49)

1.23 Prior to the introduction of these changes to the engagement of agency staff, DHS was not in possession of regular Statewide data on trends in agency usage and costs. DHS has requested that hospitals report on the outcomes from these changes. These reporting arrangements should be supplemented by additional details such as shortages in hard-to-fill specialties. (paras 7.68 and 7.69)

Linkages between the key stakeholders

1.24 There was regular liaison between key stakeholders such as DHS and hospitals, and between individual hospitals and universities, on nurse work force-related issues, although not directly related to work force planning. (paras 8.9 and 8.12)

1.25 Our audit found a need for Statewide coordination and decision-making arrangements between the university and VET sectors, hospitals and DHS on overall nurse supply and demand issues. Consideration could also be given to extending representation to other sectors such as the private hospital system. (para. 8.21)

RECOMMENDATIONS

1.26 A full listing of recommendations contained in this report is set out below.

Report reference	Paragraph number	Recommendation
DHS nurse work force planning	5.21	We recommend that DHS: • conducts a Statewide review of the status of the implementation of recently introduced hospital payroll systems in terms of their capacity to meet operational and work force planning requirements; and retains the option of publishing the Victorian results of the Nurse Labour Force Survey as soon as they become available, consistent with yet to be published national results, if Australian Institute of Health and Welfare data publication continues to be subject to time delays.
	5.26	We recommend that DHS initiate discussions with representatives of key non-public sector employers with a view to progressing the collection and reporting of comprehensive nurse work force data.
	5.29	We recommend that data collected for DHS on the supply of nurses be extended to include a longer time period to allow trend analysis, the destination of graduates and other key demographic characteristics such as age profiles of graduates.
	5.33	We recommend that DHS, in partnership with hospitals: • agree on an approach to address information requirements and data needs for work force planning and monitoring; • assign clear responsibilities, milestones and resourcing to undertake and manage these tasks; and • ensure appropriate safeguards over data reliability and reporting requirements are built into the data collection process.
	5.39	We recommend that: • a timetable for undertaking a comprehensive nurse work force study be agreed by DHS, including key actions that are required to meet milestones; and • in the short-term, agreement is reached on the conduct of a limited number of small-scale studies, the results of which should be considered as part of a more comprehensive nurse work force study.
	5.45	We recommend that DHS undertake a formal assessment of the risks associated with its work force planning arrangements to ensure the development of a robust forecasting model and a comprehensive approach to future nurse work force studies.
Nurse work force planning by hospitals	6.41	We recommend that • Hospitals give a higher priority to introducing improved work force planning and associated system support; and DHS, in consultation with hospitals, develop a pilot program at selected sites for various categories of hospitals to upgrade the standard of hospital work force planning. This would include the provision of standard nurse work force data definitions and adequate system support particularly to allow electronic transferability of data from hospitals to DHS.
Initiatives for nurse recruitment and retention	7.45	We recommend that DHS: • directly link the funding of future Refresher and Re-entry Program places to vacancies or contract positions within public facilities; • expand existing retention initiatives to provide additional career opportunities for non-managerial generalist nurses; • improve communication on forthcoming initiatives and feedback on the outcome of funding deliberations; and • introduce data collection and monitoring strategies for evaluation purposes.
	7.75	We recommend that broader hospital system outcome measures be supplemented with additional agency specific indicators in order to better quantify the impact of restrictions on nurse agency use.
	7.89	We recommend that DHS develop a strategic policy framework which includes: • communicating a clear definition of its roles and responsibilities vis-à-vis hospitals; • introducing benchmarking of hospitals’ performance on nurse recruitment and retention covering both quantitative and qualitative indicators; • introducing policy initiatives that recognise and reward best practice in this area; • sponsoring research into defining nursing-related work and associated technical requirements and competencies; and • engaging with other key stakeholders in addressing these issues.
Communication and co-ordination between key stakeholders	8.24	We recommend that: • co-ordination arrangements be initially established by DHS linking key stakeholders involved in nurse supply and demand for the public hospital sector; • the potential to expand co-ordination arrangements to include coverage of major non-public sector nurse employers should be explored; and • regular feedback be provided to interested parties such as statements on areas of nursing shortages.

RESPONSE provided by Secretary, Department of Human Services

Overall, the Department of Human Services welcomes the report into nurse work force planning and supports the findings and recommendations of the performance audit undertaken by the Auditor-General. Health work force planning has been a problem in Victoria for many years, due to a combination of factors - principally a lack of resources, fragmented effort, and poor and untimely data - many of which are identified by the audit. In the health field the Department does not have the same degree of control over the work force as is enjoyed, for example, by the Department of Education, Employment and Training with regard to teachers. Work force planning is inherently a difficult task: planners typically do not directly control many variables, there are long lead times and outcomes can never be precise. Looming shortages in many key health professions, including nursing, have resulted in significant efforts being made to redress the situation, as the audit notes.

The audit highlights 3 issues:

Problems with data, from a wide range of sources

The data available are untimely, often contradictory and incomplete. This is a national problem and one which Victoria is playing a key role in resolving. Improved data systems in hospitals, which the audit recommends, are a necessary precursor to more effective work force planning but will require substantial investment. The Department has undertaken several initiatives to improve the situation, but acknowledges that there is some distance to go. The situation with regard to data from education, immigration and regulatory sources is also not completely satisfactory and efforts to improve all 3 continue.

Retention

The audit warns that the pool of nurses who are registered but not working as nurses (either because they are not working, or working in a non-nursing role) has fallen significantly in the past few years. The audit argues, in effect, that we have used up a major portion of our reserves, and the time has come to increase the number of nurses being educated. The Department agrees, but notes that the Commonwealth is responsible for funding university education. The State in 2001 doubled the number of places for Division 2 nurse students in the Vocational Education and Training system.

There is a need for a substantial increase in the number of Victorian undergraduate places for nurses funded by the Commonwealth. As there would be some difficulties in expanding the number of places quickly, principally in recruiting staff, providing infrastructure and making available sufficient clinical experience, such an increase may need to be phased in over 2 years.

The gap between supply and demand will be the subject of a major study which will be undertaken by the Department in the second half of 2002. The situation is complicated by large but probably temporary swings in recruitment from overseas, re-registrations, re-entry to the work force and the expansion of the work force that has occurred in the past 2 years. Modelling, sensitivity analysis and a preliminary review of available data show that the most critical factor is the attrition rate from the existing work force. In a sense the Department’s study must determine the underlying attrition rate that will have been obscured by the temporary conditions reported above. This data element is particularly difficult to capture, the only known studies being inadequate for the purpose. The Department notes that in the teacher work force, which has some demographic similarities to the nurse workforce, the underlying attrition rate is about 5 per cent but is predicted to be 8 per cent annually by 2009.

In these circumstances of uncertain supply and growing demand, retention becomes a major issue. The Department has, in the past 18 months, worked with health services to improve retention practices.

The need for new structures to link regulators, education providers, funders, users and planners

The audit calls for the establishment of new structures to provide information flows and feedback loops between users and suppliers of the nurse work force, with other relevant stakeholders and the Department agrees. Funding of universities is a Commonwealth responsibility, and the Department has taken an active role in advising both current national reviews of nursing education and related matters. However, it is clear some issues (including the relationship between under- and post-graduate numbers, course content, funding for clinical supervision) are also primarily national issues, which the State has only a limited capacity to influence. The State is responsible for issues such as mentoring, effective retention policies, the nursing skills mix, regulation and accreditation.

Some issues may require the State or Commonwealth to work together with other, independent stakeholders to secure desired outcomes.

The Department has already taken some steps to improve linkages with stakeholders and will establish new structures to further improve the situation.

Other comments

Work force issues have been given increased focus in the Department of Human Services in recent years through the creation of the Nurse Policy Branch and its work on recruitment and retention matters, and recognition of work force issues as a Flagship Project. The latter gives work force matters a status which allocates responsibility to a single senior executive, who is charged with bringing together the various strands of work being undertaken into a single coherent whole. Additional resources will be provided to assist this process: already work has been undertaken on a broad framework for work force studies, and detailed work on the maternal and child health work force has begun.

The Department believes that the focus on nurse agency use in hospitals has had a number of positive impacts. It has ensured greater value for money from casual staff employment. It has encouraged hospitals to think creatively about how to offer greater flexibility and better working conditions to their existing permanent nursing staff, and to greatly expand their nurse banks. It has also encouraged hospitals to develop more sophisticated work force management processes and systems, with some promising results.

The audit examines experience in nurse workforce management in several other countries quite extensively. It should be noted that Victoria’s achievement, proportionately, is significantly greater than in any other jurisdiction, especially in relation to the funds spent.

The Department agrees that retention is more cost-effective than recruitment and has encouraged hospitals to improve their retention efforts by increasing flexibility, creating their own nurse banks, offering refresher coursers, subsidising post-graduate education in specialties that are in short supply and other measures. However, the gender/age composition of the nursing work force will continue to have a major impact on retention.

It is likely that one factor accounting for increased migration of nurses from other States and countries to Victoria is the increased remuneration accessible as a result of recent industrial decisions. The current disparity of nurse wages between Australian jurisdictions in favour of Victoria is, however, unlikely to be sustained. As other States catch up, in relative terms, it is likely net inter-State migration, currently at a high level, will fall. Similarly, it would be unwise to assume high levels of international migration will be sustained.

Although a nurse work force supply and demand study will not be completed until the end of 2002, the Department believes the growth in demand for nurses over the next few years is likely to be approximately 3 per cent annually, due to rapid expansion in aged care places, and then by 2006 resume a slightly lower long-term growth rate of around 2.1 per cent annually.

The data on vacancies in Part 6 of the report is interesting and broadly comparable with work done in 2000 and 2001 by the Department. A vacancy rate of just over 5 per cent is in no way unusual. Work is continuing on a new dataset which will provide the Department with more precise data by specialty, which can inform decisions about priority areas for funding of post-graduate education scholarships.

One of the issues examined is the question of how hospitals are responding to shortages of nurses. Possible strategies in some situations include substitution by nurses who may not have pertinent specialist training, or Division 2 nurses for Division 1 nurses. However, all nurses in an area do not necessarily need to have specialist training. For example, the professional association representing critical care nurses agrees that not all nurses working in an intensive care unit require post-graduate qualifications in critical care. In Victoria, relatively few Division 2 nurses are employed in public acute hospitals, although they form the bulk of the nursing work force in the sub-acute (largely geriatric) care and rehabilitation system. Division 2 nurses only substitute for Division 1 nurses in acute hospitals where this is judged appropriate in view of their skills and training.

The Department has been collecting daily information from all metropolitan health services and the 3 largest non-metropolitan health services since the nurse agency directive was circulated in early March 2002. Hospitals have been asked to report only those incidents that are directly attributable to the nurse agency directive and the Department has made significant efforts to ensure the accuracy of this data collection. In addition, close monitoring of the regular daily ambulance bypass system, the fortnightly reports of payroll data, and the monthly reports of activity and financial status are supplementing the new data collection. Some of the information the audit suggests should also be collected will become available once the new Nurse Workforce Minimum Data Set is implemented, over the next few months.

The daily reporting system shows that the total casual work force has been stable from early March to early May in the metropolitan health services plus Ballarat, Bendigo and Barwon Health, at about 1 000 shifts a day. The fall in the number of agency staff being used has been closely matched by an increase in nurse bank utilisation. Data collected from health services by the Department indicate that more than 1 000 nurses have joined public hospital nurse banks since the start of 2002.

The dynamics of the nurse agency work force are not as clear as implied by the discussion of the results of a survey conducted on behalf of a nurse agency. The sample was small and limited, and the results would need to be tested be a follow-up survey of the same individuals to determine whether their subsequent behaviour mirrored their expressed intentions.

Analysis of trends in hospital nurse EFT monthly figures over the past 5 years shows that there are distinct and predictable peaks and troughs. These are linked to hospital activity, which is similarly cyclical for reasons linked to staff availability and patient demand.

With the introduction of fixed nurse-to-patient ratios in most areas of public hospitals, activity would decrease if hospitals were unable to recruit sufficient staff to meet clinical need. By improving their human resources management, making hospital employment more attractive, by expanding the size of their nurse banks and other measures, hospitals should, however, be able to meet normal seasonal variations in demand in 2002.