After the Royal Commission, how will the aged care industry respond?

A recent US survey found that three out of every four people said they would like to live to be 100, if they could do so in good health. Yet the same number of people said they ate too much, didn’t exercise enough and were likely to retire at the age of 65.

The Mandarin first published this article on the 24/10/2018

This growing collision between longevity, chronic health conditions and aged care services reflects a familiar narrative and one that is driving new thinking from Australian policymakers about the direction of aged care services and delivery.

The number of over-65s is expected to double in Australia by 2050. The financial impacts are staggering. In 2016-17, $17.4 billion was spent by governments on aged care, of which 69 per cent was for residential aged care. A total of 215,000 people entered aged care services that year, with women outnumbering men two to one. Because they live longer, women also have more complex health care needs.

As the numbers increase, we are confronted by an aged care sector in crisis. The recently announced Royal Commission into Aged Care Quality and Safety will bring into the stark light of day the systemic failures by parts of the sector to provide some of our most vulnerable citizens with even the most basic level of adequate care.

While the recent 4 Corners investigation threw light on the dark underbelly of appalling ‘care’ practices, those working in the sector would confirm these issues are not new but also that the examples cited the minority rather than the norm.

If aged care is already struggling under the weight of regulatory scrutiny and financial pressures at a time when independent analysis has shown that 43 per cent of the sector is operating at a loss, then much of the sector will, therefore, seem unprepared to deal with the added pressures likely to come from the royal commission.

It’s something that Deloitte partners Michael Kitts and Willem Punt say will demand not just soul-searching but new frameworks supporting quality of care, conduct and outcomes-focused delivery of services which prioritise public trust, keep faith with customer promises and secure the outcomes and experiences that matter to care recipients.

A royal commission – at what cost?

Kitts, who is Deloitte’s National Human Services Leader, says it is almost certain that any recommendations coming out of the royal commission will involve a hefty price tag. With unions pushing for legislated staffing ratios per person cared for, and additional regulatory and compliance costs, the already financially constrained sector will be put under new and possibly onerous challenges. This at a time when the existing arrangements are already sub-optimal and unsustainable.

We have a situation where the number of elderly Australians is increasing, the government will struggle to put more money into aged care, the sector is already losing money and the royal commission is most likely to make recommendations that will be expensive to implement. It’s a challenging environment, Kitts says.

Punt, who focuses on governance, risk and compliance, agrees, saying Deloitte’s current experience of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will likely place “significant strain on businesses to produce management information which they may, at the moment, not have”.

“Many aged care organisations may not sufficiently understand what is happening at the coalface. Traditionally, they are not designed or set up to monitor outcomes at the levels of accuracy and reliability that the commission will demand.” says Punt.

“One of the challenges facing the sector is locating supporting evidence to back up claims that they treat customers and staff well. They will also need to resource for a significant compliance burden in relation to reaction to the commission’s notices, preparation of supporting materials, witness statements and the like. While a large bank can generally command those resources, it is probably not true for many aged care providers.”

Aged care organisations must act now

Both Kitts and Punt argue that in order for aged care organisations to successfully negotiate what is likely to be to be a demanding inquiry, they must be prepared ahead of the commission.

The real risk is that the most reactive – those that leave it to the last moment – will find themselves in a precarious position.

Punt says the early movers will see the royal commission as a challenge and an opportunity to improve their business practices and to be best placed in moving towards a post-commission future that is more appropriate, sustainable and likely to be chosen under the government’s regime of consumer directed care. Experience shows that those that see this primarily as a business opportunity to focus on improvement will address the business, compliance and other risks better than those seeing this purely as a legal risk that needs to be managed.

“An already fragile industry is now faced with a perfect storm scenario: social expectations developing faster than the regulatory framework and the sector’s ability to respond; in many cases, inadequate infrastructure; financially constrained business models; and a lack of maturity in terms of governance, monitoring and auditing,” says Punt.

A greater focus on outcomes

Kitts says across the globe there is a movement toward a greater focus on outcomes rather than inputs and activity, and that the royal commission will likely push the aged care sector to adopt a similar stance.

He notes that a widely adopted framework known as the Quadruple Aim, derived from the Institute for Healthcare Improvement in the US, could be the basis of measurement and assessment for the future.

The Quadruple Aim is a scheme for optimising health and wellbeing for individuals and the general population by focusing on four things:

  • Improving the experience of being cared for, with an emphasis on the quality of the care and the level of satisfaction, both of which will be focuses of the royal commission.
  • Improving the health and wellbeing of populations
  • Addressing the per capita cost of care
  • Improving the experience of care providers, known to have a massive impact on how care is delivered

Kitts’ thinking behind the Quadruple Aim is that its broad adoption by the sector would lead to a more robust and thriving system with improved reputation and status – a virtuous circle in terms of business dynamics and one that focuses on what really matters. It could also: decrease the care cost burden on governments and individuals; improve quality of life for individuals; lead to healthier and more productive communities and enhance the ability of aged care and health systems to respond to new regulatory challenges and cost containment measures, all while improving quality of care.

The majority of the industry is doing the right thing

Kitts and Punt say that the majority of providers are committed to high quality care but the challenge during the royal commission will be to demonstrate that commitment clearly. It will not be good enough to say that care is appropriate and of high quality; that will need to be evidenced.

Those that demonstrate trustworthiness – the right mindset, an ability to ensure quality outcomes, and who offer services that are clinically suited to the circumstances – will come out of the royal commission with their reputations intact and a more sustainable business, Punt says.

New business models based on consumer directed care are already underway, and consumer demand, including the preference for in-home care, will continue to drive business models in that direction. More customer choice also comes with more accountability from providers – which many are currently not geared to meet, or critically, evidence.

“With the right to spend public money comes two important responsibilities. First, there is the pressure to deliver the best possible service and secure the outcomes that matter to care recipients. Second, there is the transparency and accountability for the use of public money and the experience of both the consumers and the deliverers of care.”

As Kitts and Punt say, the royal commission will throw the quality and conduct of all aged care organisations into the spotlight. Inevitably, there will be a justifiable focus on the things that have gone wrong, but it is also critical that these are looked at within the context of the many more things that go right and of the majority of care providers who are committed to delivering high standards of care.

Kitts and Punt are optimistic – the royal commission can be a catalyst for the betterment of all in the sector – vulnerable customers, diligent carers, responsible service providers and government authorities who are rightfully prudent in spending tax dollars.

For providers to benefit, they need to move early to assess and, where necessary, improve their ability to build trust and keep customer promises. It will enhance their ability to make their voices heard and be the providers of choice in a sector undergoing significant change.


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