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Background
The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes.

Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.

The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organisation.

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Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then CLICK HERE to open it in another tab or web page.

Content of this page
The British not for profit group BUPA has purchased Australia and New Zealand's largest for profit nursing home company. This web page tracks the efforts made to show that promises made by ministers had not been met and that BUPA did not have to front up and seek approved provider status. Any criminal or dangerously aggressive commercially focused entity can still buy  nursing homes without scrutiny.

The page establishes that the new labor governments refuses to meet their predecessors undertakings.  It documents their reliance on regulatory vigour and oversight to control the consequences. These measures have already been unsuccessful.

Suggestions are made as to how the community might do something about the problem.

 Australian section   

Will BUPA seek approved provider status

(Well actually NO)

  

CONTENTS


The Problem and Addressing it

Background

When DCA, Australia and New Zealand's largest owner of nursing homes was purchased by a Citigroup private equity consortium objections were lodged with the appropriate departmental authorities assessing approved provider status. Citigroup had previously been found wanting when it applied for hospital licenses in NSW.  

It took almost 5 months to extract an acknowledgment and response from the department. This indicated that Citigroup's Venture capital arm did not have to seek approval because they were buying nursing homes owned by a company with approval status already granted. They did not have to seek approved provider status in their own right. 

This can only mean that approved provider status, once granted, becomes a commodity which can be traded in the marketplace like any other commodity. This commodity adds value to the sale - a considerable value for a company that might not be granted approved provider status because of a poor track record.

This matter was taken up with non-commercial groups involved in or taking some responsibility for the care of the elderly and with politicians. Both ministers responsible for aging finally responded and there are letters from them on this site undertaking to correct this problem. These matters are addressed on another page and there are links to copies of the correspondence with the department and from or on behalf of the two ministers.

An election was called.  The opinion poles indicated that these ministers might not be re-elected.

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BUPA buys the nursing homes - its importance

When BUPA purchased Citigroup's DCA nursing homes, it provided an opportunity to see if the ministers had met their undertakings - or if the undertakings were hot air. The changes would not have been popular with the industry and they would have been strongly lobbied.

In addition I felt that there were real concerns about the way BUPA had done business and that it was essential that it be assessed by a body with the power to insist on disclosures.

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Objections to BUPA

Ms Karmel from the department of aged care had given me assurances in 1999. She had then shouldered the unenviable task of telling me early in 2007 that these assurances were hollow because the regulations passed by her political masters did not require many of those whose suitability she should be assessing to present themselves.

I therefore faxed and posted a letter to her on 4th October 2007.  I asked

"whether the changes to the aged care regulations promised me in correspondence from the Minister for Health and Aging on 7th June and the Minister for Aging dated 19th June 2007 have in fact been made and that companies buying other companies that already have approval status will now have to seek approval in their own right?"

and then

"The question is a simple one of fact and I look forward to an immediate response."

I did not receive one.

Click Here to read the full letter to Ms Pru Karmel. 

When I had received no response by 11th October I thought it wise to send information officially to the approval body and request that they examine the issues raised.  I did this as an objection. It was never acknowledged.

Click Here to read the objection

On Thursday the 18th October I phoned the department and spoke to someone there. I was assured that the matter was receiving urgent attention but they would not disclose to me whether BUPA was required to apply for approval status. Perhaps this was some deep commercial in confidence secret to be kept from the public whose welfare the approval processes are claimed to protect!

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Going Public

It was now over 3 weeks since I asked for information urgently. I therefore decided to put this information as well as any worrying information I could find about BUPA's operations on the web site. At the same time I wrote again on the 22nd October to the department drawing their attention to the information on this new web page.

I wrote

"The worrying areas I identified were situations where I felt that BUPA had not coped adequately with the tension between commercial priorities and its claimed not for profit focus. These are matters which deserve your attention. They are

I look forward to an early acknowledgment and response to my letters, particularly to my question about BUPA's requirement to apply to you for approval as was indicated would happen in the ministers' letters."

Click Here to read the full letter.

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Asking the Labor Party

We were nearing the end of a federal election campaign and I felt it was time to ask the labor party how they were going to handle this situation if they gained power.  Would they honour the undertakings.

The important role which the owners played in problem homes had become increasingly important. If one home was a problem then the others homes owned were also likely to be (examples Kenilworth and Belvedere Park --- or Brighton and Hyde Park nursing homes). The government ministers of the day were avoiding this issue.

I wrote to the shadow minister for aging, the Hon Senator Jan McLucas on 24th October setting out the issues and asking her how labor would address them, if, as seemed likely, they won the election.  I promised to put her response on this web page.

The letter 

I asked

"There are clearly two issues here that should be important for labor's policy. You are I am sure well aware of them and have already thought about them. I ask you to address them in a letter which can be set beside the present ministers' undertakings.

  1. a. Assessment of the suitability of potentially influential owners of nursing homes before they purchase and
    b. what action is taken when an existing owner is shown to be a criminal or otherwise unsuitable. This has been a serious problem in Australia.
  2. The bundling of nursing home approval status with the sale of nursing home companies. What steps will be taken to ensure that all those who play or might play an influential role behind the scenes are assessed as suitable in their own right."

Click Here for the full letter to Senator McLucas

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Update June 2008

The new minister and her staff

The shadow minister did not respond and a labor government was elected.  To the disappointment of many who had dealt with Senator McLucas, the aging portfolio did not go to her.  It was given instead to a previous policewoman, The Hon Justine Elliot MP.  She brought in new staff including Walt Secord who reports indicate had been demoted from Rudds staff because of a series of blunders. That all was not well in aged care was suggested when Heather Witham, Senator McLucas assistant and other staff experienced in aged care resigned or were replaced.

A search for "Walt Secord" on http://www.crikey.com.au yields a series of articles which might give an indication of the reasons for the difficulties that have occurred since the election in dealing with the minister and her department. Hopes have been dashed. They certainly suggest that aged care is not high on Prime Minister Rudd's list of priorities and the portfolio may have been lumbered with less promising performers. This is not a team that will confront and face down the business lobby or the private equity owners. The following are extracts from some of these articles or the comments made.  Please note that this is only one source and bias is possible.

 

18 April 2007
Top of the queue we must put the senior media man Walt Secord who has years of experience in manipulating public opinion on behalf of a nerdish boss. Secord worked for NSW Premier Bob Carr and starred in that wonderful character assassination which saw an Education Minister traduce the reputation of a schoolboy for having a gun when it turned out not to be true. He is the hard man in the team and works the press gallery efficiently enough.

14 June 2007
"Walt Secord almost destroyed the life of a migrant family in Western Sydney by inventing a story. Why has the Leader of the Opposition got this scum on his staff?"

7 September 2007
There are a few of us who think Walt and his crew are acting like teenagers rather than people who will work in the PMO -- worse still they are sabotaging their own stories... weird!

12 December 2007  
Walt Secord has undergone a spectacular fall from grace. From the lofty heights of being Kevin Rudd’s director of communications he has landed a post-election appointment as chief of staff to the Minister for Ageing Justine Elliott, a former police officer.

Elliott, MP for Richmond in northern NSW, is in the outer ministry and the second most junior minister in Rudd’s 30-member ministerial team. Secord, who served former Premier Bob Carr for 10 years and then joined Hawker Britton in August 2005 as communications director, became the Opposition Leader’s chief spinmeister within a few weeks of Rudd’s capture of the Labor leadership in December 2006.

Secord’s pre-eminent role during the marathon election campaign led to the belief he would start his next career as a government bureaucrat in one of the senior portfolios – defence, foreign affairs or communications.

Four reasons have been given for Team Rudd’s decision to marginalise the Canadian-born political heavyweight:
 - - - - -partly blamed for not allocating a full-time minder to Peter Garrett during the campaign which resulted in the former rock star making na•ve, off-the-record comments - - - - .
 - - -  partly blamed for the fiasco surrounding the candidacy of George Newhouse for the seat of Wentworth held by Malcolm Turnbull.  - - -
- - - - partly blamed for Robert McClelland’s untimely reference to Labor’s opposition to the death penalty on the eve of commemoration ceremonies for the Bali bombings. - - - - . The subsequent media furore – and the pointed public rebuke from Rudd – probably cost him the defence or foreign affairs portfolios.
 - - - - -After taking soundings in the National Press Gallery, Team Rudd came to the conclusion that the sometimes abrasive and over-bearing Secord would best serve the incoming government by starting in an obscure position away from the affairs of state and the media.

This is a big comedown for The Man Mountain. He expected more than working for the Minister for Ageing in the bureaucratic backwaters of Canberra. We haven’t heard the last of him.
For full article see Rudd's chief spinmeister pays the price for campaign blunders
http://www.crikey.com.au/Politics/20071212-Rudds-chief-spinmeister-pays-the-price-for-campaign-blunders.html

8 January 2008
Of course, it would be na•ve to expect the government to promote “negative” stories about itself: there are plenty of those about already. But Ms Firth and other Ministers will do themselves a favor if they jump off the media trampoline constructed by former Premier Bob Carr and his eminence grises Walt Secord and Amanda Lampe. Rather than issue a weekly barrage of “positive” press statements to meet the targets set by the Premier’s media unit, why not try another tactic and actually do something that’s practical and may improve things for the citizenry? Just a suggestion.

18 February 2008
Walt Secord was shifted aside from his exalted position in Rudd's office but trouble has followed as Chief of Staff for Justine Elliot, Minister for Ageing. Since Secord’s arrival Heather Witham - senior policy advisor – has resigned and another staff member has gone in the first Parliamentary sitting week. Elliot's inexperience in the portfolio and in politics is not helping

26 March 2008  
Walt Secord was Bob Carr’s longest-serving communications director, credited with helping mastermind historic election victories in 1999 and 2003. He moved on to the Labor Party palace of spin Hawker Britton, before joining Kevin Rudd’s office shortly after he became leader, where he oversaw yet another election win.

Then, as Alex Mitchell reported in Crikey in December, something happened. He ended up in the office of the Minister for Ageing, Justine Elliot. Chief of staff to a junior minister within the Health and Ageing portfolio.
---------------------------
And Queenslander Justine Elliot is entirely new to the area, having been appointed over the respected Jan McLucas, who was shadow Minister for Ageing when Labor was in Opposition.

Given that, you’d expect Secord – especially with his background in media, rather than policy – would want advisers with expertise in aged care issues.

Instead, he has created a miniature version of the NSW ALP within Justine Elliot’s office. His deputy is Patrick Muhlen-Schulte, a young Labor apparatchik who worked for Secord in Carr’s office and for NSW Roads Minister Eric Roozendaal. And Angela Koutoulas, who commenced with Elliot last week, is a former NSW Labor staffer and is currently a councillor on Rockdale City Council. In his inaugural speech in the NSW Parliament, Frank Sartor singled her out for thanks, along with ALP heavyweights such as Roozendaal and Mark Arbib.

None have any experience in any ageing-related issues, although Ms Koutoulas was an adviser to the Assistant Health Minister in NSW.

 - - - - -  But the complete lack of any experience in ageing issues in Elliot’s office, in favour of young NSW Labor talent, is remarkable.

Indeed, Secord, whose operating style has all the subtlety traditionally associated with the NSW Labor Right, has overseen the removal of all aged care experience from his staff. As Crikey reported in February, Heather Witham, who worked closely with Jan McLucas in developing Labor’s ageing policies, left after barely two months working for Secord (Witham declined to comment when approached). Bureaucrats from the Department of Health and Ageing who have filled in as advisers have been sent back to the bureaucracy, although some remain as departmental liaison officers.
 - - - - - - - But the lack of in-depth understanding, and a tendency to focus on spinning issues – something we’re familiar with from the Carr era – has them concerned, particularly given Elliot is inexperienced and lacks confidence.
For full article see Walt Secord puts a bit of mate into aged care
http://www.crikey.com.au/Politics/20080326-Walt-Secord-puts-a-bit-of-mate-into-aged-care.html

28 April 2008
The first comprehensive analysis of the new Government’s advisers shows that ex-NSW ALP staffers and senior bureaucrats are playing a strong role in shaping the new Government’s policy and political direction.
-------------------------
However, the approach of Walt Secord, chief of staff to Ageing Minister Justine Elliott, who has stacked his office solely with NSW Labor figures, is relatively rare.

9 May 2008
Rudd’s appointment of Bob Carr’s former communications director Walt Secord early in his period as Opposition Leader was taken as a hint of his intended approach to the media, borne out by the aggressive approach of Secord, which incensed some old Gallery hands .

Secord has now left – to run Justine Elliott’s office – but the approach appears to have remained the same.

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Taking the issues to the new minister

A few weeks after the election on 11 December, I wrote to the new minister raising the issue of approved provider status and asking for an indication of labor's plans. I felt sure that labor would want to deal with this. 

The threat had now become more acute because evidence coming from the USA clearly indicated that acquisition of nursing homes by private equity owners was associated with depleted staffing and deteriorating care. As private equity groups normally purchase existing nursing home companies they do not have to seek approved provider status.  Their management strategies and their cost cutting as they seek to "turn around" the business to generate more profit are likely to have a major impact on services and care.  That criminals are prohibited from holding directors post will not prevent owners appointing directors without convictions, director who will do what they are told.  

A dominant section of the for-profit sector in Australia was by now owned by private equity. Submissions predicting that care would be compromised by private equity ownership had previously been disregarded by a senate inquiry. Stories emanating from the nursing home sector suggested that problems with staffing and care were now developing in Australia.

 (see the subsection "Private Equity enters health and aged care" on the web page  "Coming to Grips with Health Care" for a summary and links)

I include the summary from the letter to the minister here.

Summary
This letter draws attention to major problems in aged care regulations relative to the suitability of nursing home owners and promises made by the previous ministers. 

I ask for an undertaking to address two key issues and to critically examine and make plans to address a third.
 These are issues which both the previous health and aged care ministers undertook to address They lost power before they could do so.   I urge you to go even further by reinstating probity requirements in the legislation and giving them adequate legal backing.

I also briefly refer to a number of issues which I feel should be carefully considered when restructuring the aged care system.  These include the impact of conflicting marketplace paradigms on staff, problems in the accreditation system, and the implementation in the nursing home sector of the new prime minister’s promise of transparency.

In the long term I ask you to consider the social viability of a system that is driven by underlying paradigms that conflict with those on which the effectiveness of such services depend.

Click Here to read the full letter

I received a brief thank you letter on behalf of the minister dated 22 January 2008 stating "The government is closely examining aged care policy and your views on the aged care industry and private equity ownership of nursing homes have been noted."  No mention was made of the key approved provider issue.

I wrote again on 4th February 2008 suggesting that the commercial operators had an iron grip on the sector and pointing out that

"My letter very specifically asked, in the introductory paragraph, for an assurance that two glaring regulatory deficiencies would receive attention.  The previous government had already promised to address these problems. These threaten and compromise the integrity and the effectiveness of the regulations"

Click Here to read this letter.

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Squeezing information from the department and the minister

In the meantime I had still had no firm confirmation that changes had not been made by the previous government - nor that they were not intended by the new government. It was therefore difficult to take this public - lest I be embarrassed.  I had not received a reply to my objection and correspondence with the department about BUPA.  My next step was an FOI application on 11 December 2007.  In my subsequent correspondence with the FOI assessor on 22 January 2008 I made my intent clear.

"I stress that my concerns follow the failure to respond to my letter to  Ms Prue Karmel in your Canberra Office dated 4th October 2007 asking whether promised regulatory changes had been made.  I wish to confirm that BUPA did not seek approved provider status, was not required to do so and that no assessment was undertaken.   These matters are of major public interest, and critical to informed community debate about aged care policy.

This is particularly important in light of the revelation of serious anomalies when a Citigroup subsidiary purchased DCA, and because of the undertakings by the two previous ministers to address the problems.  I have not been able to confirm their failure to do so before they lost office.   This uncertainty prevents the community from engaging in constructive debate and from bringing pressure to bear on the new government to address the anomaly.   I am consequently eager to press ahead with this matter before the new government’s aged care policy is set in stone."

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No changes have been made to the regulations

The response came on 20 February 2008 and this confirmed that there were no documents because no assessment of BUPA's suitability to be an approved provider was made.  I quote sections of the letter.

"Despite an extensive search the department has been unable to identify any document relevant to your request.   I must therefore refuse access - - - .

As you are aware an organisation which acquires a controlling or significant interest in an organisation that already has Approved Provider status is not required under The Aged Care Act 1997 to apply for approved provider status.  BUPA, therefore was not required to seek approval from the Department of Health and Ageing."

The letter was signed by Allison Rosevear.  One wonders if the department could possibly be trying to avoid confirming that my correspondence had been received.  There is no acknowledgment.  If they had been received there would surely have been some internal memos and notes, including one referring to my telephone call regarding the urgency of the issue.

In my response I made these points and indicated how easily the matter could have been resolved 8 months earlier by a simple response to my first question, one to which I was entitled.

Click Here to read my response to Ms Rosevear.

On 7 April 2008 Ms Rosevear replied

"Please note that there was no resistance to your request for information; there was no information to provide.

Your view have been noted, and, together with the views of others, are factored into the Department's work in this area."

 

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The labor party is not going to act

I now had confirmation that nothing had been done. I still did not know whether the minister's promised review of aged care policy would address the key problems of approved provider status and private equity ownership.

I therefore wrote to the minister personally again on the 4th March indicating that in 6 months I had received no reply to a simple question.

"I therefore write for the fourth time to ask whether the labor government plans to address this glaring regulatory deficiency, and if so, some indication as to when this will happen."

Click Here to read the letter

I finally received a response which I consider confirms that the department does not and that the government has no intention of regulating the ownership of nursing homes, even when as in the case of private equity these owners have a particularly strong motive for interfering in management and clearly do so.  Failures in care are still to be dealt with after they have occurred and only if they are detected and can be proved to have occurred.  

The lessons from the USA are once again being ignored and we are following their example.  It concerns me that instead of using her head, the minister is resorting to her policewoman ways.  She is determined to continue down a path that has already failed in the USA and in Australia.  In my view the current pressures in the system make it extremely unlikely that these policies will be successful.

The response is a reiteration of many similar letters and responses.  You should read it and make up your own mind whether you think that all this regulatory vigor is likely to have much preventive impact at the bedside.  Will the system still depend on detecting deficiencies in services after they have occurred and failures in care when they can be both detected and then proved to have occurred.  Too often this comes down to notes made by the staff complained about and conflicting evidence given by a single family member and staff.  Staff who have resigned or been fired because they have disputed issues with management are not considered credible.  One inquirer was told that they are not usually interviewed when complaints are investigated  It is not surprising that complaints made by family and friends are difficult to prove.  Concerns have also been expressed that staff are intimidated and that family prefer not to complain less this impact adversely on their loved ones.

Click Here to read the letter on behalf of the minister.

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Taking the issue to the community and to politicians (August 2008)

My response to this was to write a criticism of the minister's position pointing out just how ridiculous it was. I sent versions to this to a large selection of bodies with an interest in aged care, to all federal politicians and to all state politicians. I asked them to lobby and to use party channels to press the issues. The responses received show that many have forwarded the matter to the minister and I have been told that she will respond to me. I am not holding my breath. She has not done so and I do not think that she can do so in a rational manner and remain credible.

The following is the email version sent to state politicians and is self explanatory.

 

Dear state member of parliament,

Most members will be concerned for the welfare of the aged in their electorates. In April 2007 I emailed many of you about a serious anomaly in our aged care regulations, one which posed a serious risk. Some of you took this up with your federal counterparts. The government at the time agreed to make changes to the legislation but lost the election before doing so. I have corresponded with the new minister and her department and after 6 months it is clear that the federal labor party and the minister for ageing have no intention of addressing the issue.

I have emailed federal politicians and am now asking those state politicians who would support these changes to press for change through party channels and also email federal politicians representing their regions as well as the various ministers for health and aged care indicating their support for change. Simply forwarding this email to them with a covering note of support would be greatly appreciated.

I realise that aged care is not primarily a state responsibility but aged care is integral to the well being and functioning of the community in every electorate. This should not be a political football. Nor should our concern be constrained by state/federal boundaries.

To refresh your memory and update you on the issues I supply the following summary which I sent to federal parliamentarians.

Problems in Aged Care Regulations

I am writing to politicians again about a serious anomaly in federal aged care regulations and ask that we should once again press for changes through the political system and party channels.
Some may remember my correspondence in April 2007. As a result of your efforts the previous federal coalition government promised in June 2007 to address the issues but lost government before doing so. After 6 months of inquiry and correspondence it has become clear that the present labor government is reluctant to do so. I am therefore writing to ask members to once again press the issues through political channels.

Background
Since 1997 any criminal or otherwise unsuitable organization has been able to gain control of nursing homes and for practical purposes buy “approved provider status” without being required to undergo any sort of assessment. This was exposed when an objection was lodged to the purchase of DCA nursing homes by a private equity arm of Citigroup. The objection was based on Citigroup’s poor track record in exploiting those to whom it owed a duty of care. It transpired that Citigroup’s subsidiary had not been required to seek approved provider status. Approval status came with the purchase. It was an add on value, traded in the marketplace – particularly valuable to a company like this.

An 18 month thorough probity review of Citigroup’s private equity group had previously been performed in NSW. Licenses for operating in the much less vulnerable hospital sector were eventually granted to this same Citigroup subsidiary but with conditions giving greater protection – and only when the company was already selling the hospitals.

It became clear that the majority of the wealthy financiers, banks and private equity groups that now own large numbers of nursing homes would have purchased their approved provider status when they bought into the sector. Few would have had their own suitability assessed.

I drew this matter to the attention of politicians and aged care associated groups in Australia in April 2007. Some took this matter up. In June 2007 both the federal ministers responsible agreed in writing to address the problem in proposed legislation, although it was not clear what form this would take. This was not done before the election.

The issues are explored and copies of correspondence have been placed on the www. They can be accessed from http://www.corpmedinfo.com/dca_sale.html

The labor government’s response.
I was unable to get a response from the labor shadow minister for ageing prior to the election but have corresponded with the newly appointed labor minister for Ageing, the Hon Justine Elliot, and her department since the election. There has been a reluctance to release information or give any undertakings.

When forced by questions on notice and by FOI requests they have responded by simply restating the current regulatory position. It is clear that the labor party has either put aged care on the back burner, or the minister and her advisers do not understand the significance, or lack the courage to deal with the response of the corporate marketplace. Any useful changes are likely to be ideologically unpalatable to the market.

These developments are explored in greater depth and the correspondence is available at
http://www.corpmedinfo.com/bupa_approval.html

The Issue

Extracts from Letter from Ms Allison Rosevear, Assistant Secretary, Residential Program Management Branch, Dept. Health and Ageing (April 17, 2008) on behalf of the Minister for Ageing.

As I have advised previously, the Aged Care Act 1997 (the Act) does not regulate the ownership of approved providers; it focuses on assessing the Approved Provider entity and the individuals that may exercise executive or managerial control of the Approved Provider. If there is a change of ownership of an Approved Provider which results in a change of the directors or senior management then the Approved Provider is required to notify the Department of the changes and the Department may review the Approved Provider’s suitability in light of the notified changes
--------------------
The Australian Government is committed to quality care for frail older people and monitors this in the aged care sector through the accreditation system. The Department of Health and Ageing is responsible for monitoring and recording approved service providers’ compliance with their obligations under the Act and the Aged Care Principles.
-----------------
All residential aged care services - - - - - must go through the accreditation process at least every three years.

The issue as explained by the present minister (above) arises from a contrived, artificial and invalid separation of owner from provider in the regulations. This invalid construct sees the two as quite separate, whereas some are owners as well as providers. Owners are clearly intimately concerned with the profitability of the businesses they own and clearly consider that they have every right to participate in the management of these businesses, particularly when they are not generating profits. In contrast the owner is not seen by the present minister to influence the provider, or to participate in any way in decisions that might impact on care. This is unrealistic. This is about care and ultimately almost all financial decisions impact on care.

Furthermore it is inconsistent. BUPA operates nursing homes in the UK and multiple other countries so is a provider, yet when it purchased DCA from Citigroup it was an owner and so did not have to seek approved provider status. DCA's subsidiary Amity presumably holds the approved provider status. Is it reasonable to expect BUPA not to apply its international experience to its new purchases? 

Approved provider regulations are directed only to the criminal records of subsidiary providers, their directors and key managers. Owners are free to replace those who will not do what they require with those who will, provided they have not yet been convicted of any crime. An unsuitable individual or company simply needs to restructure the paper trail to run the business.

It is fanciful to suggest that an owner whose interest in its purchase is commercial would not take an interest in this purchase or participate in business decisions that might impact on its profitability and so on care. Equally ridiculous is the suggestion that it would not insist on appointing like minded senior staff. The stake held by each owner reflects its degree of control. As impossible is the ability to detect and police interference by an unsuitable owner in the running of nursing homes. The track record for this in Australia is already poor.

All this is well illustrated by Citigroup’s private equity buyout of DCA. Private equity owners typically purchase less profitable companies and restructure them to make them more profitable and so more valuable. Citigroup’s subsidiary did this when it purchased DCA. It sold within 2 years at a huge profit. It could not have done so without actively participating in management and in cost cutting. It clearly had every intention of doing so. By far the largest nursing home cost (probably in the region of 50%) is nursing (numbers and skills). Failures in care and staffing ratios are intimately related.

The nature of the owner therefore becomes critical, probably more critical than the provider. It is the controlling entity, and as such is in a powerful position to influence outcomes for residents. Under the probity requirements abandoned in 1997 it would have been a prime regulatory concern.

While nursing staff are barred if they have criminal records, the suitability and criminality of owners is regarded as irrelevant. Nurse aids receive more scrutiny so we must assume that they are seen as a greater threat.

By any standards the approval process is a political farce - a waste of providers time and tax payers money. It reflects the coalition party's bondage to the industry before the 1996 election and may be one of the parts that nursing home mogul Doug Moran claims he wrote for the new government of the time. If it is not to be made effective then government should stop deceiving the public and trash it.

The importance of the owners is well illustrated and the issue is made more acute by the revelations, in 2007, in the USA, that the acquisition of nursing homes by private equity has been associated with a decrease in staffing and a deterioration in care. Regulators in the USA are now paying far more attention to ownership.

There are hearsay accounts suggesting that similar problems in staffing and care following private equity acquisition are happening in Australia. There is insufficient publicly available information available for a similar objective assessment.

Control of the quality of care provided has come to depend on the three yearly accreditation visit by an agency based in far off Sydney. This is supplemented by the occasional unannounced (but not always unexpected) visit. There is also a complaints mechanism dependent on nurse whistle blowers and on formal complaints lodged by inexperienced relatives. Nurses fear victimisation and distrust the legislative protection offered. Relatives fear that their loved ones will be targeted if they complain. Their complaints are all too often rejected because the lone voice of the family member is contradicted by staff. This leaves them frustrated and disillusioned. Most failures in care are likely to remain undetected.

The oversight and accreditation required to make even these measures work, and the paperwork on which it depends, increase the costs of care. They become so onerous that resources are diverted to them and these are at the expense of care in even the best homes. They become counterproductive. Nurses and providers complain bitterly about the burden and the impact this distraction has on care.

A system that is

so inviting for aggressive profiteers,
one where cost cutting is so closely linked to poor care and
one that depends on such onerous, delayed and inadequate after the event controls,

is one that has been set up to function poorly.

It creates a “what we can get away with” approach, across the board mediocrity and penalises excellence. We can hardly expect it to work well.

A first step in addressing these problems would be to closely scrutinise the owners, those actually holding the purse strings. They ultimately control the money and so the supply of human and other resources on which care depends.

J Michael Wynne

 

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Where to from Here

As I see it the only course is for the community to grasp what is happening and to exert the sort of pressure that currently does not exist.  The pressure should be on government to make them act and on nursing homes to provide good care.   A strategy starting at the bottom and ending at the top will be most effective.

We need to form local groups that will 

If we are to have benchmarks and standards then they should be our community benchmarks and not corporate or political benchmarks.  We regularly enter these nursing homes to visit family and friends.  Many of us have had nursing or other health care experience and can educate ourselves further. We are well placed to play an active roll and should insist that we are given a useful roll in caring for our community.  

We are far better placed than agencies in Canberra to see what is happening at the coalface.  We can ensure that our benchmarks are met in the care of our friends, family and community.  We have a responsibility to our aged citizens to gather the information needed to make rational decisions and drive change. It is clear that the market and government are not going to do so. This is an insurance for our own future.  It is our government.  With information and knowledge we can insist that it acts in our best interests.  If we don't do these things then we cannot expect others to do them for us in the years to come when we in turn are in need.

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A new Aged Care Amendment Bill (Update November 2008)

I had no response from the minister but on 16 October 2008 the minister for Ageing, the Hon Justine Elliott introduced the "Aged Care Amendment (2008 Measures No. 2) Bill 2008" into the parliament. It was referred to the Community Affairs Committee of the senate for an inquiry. Submissions to that inquiry closed on 5 November. I was allowed to make a late submission but do not know if it has been accepted by the committee. If so it will appear on their web site and can be downloaded. The committee is due to report on 20th November. None of this has been widely publicised.

Some of the major changes in the new new bill relate to the approved provider system and seek to address the issues I have been canvassing. The bills structure is complex and difficult to understand. The explanations are not always clear. I am not sure whether it will actually do what the minister claims it will do. If this bill does or is modified to do what the minister claims it will do, then it will be an important first step in reforming our system. I suspect that there has been a lot of debate with the industry and that the minister has had to overcome some strong objections. It will not have been easy for her and she is to be commended.

The submissions made make interesting reading. The for-profit sector (one third of homes) not surprisingly largely oppose the changes, the not-for-profit sector (two thirds of homes) tentatively supports them but make suggestions and criticisms. The Catholic church presses for further changes to reform the system and makes suggestions. The community groups responding are supportive but express disappointment that the bill is far too limited. Staffing ratios are ignored, there is no sign of the transparency prime minister Rudd promised and oversight changes are largely more of the same. The Aged Care Crisis Centre and the Aged Care Lobby Group (SA) make constructive submissions.

In my submission I use real world examples to illustrate the problems in the present approval process and ask the committee to ensure attention is given in the bill to the issues they raise. I also point to the need to move forward from here to introduce transparency, address staffing issues and reform the oversight and complaints systems by linking them into the community and giving the community a cooperative role and some real leverage in regard to standards of care. I have been told that something like this was considered for the first aged care bill (Hawke Government) but was not implimented. A program along these lines has been introduced into another sector in Victoria and I believe it works. (http://www.publicadvocate.vic.gov.au/Services/Community-Visitors.html)

This is an important bill and those interested should look at the government web site to read submissions and watch for the report when it becomes available. My impression is that the majority not-for-profit sector is ready to look at constructive change, particularly if ideas come from the community of which they are a part.

Go to http://www.aph.gov.au/senate/committee/clac_ctte/aged_care_amend_2008_measures_no2/submissions/sublist.htm

Update Feb 2010 The Amended BILL

The Aged Care Amendment Bill was passed in December 2008 claiming that this would address the issues of unsuitable owners. To test the legislation objections were lodged in regard to the approval status of the company Milstern and its owner. The outcome suggested that the legislation was still ineffective and did not do what was claimed. My submission and the correspondence are on another web page.

Click Here to go to this page

UPDATE OCTOBER 2011

Blackstone attempts to buy Japara

In June 2011 the US private equity group, Blackstone, attempted a takeover of Japara, an Australian aged care group. Internet searches revealed a number of disturbing reports about Blackstones conduct. The approved provider process was advised of this. They confirmed that despite the 2008 amendments to the aged care act 1997, buyers of companies that already held approved provider status did not need to apply.

They also indicated that as the process was "in confidence" they could not reveal if a company had applied. There is no way that a member of the public who has information would be able to assist by supplying it. The 2011 productivity report also does not recommend changing the approved provider legislation.

Click Here to go to this web page

For Updates:- A good way to check for recent developments in aged care is to go to the aged care crisis group's search page and enter the name of the company, nursing home or key words relating to any other matter in the search box. Most significant press reports are flagged there. The aged care crisis web site has recently been restructured and some of the older links used from this site may not work.

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Web Page History
This page created 22 Oct 2007 by Michael Wynne
Updated 26 Oct 2007, Revised 12 Jun 2008 Updated Aug 2008. Nov 2008 Feb 2010, Oct 2011