What directors need to know from the aged care Royal Commission interim report

The release of the Aged Care Royal Commission interim report on 31 October 2019 prompts calls for an increase in transparency, accountability and communication.

The three-volume Royal Commission into Aged Care Quality and Safety Interim Report: Neglect, released on 31 October, summed up a year’s worth of harrowing stories and demonstrated how the $18 billion aged care sector failed to meet the needs of older, vulnerable Australians. In response, the federal government quickly announced an additional $537m in funding to address the most urgent of the urgent issues — increasing home care packages, reducing chemical (pharmaceutical) restraints, and moving younger people out of residential aged care.

It was a welcome but insufficient boost, according to many in the industry. CEO of Aged & Community Services Australia, Patricia Sparrow, said the package “[would] not even touch the sides of demand from older Australians”.

Even the interim report noted no amount of funding could patch up the ailing system’s flaws. It highlighted a range of demographic, social and economic pressures bearing down on the industry, and concluded only a “fundamental overhaul of the design, objectives, regulation and funding of aged care in Australia” would do.

The final report, due by 12 November, will focus on governance and accountability in the sector and the need for a complete overhaul of the design, objectives, regulation and funding of aged care in Australia. It is expected to provide a road map for this transformation and it is against this backdrop of due diligence that directors and boards of aged care organisations are assessing their policies and practices — to ensure governance frameworks comply with the new Aged Care Quality Standards and to establish a robust organisational culture of diligent and authentic service quality and safety.

Big issues

The Royal Commission has heard evidence about clinical governance structures that looked good on paper, but broke down in practice with insufficient information flow. Boards need to pay attention to the robustness of their internal communication structures — in larger, more complex entities that might take the form of obtaining external assurance.

Among the key issues highlighted in the interim report were barriers for those seeking to access residential or home care; a “culture of apathy” in relation to providing minimum standards of care; a lack of transparency in communication, reporting and accountability; and a host of unacceptable practices.

Uniting these disparate, disturbing stories was one core issue, according to UnitingCare Australia national director Claerwen Little. “All these problems are symptomatic of governance issues which need to be addressed,” she explains. “What the past 12 months of hearings has really raised for directors is that culture is pretty much everything.”

Already, some boards and directors have been called out. Some providers, including Regis Aged Care CEO Linda Mellors GAICD, have called for directors to gain first-hand knowledge about what goes on inside their facilities.

“Eat a meal with residents and ask them directly what their experience is,” she says. “You get such rich feedback when you do.”

Little says directors and boards needed to ask a series of questions: Is our culture setting right for good quality care? Have we got the right people on our board? Where can we do better? Is the individual at the centre of everything we do? “There should be a direct line of sight from the person in a residential setting right through to the people on the board because (the latter) are setting the culture and tone,” says Little.

Brace for change

One of the deficits identified in the current aged care system was a lack of transparency and communication. For example, the interim report stated that the entry point to the system — My Aged Care — was difficult to navigate. It also noted that there was no easily accessible public information about the quality of the services provided, such as the number of assaults or complaints. Further, performance on a limited set of indicators only became compulsory on 1 July 2019.

“The commissioners’ view is that it’s a system that’s largely been left to its own devices, with not a lot of information flowing to individual customers and their families… and not a great deal by way of the ability to compare between providers,” says King & Wood Mallesons partner Kim O’Connell.

While no specific recommendations have been made thus far, O’Connell considers it prudent for boards to prepare for greater reporting requirements. “[The government] perhaps doesn’t have sufficient direct oversight of how [its] money is being spent,” she says.

“It’s possible a quality control body or regulator will be given a mandate to do more checks and investigations.”

Given that government funding accounts for 70 per cent of aged care revenue, there are also demands for increased openness, accountability and interaction with the broader community. For instance, five of the six largest aged care providers — Bupa, Opal, Allity, Estia and Japara — either declined to be interviewed or failed to respond to requests for interviews for this story.

Clinical governance

According to Liesel Wett FAICD, chair of Goodwin Aged Care Services, ACT’s largest provider, many aged care boards lack a health or medical representative. “If boards are stacked with accountants and lawyers, then no-one has the clinical expertise to question the use of practices such as chemical and physical restraints,” says Wett.

She points out Goodwin has had a clinical governance committee — which functions like audit and risk, but for medical care — for the past seven years.

Regis’ Mellors agrees that aged care boards need to place as much emphasis on clinical as financial governance, mirroring a shift that took place in the healthcare sector long ago. This would allow oversight of clinical areas of practice, such as wounds, falls and medication, as well as residents’ experience of personal care such as assistance with showering, using the toilet and meals.

“Directors should consider the skills matrix and ensure there is someone on the board who has a clinical background,” says Mellors.

Fragmentation in the aged care sector contributed towards the lack of clinical expertise on boards. Specifically, says Mellors, around two-thirds of the 900 aged care provider groups in Australia are single home providers.

Aged care has not yet experienced the consolidation that other industries, such as healthcare, have. Therefore, it can lack access to the high-level expertise, systems and processes that come with economies of scale.

“Often boards of small providers are made up of good people from the local community — they’re people with great intentions, but they don’t always have the (breadth of skills required),” she says.

Financials

A lack of adequately trained staff, low wages, and overwork are other woes in a sector struggling to remain financially viable. Providers have pointed to challenges in recruiting and retaining the right people, while workers have said they are stretched so thin they barely have time to provide basic care, let alone more enriching interactions.

A March 2019 report by specialist accounting firm StewartBrown found more than 40 per cent of aged care providers surveyed were losing money, with the average earnings per bed/day just $3.20. But there is no easy solution to the funding issue when increased governance, staffing, reporting and other requirements already flagged will represent a further impost.

This makes it all the more important for aged care providers to take action to ensure their sustainability, O’Connell says. “If there are issues facing those operators who face financial strain in complying with any potential new requirements — they could input that into the commission’s consideration,” she says.

With alternative models for aged care delivery and leadership changes among topics for future consideration, directors should brace for a radically changed landscape. O’Connell says the government’s swift response to the findings in the interim report indicate it is very focused on, and responsive to, this Royal Commission. “People can’t assume this report will be put on the shelf and left to gather dust. I expect there will be a swift response when the final report is made.”