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Aged care regulation and funding in Royal Commission spotlight

‘The increasing complexity and demands of the regulatory environment and the lack of adequate funding are key factors in the failures in governance in the aged care sector,’ said Nick Ryan, Chief Executive Officer, Lutheran Aged Care.

‘Most providers struggle in the area of corporate governance, especially in terms of a single line of sight “from the boardroom to the bedside”.’

This comes as the Royal Commission into the Aged Care Quality and Safety is set to hear from sector leaders and experts on the challenges and ways forward for funding, financial and prudential regulation. The Commission will focus on financing and sustainability of future improvements. It will also consider funding models to support the service delivery and the prudential regulation of aged care providers.

Cynthia Payne, Managing Director, Anchor Excellence who was for 16 years CEO of the aged care provider Summit Care, believes there is an underestimation of the requirements associated with the aged care standards.

‘Boards do not have sufficient understanding or evidence-based understanding of the high impact or high prevalence risks and how this detailed assessment of risks for each consumer should lead to the oversight for clinical governance,’ Ms Payne said

‘Boards being historically heavily management led are now developing the right mix of “board led” governance and clinical governance approaches to bring about the rigour for safe and quality focused organisations.’

The move to a consumer directed care model has been some time in the making, but the full transition has been slow in coming.

The Royal Commission and the tragic consequences of the COVID-19 pandemic have exposed numerous systemic and cultural challenges to customer driven services, and deep fault lines in clinical and broader governance standards.

Aged care has been a ‘provider centric’ industry for decades, Nick Ryan said.

‘Real reform has yet to flow through. The industry still operates out of an old narrative. Most older people don’t identify themselves as “fragile passive recipients” any more than you or I. While the market components of Consumer Directed Care may have commenced, the philosophical and rights-based elements have not yet come into play,’ Mr Ryan said.

Ms Payne feels that management and boards have underestimated the significant changes needed to move to a consumer-centric and consumer led aged care system. Technically consumer direction commenced in home-based services and the aged care standards are now unified for both residential and home care.

This is significant Ms Payne said as both streams of services continue to evolve in their application and understanding of the requirements.

‘This is not surprising given the transformation agenda through the regulatory change. As a 30-year veteran it is my experience that the sector tends to take about 12-18 months to transition to new requirements. There are substantial changes required to systems, processes and capabilities.’

Ms Payne further points out that change management is in itself a process and each provider will be unique in its board governance oversight, management capability, and also staff and consumer health and knowledge literacy.

‘My experience with a range of providers – large and small, NFPs and For Profits – is that they have all been responding. However, it is their assessment of risk and understanding of the regulators role in using a risk-based approach that has taken some time. For some organisations they initially and genuinely thought they were on the right track. But when they had a performance assessment, they learnt very quickly that the regulator will, justifiably, respond using the risk-based approach to harm and adverse consequences to older Australians.’

The benefit of strong clinical governance also cannot be under emphasised, Ms Payne warned. Nor the detail the regulator goes to in assessing provider performance. There is no ‘tick a box’ option here.

As we move forward with intent, boards and management will play the central role in driving sector reform.

Mr Ryan recommends an immersion model to facilitate an effective and informed leadership.

‘I like the idea of immersion,’ Mr Ryan said. ‘Every board member every year should be immersed in the life of a service for a night and a day — not to do an ‘inspection’ but to imagine what it would be like to live there for the rest of their lives. The real question for me is whether the resident is aware of what the governance group is doing – is the resident assured?’

Ms Payne also reflected on the need for deeper capability and maturity at all levels of the organisation. And a deep understanding that what matters first is what occurs in the interface between staff and older people receiving care (home and residential). That those capabilities and systems enable the alignment between requirements — goals, needs and preferences, of the older person — either with themselves directly or through their representatives.

‘The challenge for boards is to have sufficient understanding at that level so that it can be clear with management about the governance requirements that enable the best alignment and deliver on the standard requirements with consistency and per the consumers expectations and needs.’

Webinar: Adding value to governance in aged care

Cynthia Payne and Nick Ryan, will be joined by Brendan Moore, General Manager Member Services, Leading Age Services Australia, and Governance Institute Chief Executive Megan Motto to discuss all of these issues and more in a national virtual briefing ‘Adding value to governance in aged care’ on 15 September 2020.

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