The Hunter's top public health official says omicron cases will keep rising after hospital admissions surpassed the peak of the delta outbreak on Wednesday.
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Two female residents of the BaptistCare Warabrook Centre nursing home died over Christmas, the first COVID deaths in the Hunter since the omicron outbreak started three weeks ago.
BaptistCare said on Wednesday that 35 staff and residents of the aged care centre had tested positive in the past two weeks.
Hunter New England Health reported 775 cases on Wednesday, a sharp rise after a lull in testing at Christmas.
The number of COVID patients in HNEH hospitals has jumped in one week from 11 to 31, one more than at the peak of the delta outbreak in early October. Three of the COVID patients are in intensive care.
NSW added 11,201 new infections, almost twice the previous record for the pandemic set last week.
Public health controller Dr David Durrheim said Hunter case numbers would "absolutely" keep trending up, especially after social gatherings over Christmas.
"What we were seeing was very much a false downturn, largely as a result of people not seeking testing or the availability of testing before Christmas," he said.
"What we're seeing today is not yesterday's tests but a couple of days ago's test results across NSW."
Prime Minister Scott Morrison flagged on Wednesday that national cabinet would discuss narrowing the definition of a close contact to only household members as case numbers skyrocketed.
"We just can't have everybody just being taken out of circulation because they just happen to be at a particular place at a particular time," Mr Morrison said.
Health chiefs are also weighing up whether to cut isolation times for positive cases after the US and UK reduced isolation to five and seven days respectively.
Dr Durrheim said focusing testing on those who were symptomatic and shortening isolation times appeared to make sense.
"Omicron does appear to have a very short incubation period, even compared to delta, so most people are maximally infectious in the first two to three days of their infection, so it may well be that the focus should be on that initial week," he said.
BaptistCare said it had been advised on December 15 that several staff members at Warabrook might have come into contact with a person who had tested positive for COVID-19.
"Since this time 20 staff and 15 residents have tested positive," BaptistCare said.
The women who died were in their 70s and 90s.
The woman in her 90s had received three vaccination doses and the younger woman was double-vaccinated.
BaptistCare said the woman in her 90s had underlying health conditions and the woman in her 70s was "on an end-of-life pathway".
Dr Durrheim said it was too early to know how severely omicron would affect different age cohorts.
"The more severe illness normally follows in weeks two and three of the infection, and almost exclusively the first week of cases in Hunter New England were all young people, so there still are questions about what the scale of that severity will be in the older age group, and particularly unvaccinated people."
He said omicron might cause comparatively mild illness, but high case numbers could still challenge the health system.
"Clearly, the more cases you get, the more severe, end-of-the-spectrum you get as well," he said.
"Unless it's very, very mild, we should expect a large number of cases, including hospitalisations as well.
"Just based on case numbers it may be a very small proportion, but it may translate into a large absolute number of [hospital] cases."
The HNEH cases were up from 409 the previous day.
Lake Macquarie local government area led the new infection count with 187, followed by Newcastle on 185.
Maitland had 122 new cases, Cessnock 55, Port Stephens 52, Singleton 31 and MidCoast 26.
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