Better governance required as pressure mounts on aged care sector

Governance Institute of Australia has called for the terms of reference of the royal commission into aged care to include a review of the current state and adequacy of the governance and risk management frameworks in a letter to the Honourable Ken Wyatt AM, MP Minister for Senior Australians and Aged Care.

“There are key issues emerging for the aged care sector which point to the need to investigate whether providers have the necessary governance and risk management frameworks in place,” said Acting Chief Executive of Governance Institute, Meegan George.

“The aged care sector’s role is to care for the most vulnerable members of our society. It is vital that the royal commission looks at whether the boards of aged care providers are making informed, effective and ethical decisions,” Ms George said.

In its letter, Governance Institutes refers to its guide, Adding value to governance in aged care, published in 2017. The guide outlines key challenges that the board and management of providers must effectively navigate, including:

  1. Workforce planning: There is currently a workforce and skills shortage and the work is highly labour intensive. As a result the costs of labour are significant. Also, over 50% of people living in aged care homes currently have a diagnosis of dementia and have complex care requirements. Filling roles with less skilled workers may result in a board not meeting its duty of care obligations. A more responsive, better skilled and flexible workforce enables providers to deliver higher standards of service and care.
  2. Regulatory compliance: The legislation requires aged care providers to meet certain requirements relating to the provision of care and services. A culture of compliance with legislative requirements surrounding the health and safety of patients is the ultimate responsibility of the board.
  3. Financial sustainability: Board members of for-profit and not-for-profit organisations must clearly understand the provider’s finances, balance sheet and the sensitivity of the business to changes in the funding model. Ensuring the solvency of the provider must be top of mind for directors so they can continue to provide quality services to those in their care.

“It is essential that boards of aged care providers have the right governance and risk management frameworks to give them a clear-eyed view of the associated risks that come with these challenges, including the potential for conflicts of interest or neglecting a duty of care.

Click here to read a copy of “Adding value to governance in aged care: A practical guide for any potential or current member of a board of an aged care provider.”

For further information contact Rachel Waterhouse  Rachel.Waterhouse@governanceinstitute.com.au(02) 8227 5916 or 0402 336 352.

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