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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. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Any comments made are based on the belief that there is some substance at least to so many allegations.

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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
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Content of this page
This web page documents the steady deterioration of the system during these years as the government continued its drive to corporatise and marketwise the system. There was less publicity but a senate inquiry in 2005 clearly identified the many failures in the system. It had little impact and was ignored until a truly damaging scandal broke in 2006.

 Australian section   

 The Julie Bishop years
2002 to 2005

  

CONTENTS


Problems continue in 2002

In 2002 there was no let up and problem homes were still there. In spite of all the rhetoric and renewed effort the Eildon nursing home in Victoria failed 39 of the 44 standards - the worst of the worst. Overall the new minister was given some breathing space and a chance to improve matters. Given the nature of government policy she had little room to make changes but was more successful in keeping the pressure off government as the situation deteriorated.

Jun 2002 A continuing saga of misery

MORE than half the Victorian nursing homes inspected by authorities this year failed to meet Federal Government standards.
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Inspectors found many were left alone all day without proper food or medicine. Some soiled their clothes or beds because staff ignored pleas to help them to the toilet.

Residents in some homes were denied access to doctors and other specialists, records show.

The distressing practices continued despite a government pledge two years ago to clean up nursing homes.
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Checks at other homes, including one run by the Frankston City Council, have revealed similarly distressing practices. These include: A DOCTOR recommending beer for an unruly patient to calm down the person at night rather than getting help from specialists.

STAFF told not to monitor the diabetes of a 100-year-old woman because she was too old to worry about.

HOMES that stink of urine and bathrooms soiled with faeces.

RESIDENTS fed powdered "cuppa" soup for dinner.

WAITS of up to 13 days to have wounds cleaned and redressed, despite doctors specifying daily redressing.

RESIDENTS forced to urinate in their pants or beds because staff take too long to help them to a toilet.

OUT-OF-DATE or wrong medicine given to patients, or medicine not given at all.

DIABETES and blood pressure not monitored.

BLIND residents left to feed themselves despite telling staff they couldn't see the food on their plates.

RESIDENTS forced to buy their own wheelchairs.

STAFF ordering ethnic residents to speak only English.
HOMES FAIL Herald-Sun June 24, 2002

Government pressure continued to drive homes into the arms of market listed operators.

Jul 2002 Selling to market listed for profit companies

New government legislation forcing private nursing homes to upgrade their facilities may also boost aged-care stocks as operators faced with a huge repair bill may sell out to listed companies.
Sector sinks to two-year low but good news for aged care companies Crises cripple health stocks. Sunday Times (Perth) July 14, 2002


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No let up in 2003

In 2003 the stories of aged care scandals and evidence of continued regulatory failure returned with a vengeance. There were a string of problems at Ripplebrook where many of the Riverside residents had ended up. Even more damaging was the Tangerine scandal. Four homes including Ripplebrook, Tangerine and Rosedale manor, another problem plagued home, were all owned by two related companies, Supported Residential Services and Marnotta. The problems in these homes are described on that page. Both companies eventually entered bankruptcy.

May 2003 Four homes in administration

THE welfare of up to 100 elderly Melburnians is in doubt after four nursing homes were placed in the hands of administrators this week.

The homes, Tangerine Lodge in Mt Martha, Villa Lombardia in Keysborough, and Ripplebrook Village and Rosedale Manor in Carrum Downs, remain open.

But residents and their families - some of them veterans of the kerosene bath scandal - face an agonising wait for certainty as administrators try to sell the homes to government-approved operators.

Elderly face grim future Herald-Sun May 23, 2003

Unsatisfactory conditions at Armitage Manor in Victoria were compared with Riverside. In spite of this the company owning the home McKenzie Aged Care Group were able to secure licences to build and operate more aged care homes. The problems in care are descibed on that page.

Chelsea Private Nursing Home had been accredited and it was not until a patient died after being assaulted that a review identified multiple problems at the home..

 


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The shortage of nursing home beds

The shortage of nursing home beds and the pressure on hospitals continued. It became clear that government would have to fund a massive expansion in nursing home. It planned to do so using the market. Market enthusiasm increased and there was more pressure on government to increase the amount users paid.

Aug 2003 Residents backing up in hospitals

EVERY day in Tasmania 117 elderly people who need to be in a nursing home are waiting in a hospital bed.

Health and Human Services Minister David Llewellyn said a new study showed Tasmania was spending more than $16 million a year caring for people who should not be living in hospital.
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"The whole question of residential aged care is one of the biggest challenges facing Australia and for Tasmania the need to meet this challenge will come much sooner than elsewhere, even decades before some of the bigger states."
Aged care crisis in Tassie wards  The Mercury, August 28, 2003

Nov 2003 Money to come from the marketplace

Two years from now the Federal Government plans to have 200,000 age-care places available to house Australia's maturing baby boomers. At present there are about 145,000 beds - provided mostly by churches and charities - meaning things clearly have to change. For patient investors, this signals potential new opportunities.
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Consolidation has started to wash through the age-care sector with large players, such as Regis and DCA Group (which has a majority stake in the Amity Group) steadily chewing up more of the total pie.
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At the government end, work is in place to find new ways of encouraging private money to the industry.
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"But there's also the warning that you're relying on management to run a successful facility. It takes a lot more specialised management to run, and therein lies the risk because demographically, and just from pure population numbers, it's got to be a good investment."
Old Rockers Spark A Boom The Age November 1, 2003

Dec 2003 Increased funding will flow to the bottom line. Will any be for care?

- - - - - the aged care industry is where the growth is and the Government wants to ensure that by 2008 certain industry standards are in place. This new regime is expected to force out many bit-part players, which will provide quite an opportunity for DCA to buy facilities at well below the cost of a greenfields development.
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Deutsche believes Professor Warren Hogan's Review of Pricing Arrangements in Residential Aged Care will call for an increase in daily rates and the deregulation of pricing and funding rules.
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"This is being driven by the Commonwealth's need to ensure the private sector has sufficient incentive to provide for the expected explosion in demand for aged care places," Deutsche said. "With minimal risk, Hogan's recommendations will impact on operating costs, the expected subsidy increase will flow directly to DCA's bottom line . . ."
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Growth through acquisition creates potential integration problems, and a focus on costs may alienate doctors and nurses at some stage.
DCA to age gracefully The Sydney Morning Herald December 11, 2003

Jun 2004 Bed crisis still getting worse

More than 20,000 elderly people are on waiting lists for nursing homes and aged care hostels in NSW and the ACT, a survey shows. They are waiting longer for a vacancy than they did in 2001.

The survey of 208 residential care services was conducted in December 2003 by the Aged and Community Services Association of NSW and ACT, the peak body for non-profit providers.

It shows people wait on average 24 weeks for a vacancy in a nursing home and 36 weeks for a hostel, at least four weeks longer than they did when the last survey was carried out.
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In some cases, people could wait for two years or longer for entry to facilities that specialised in dementia.
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Mr Sadler said the Federal Government had increased the allocation of aged care places over the past two years but this had not yet translated into beds on the ground. This was due mainly to delays at local government level, and lags in building; and some nursing homes had temporarily closed for refurbishment in order to meet the mandatory new 2008 building standards.
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The pressure on aged care facilities also was due to hospitals discharging elderly people "quicker and sicker". It meant that instead of being able to go home, elderly people were likely to have to go into residential aged care permanently.
Elderly Forced to Wait As Aged Care Crisis Worsens The Sydney Morning Herald June 1, 2004

 


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The Hogan report 2004 - more corporatisation - an election

The shortage of nursing home beds was getting worse. The government seemed to come to the realisation that the sector was struggling and that someone was going to have to spend money if operators were to survive, let alone refurbish and expand. The question was who would do so? Would it be the users as urged by economists or the taxpayer. This was a time of record budget surpluses and aged care was bleeding. The 2004 Hogan report on aged care (an economist) supported the corporate market and recommended bonds for high care and increased user fees. The government took a middle road increasing fees and government subsidies and relieved commercial operators initially welcomed it. What they have wanted since 1997 was bonds for high care residents but they did not get it.

Government were encouraging "commercial players" into the sector. I read this as people who have a primary interest in making money and not in providing care. The lessons from the sad state of aged care in Victoria, where the profit hungry were enticed into the market has not been recognised.

Increased funding was linked to efficiency. For efficiency those of us who have heard it all before will read staff cuts and less time to talk to residents and be humane.

Feb 2004 Funding for more beds

The federal government yesterday announced funding for an additional 5889 aged-care places, boosting the prospect of future profits for health-care companies such as Primelife Corporation , DCA Group and Ramsay Health Care
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Earlier this month , a government-commissioned report by economist Warren Hogan recommended high-care patients pay bonds except in certain circumstances.
Nursing Homes Welcome Extra Aged - Care Places Australian Financial Review February 11, 2004

Mar 2004 Ripe for consolidation by listed DCA

Macquarie Equities has reviewed the global health-care sector and the local aged-care industry. It says the aged-care sector is ripe for consolidation, with the imminent release of the recommendations of the Hogan Aged Care Pricing Review likely to be a catalyst for the likes of DCA Group to acquire smaller rivals.
Toll And Patrick Lasso Iron Horse Australian Financial Review March 30, 2004

Apr 2004 Election an issue if introduce high care bonds

A review of the sector by economist Warren Hogan has recently been completed and is being studied by the Government. The report has not been publicly released, but it is believed to recommend substantial changes to the way aged care operates, including progressive deregulation. But the question is how far the Government would be prepared to go in implementing what are sure to be contentious recommendations, given that an election is due this year.
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If the Government wants to extend the use of accommodation bonds to high-care residents, it may find it easier now than in 1997, when, after heavy opposition from the community, it was forced to back down.
Grey Expectations Business Review Weekly April 1, 2004

May 2004 Making it attractive for commercial players

The private sector runs just 33 per cent of aged care facilities -- with the voluntary groups such as churches and charities dominating. The federal Government's stance is seen as making it more attractive for commercial players who've already shown interest in offering aged care.

Australian Nursing Homes and Extended Carer Association chief executive Rod Young said if the funding recognition continued, operators of any persuasion would see it as a "sustainable financial environment".
Package puts a spring in the step of aged care providers - Budget Reaction The Australian May 13, 2004

May 2004 Responding to the Hogan Review

The package included recommendations of the Hogan review such as $878 million more in assistance to aged-care providers, linked to efficiency improvements, which will lead to the creation of about 27,900 aged-care places over the next three years. Aged-care providers will also be able to increase residents' charges by up to $854 a year to recoup revenue while providing for the community's growing aged-care requirements.

However, the package also included an unexpected increase in capital funding in the form of a one-off, $3500 payment to nursing home operators to upgrade their facilities.
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"It's an admission of sorts by the government that many of the homes are not up to standard and we believe there are many homes which will still not reach acceptable standards," he said.
Lift For Health, Aged - Care Stocks Australian Financial Review May 13, 2004


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Hogan and Efficiency

An article on the Hogan report provides a fascinating window into the minds of the economists and the use of the word efficiency. For politicians economists are the all sector experts. It exposes the flaws in the economic model. One wonders what Hogan actually means by efficiency?

One can only ask whether in evaluating variations in profitability and efficiency Hogan did so in regard to standards of care and the incidence of pressure sores, weight loss, quality of residents lives and other markers of good nursing. The terms are used very broadly in his report and he does not attempt to quantify these.

In any reasonably efficient system the figures of all of these would be readily available and clinical efficiency could be tested against economic efficiency including costs of nursing, supplies, administration etc. Unfortunately in the competitive market system this sort of efficiency does not exist - only economic outcomes are measured.

Perhaps I am maligning Hogan but this would have been reported by the AFR if he had done it and a search of his report using key words did not reveal anything. Any intention to reward efficiency which does not directly measure clinical parameters is likely to be a serious threat to the wellbeing of patients?

What are the human costs of "technical efficiency". The critic in the article makes the point.

Hogan’s report will only serve to prop up the Andrew Turner myth about staffing. In nursing homes the only way to increase commercial productivity is to decrease the time nurses spend with patients and the problems in nursing homes are in large measure a consequence of too few nurses spending too little time with patients.

It is clear that the market sees it the same way as Hogan and that politicians will use the Hogan report as justification for ignoring the evidence and the flaws in this report and in their policies. They will continuing with their failed competitive market policy for the aged.

Market analysts welcome the report and use it to rationalise their positions and promote market growth in the sector in the face of evidence that this is at the heart of the problems in care.

Aug 2004 The "efficiency" word. What does it involve?

A government-commissioned report into residential aged care by Warren Hogan early this year highlighted massive variation in profitability between aged-care providers due mostly to varying levels of management efficiency. The most successful earned $13,350 (EBITDA) per bed per year, while the least successful lost an average of $5771 per bed.

"There's a huge contrast between the most profitable aged-care facilities and the least profitable," Hogan told the Weekend AFR. "Much of that difference is due to management practices. I think it's reasonable to judge that a significant number (of these businesses) only stay in the industry because they're propped up by government subsidies."

In his report, Hogan suggested that if all aged-care providers were to operate at optimal technical efficiency, the cost of residential aged care could be cut by 17 per cent ($1.1 billion). Alternatively, an additional 23,000 people (17 per cent) could receive aged care at no additional cost.

But David Angell, chief executive of Aged Care Queensland, says there are few productivity increases left to be made. The only step left for many operators, he says, is to reduce services or leave the industry.

"It's a labour-intensive industry," he says. "Hands-on staff are required you can't have a machine looking after people or washing people.

"There are many people in the sector flying close to the wind in many areas it's just not profitable. The tough accreditation processes mean it's hard to cut care levels and some may have to get out."
The boom in retirement villages Australian Financial Review August 7, 2004

Nov 2004 Hogan report encourages listed companies

In April, the Hogan Report into aged care commissioned by the Federal Government highlighted the need for serious reform.

The report recommended increased private sector participation in an industry historically dominated by not-for-profit organisations.

Mr Montague-Jones said if the report's initiatives were implemented, further consolidation of the industry was likely and private-sector operators such as Ramsay and DCA Group would gain market share.
Seniors set to drive profits Sunday Mail November 28, 2004

Jun 2005 Efficiency an unchallegeable but ill defined and understood "good"

The facts are clear so the government wants to ensure that financial resources are efficiently allocated. There are significant inefficiencies in a fragmented market that present opportunity for consolidation to improve operating efficiency. We don't know how but deregulation will occur to encourage private enterprise into the sector. This will result in higher returns on invested capital for those operators who operate efficiently. The bomb is ticking and the longer government delays, the more tax revenue will need to be thrown at an inefficient industry. The independent Hogan report recommends action to enable operators to generate higher returns and therefore attract capital to the sector. The stage is set for reform and industry players are making strategic steps to establish long-term positions.
AGED CARE SECTOR : The Ageing Time Bomb, Tick, Tick, Tick........Boom! Your Money Weekly June 9, 2005


The market’s enthusiasm for the new package was mixed. While government controlled funding profitability was limited and they wanted the user to pay whatever the market would hold.

May 2004 want to charge what the market will bear

DCA would have liked to have seen the cap on charges removed altogether for non-pensioners, which would let the market determine the price for high-quality services, he said.
DCA Group shares soar after budget gives aged care $2.2b boost Australian Associated Press Financial News Wire May 12, 2004

Jul 2005 Funding discourages investment

Credit Suisse First Boston said there was little aged-care investment opportunities in Australia unless there were some fundamental changes to the way the industry was funded.
Flux leaves DCA on neutral BIG PRICE MOVERS The West Australian July 12, 2005


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Election 2004

An election was looming in October 2004 and it is clear that neither party was seriously addressing the issues or prepared to confront the problems. Nursing home projections were based on over 70 years - an old projection model. The stark reality is that it is the over 85 years that are increasing rapidly and they are the ones who need expensive nursing home care especially for dementia. Either we raise taxes or we make users pay much more. Both are electoral no no’s! The ABC’s 7.30 report in September 2004 examined the issues and is worth reading. It addresses the confusion caused by the complexity of the system, the aged care bulge, the shortage in the home care sector, and the problem of cost shifting with state and federal payers competing to spend less.

MARY BARRY, VIC ASSN OF HEALTH AND EXTENDED CARE: The governments are tinkering around the edges.
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MARY BARRY: The current aged care system was devised in the 1980s when we had about 8 per cent of our population aged over 65.

We're now heading for a situation where we will have 25 per cent of people over that age.
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TIM LESTER: Melbourne consultant Danielle Thompson helps elderly clients navigate the aged care system because families are finding they need an expert to make sense of it.
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TIM LESTER: But those in the system see community-based care failing now more than ever.

DANIELLE THOMPSON, SPECIALIST CARE SERVICES: Well, I'm seeing people on a daily basis who are actually fronting up to the hospital system because they are not getting the level of care they require in the community.
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PROFESSOR KATHY EAGAR, UNIVERSITY OF WOLLONGONG: It's fair to say there's no real planning going on.

TIM LESTER: And Professor Eagar says neither party is addressing the issue in their campaigns.
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MARY BARRY: Whoever wins the government on 9 October must take aged care seriously during the next three years and look at serious reform to ensure that it is not a political football at the next election.
Parties fail to address health, aged care, say economists Australian Broadcasting Corporation 7.30 report September 28, 2004 (For full transcript see
http://www.abc.net.au/7.30/content/2004/s1209098.htm)


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2005 Government’s goals well advanced

By the end of 2005 the government were well on their way to achieving their goal for nursing homes. The industry was rapidly consolidating and large financial institutions were the driving force. Keeping people in their homes and out of nursing homes had become a major focus. Once again they ignored past bitter experiences and turned to the USA. They brought in "Home Instead", the largest home care provider in the USA to help them. Home Care and the new company "Home Instead" are reviewed on another web page.

Sep 2005 A quiet market revolution

A quiet revolution is happening in the booming aged care industry which could see many elderly people live out their days at home instead of in institutions.
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Older nursing homes have been given until 2008 to revamp or retire. From being a cottage industry, accommodation for the aged is now a huge and profitable business which attracts a golden stream of Federal subsidies.
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So we have charitable organisations like the Salvation Army backing away from aged care homes and private investors like the successful Macquarie group moving in.
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With costs like that, the shift in focus from aged care homes to home-based care makes sense financially as well as suiting the changing mood of the people.
Home care the way to go for ageing boomers The West Australian September 30, 2005

Oct 2005 More help expected from government

There is a high probability of further government reforms to encourage investment into the aged care industry. The most efficient operator benefits most from increased funding. DVC and RHC are two major publicly listed companies endeavouring to provide better aged care service at a lower cost.
DCA GROUP (DVC) $3.82 : Aged Care and Medical Imaging Your Money Weekly October 27, 2005


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Failures in Care 2004 and 2005

Failures in care had been a continuing problem during 2004 and 2005 but received less press coverage. In 2005 a senate inquiry into aged care had identified many of the problems in the system and made recommendations. It found that the accreditation system was not working.

After nearly 10 years in power the government was now arrogant and entrenched. It had gained control of both houses of parliament. It simply ignored the report.

A nurse resigned from Tricare in 2004 complaining about poor care and valuing money and paperwork over people. The agency found major problems in a DCA nursing home although this did not get any publicity. There were problems at the Mews Aged Care Facility in Victoria. One of the directors was a prominent member of the Aged Care Association of Victoria. The agency did its best to withhold information and limit publicity.

When nurses at the Emerald Glades Nursing Home in Victoria notified the agency in 2004 of a litany of problems they were fired. In spite of serous and deliberate cost cutting problems the home was sanctioned but allowed to continue operating. There were problems at Kanella aged care centre and at the Paynesville Aged Care Facility, both in Victoria.

In 2005 the agency found problems at Bayview Aged Care Facility in Victoria, at Sir James Terrace Facility in Queensland and at St Catherine's Nursing Home in South Australia. A licence was granted to the owner of Barton Vale Nursing Home in South Australia even though he had been prominent in a previously sanctioned company. It was soon in trouble.


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Staffing issues recognised

The aged care sectors draws recruits because they are motivated by values which seek fulfilment through serving the community. Both underfunded government and market focussed services blunt their motivation and ignore their values. It is no coincidence that the workforce is aging and not being replaced.

By 2005 the loss of skilled workers in nursing homes and the dangers of untrained people caring for frail and sick people seems to have been accepted. The Andrew Turner doctrine had become untenable.

Instead of addressing the ideological contentious matters driving people who care away from nursing homes the government mounts an ideological solution. This really does no more than go through the motions of tackling the problem but the exercise further degrades the sector.

The market sees aged care as a booming industry because there is such a big demand! The solution is not to address the issue of humanitarian motivation but to use economic carrots via enterprise bargaining. They are targeting people who are interested in personal wealth rather than care. They are sending out the wrong message if they want carers.

Apr 2005 Enterprise bargaining incentives and more training for staff

The federal government will urge the states to adopt a national co-ordinated approach to fixing disparities in medical training and employment systems to deal with an impending shortage of labour in the booming aged-care sector.

The federal Minister for Ageing, Julie Bishop, will today release a landmark National Aged Care Workforce Strategy that concedes the government is concerned about the size, skill mix and availability of the present aged-care workforce.

The report reveals that the average worker in the booming aged-care industry is now over 50 years old and that there is "no centralised mechanism to plan, identify, co-ordinate" its workforce.

State governments differ in their policy and operational responsibilities for aged care and its workforce, and Ms Bishop called on state health ministers to come together with a unified approach to the adoption of enterprise bargaining regimes.
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The federal government push for a national approach to the aged-care workforce comes as investment in the sector is booming as companies look to snare a slice of $877 million of new government funding provided in last year's federal budget.
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Ms Bishop reiterated the government's commitment to better-funded training and educational opportunities in the sector including more undergraduate nursing places in universities.
Bishop launches aged-care plan Australian Financial Review April 21, 2005


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More information

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 Sept 2006 by
Michael Wynne