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Australian Aged Care Regulations to be changed


July 2007

The Assurances
On a previous page I examined the sale of DCA and explored the manner in which a Citigroup private equity group was able to buy our largest aged care provider without having to seek approved provider status from the relevant authority. Citigroup has a tawdry history for misusing those who have trusted it to serve them. It has already been found wanting in a probity review in the much more vulnerable hospital sector. This was in spite of assurances I had been given in 1999 to the effect that the regulations had been designed to ensure that only suitable groups would be approved to provide aged care.

I put this material on the www and then canvassed politicians on all sides of parliament and aged care groups asking them to press for changes. Thank you to those who did so. Some took up the matter with the minister. I am pleased to report that regulatory changes are to be made and I include letters from both of the responsible ministers below. Click Here to open the email sent in another web page.

The devil will be in the details and will very much depend on whether the regulations will now address the track record and culture of the organisation applying for approved status as well as controlling shareholders. This is a test of our politicians sincerity. Anything less will be a Clayton's change.

It would be a sad reflection of the way governments operate if this assessment is to be restricted to the directors and managers as has been done in the past. It is far too easy for an owner or owning group of the applicant to appoint individuals without a tarnished history to run the company while those who would not be approved continue to control the company by making appointments and controlling financial decisions. This would not be the first time the intention of the regulations have been circumvented by appointing a close relative as manager. There is no way in which their interference in the running of the nursing homes could be detected. There are several examples where this has happened in Australia including the notorious Riverside scandal, the Kenilworth and Belvedere Park scandal, the Barton Vale fiasco, and Peninsula Care Pty Ltd.

The doubts
I received no response to the assurances I sought from the minister for health (see letter below). These probed key concerns to confrim that the changes would be effective.

Only 2 months after these assurances were given, the response to another nursing home debacle (Belvedere Park) suggests that these two ministers had, and still have no intention of grasping the nettle. This was a similar situation but on a smaller scale. An owner with a criminal record and a history of owning very poor nursing homes going back 10 years had his final home closed down in August 2007 by the department 6 years after he was first barred from managing the facilities (but a man with the same surname - ?relative - now managed the home). The minister made it very clear in his comment that this owner would be free to buy and own nursing homes again. He gave no indication that he had, or even intended, to change the regulatory requirements.

The department is coy and won't answer questions
On 4th October 2007
BUPA a United Kingdom company bought the DCA hospitals from Citigroup. I faxed and posted on the same day asking urgently whether BUPA would be required to seek approved provider status. When I received no reply after a week I wrote to the responsible department drawing their attention to conduct which I felt might render them unsuitable. A week later I phoned and spoke to someone familiar with my correspondence. He refused to give any information.

Writing to the shadow minister
It is increasingly obvious that neither of these ministers plan to take any steps to address the key issues raised by Citigroup, Belvedere Park or BUPA. We are in the midst of an election in which the labour party are strong favourites. I have therefore written to the shadow minister for aged care inviting her to indicate how labour plans to address these problems and will put it on the web site.

The recent correspondence relating to the BUPA purchase of DCA's nursing homes has been put on to a separate web page.

Click Here to examine the BUPA purchase and the correspondence.

Reply by the Hon Christopher Pyne MP, Minister for aging to a parliamentarian who kindly took up the issues with him on my behalf.


My thank you to the parliamentarian who took up the issue expressed my hope that the regulatory changes would extend beyond individuals.


2nd July 2007


Dear _________________,

Unsuitable aged care providers

This is to thank you for taking up the issue of unsuitable aged care providers with the minister, The Hon Christopher Pyne MP.

I was delighted to learn that regulations are to be tightened up so that unsuitable providers cannot exploit weaknesses in the system. The effectiveness will undoubtedly lie in the details.

I trust that the regulations will look at the culture and track record of the company and its controlling shareholders, rather than focusing only on the not yet exposed executives holding office at the time.

If well constructed these changes will hopefully go some way to keeping out the groups most at risk of betraying community expectations.

I am not persuaded that a market in decrepitude can work for citizens in need of empathic care. As I see it the paradigms used and the qualities required from managers for success in the marketplace, and those needed for this sort of community service, are mutually exclusive, Experience in the USA and in Australia supports this.

Yours sincerely,


J Michael Wynne


Reply from the office of the Hon Tony Abbott, federal Minister for Health and Aging.

In my response and thank you to the minister's department I took the opportunity to press some of the broader issues in aged care

18th June 2007

Allison Rosevear
Assistant Secretary
Residential Program Management Branch
Department of Health and Ageing
GPO Box 9848
ACT 2601


Dear Ms Rosevear,

Re: Provision of Aged Care

I thank you for your reassuring letter on behalf of the Hon Tony Abbott, Minister for Health and Ageing dated June 7th 2007. I am delighted and reassured that something is to be done about the serious loopholes in our regulations.

I sincerely trust and seek an assurance that the new regulations will apply to the controlling owner or owners and corporate entities as well as the subsidiary seeking approval, and that probity as understood within the community and the aged care context will be an important consideration.

The majority of the problem corporations, especially multinationals, operate through controlled subsidiaries. To restrict requirements to the purchasing company would be a sham and a deceitful face saving exercise. In many instances, the problems lie in the culture of a particular controlling corporation rather than individuals. They also lie in the sector within which the controlling corporation primarily operates (eg Wall Street). These impact on probity when evaluated within more vulnerable contexts.

This Wall Street culture is well illustrated by the opening line of a critique, by The Sydney Morning Herald, of a senior manager of the Citigroup associated private equity group currently operating aged care facilities in Australia. Within the Wall Street culture this attribute is understandably admired and rewarded. The negative impact on a sector in which the welfare of frail, vulnerable and trusting seniors should be the primary objective is incalculable. This approach could not meet sensible probity expectations in health or aged care.

"Forget power and influence, Australia's newest media mogul, Adrian MacKenzie, is only interested in Profits." from Nine's Reluctant Frontman, SMH front page June 7th 2007.

Serious problems already exist in our nursing home sector. There have been recurrent failures in our regulation and accreditation processes. International experience is that such processes are ineffective in controlling dysfunction when strongly competitive corporate markets drive policies in vulnerable sectors and when standards are difficult to quantify. There are logical reasons why this is so. Aged care is a good example. It is worrying that Australia has sought to counter the consequences of its market policies by relying entirely on accreditation.

Oversight agencies do not exert any preventive economic leverage. Financial penalties applied after problems develop simply place further pressures on care. If large enough to be a deterrent they drive companies out of business and residents are harmed. The larger the corporation the easier it is for them to thumb their noses at regulations that they experience as burdensome and an unfair limit on their marketplace rights. Oversight sufficiently intense to effectively address the problems in the market driven aged care marketplace would be both too costly and too burdensome for all parties to be viable. These funds would be better devoted to care by groups motivated by Samaritan community values and service rather than profits.

There are also fundamental contradictions between market thinking and the values and norms on which a caring and humanitarian service to vulnerable citizens depends. As a consequence of this, motivated staff who care become alienated and despondent. Discounting this by claiming resistance to change is disingenuous. Many resign and others become apathetic and indifferent. They are replaced by those prepared to do whatever it takes to advance their careers, by meeting the profit priorities of their employers. Those not for profit entities that embrace and promote these value systems find the conflicts intolerable and vacate the sector. The messages coming from the sector indicate that this is happening in aged care in Australia.

Effective measures to restrict provision of aged care to entities that are less challenging to the values and norms needed for the sector to operate effectively will go a long way to reducing the harm that has already been done and the problems likely to occur in the future. It is not however a long term solution. The problems are intrinsic to a competitive corporate marketplace.

At a very fundamental common sense level a market in decrepitude and misfortune is an oxymoron and not socially sustainable in the long term. The problems that we are experiencing are a consequence of this and will not go away.

I do not believe that society will tolerate this in the long term. It will ultimately force change, although this may take many years. This in itself will create enormous problems as corporations which cannot make a profit will walk away and leave a hiatus. Citizens in the USA increasingly recognise where the problems lie and face this dilemma more acutely than we do. They lack a credible and viable way out.

There is a difference in perception and a lack of understanding between those who make decisions and those who have to live with the consequences. There is no common ground. They understand in different ways. Decision makers and workers live in different conceptual worlds. For practical purposes they speak different languages. The first group is deaf to the second. This is well illustrated in a series of recent radio interviews in Queensland. These were with staff, community groups, the industry, and the minister for aged care.

A major step forward would be for both major parties to listen to what the coalface is saying, understand why they are so unhappy, why using the misfortunes of citizens as a focus for corporate profitability is so dysfunctional, and why the very idea is disruptive to the social fabric of the community.

A first step is to accept that a one size fits all policy based on a mechanism rather than societal and contextual values and norms is fatally flawed. A mechanism that may be very successful in some contexts can be a disaster in others. What we have introduced into aged care is not socially tenable nor sustainable.

Moving away from a market model in nursing home care is going to be difficult because the current providers are driven by shareholder or personal financial interest and are not restrained by community values. There is a danger that they will dump services and so compound the problems.

We should be looking for ways of understanding aged care that are congruent with the context and needs of the sector. It would then be possible to develop strategies based on them. Steps can commence to move carefully towards structures and services that are likely to function for the sector.

Nursing home care is primarily driven by a community's empathy and its Samaritan values. It is likely that such a system would be best structured within and around the community rather than operated by market or government. The challenge will be to develop community structures sophisticated enough to manage and integrate such a service. A major problem will be maintaining services during these changes as those concerned only with profits are likely to vacate the sector. We should avoid another dramatic change based on extraneous beliefs dressed as political policy.

I might add that if there are economic benefits to a market in decrepitude this is not apparent. Competitive corporate markets in health and aged care have fairly consistently proved to be inefficient when cost and health outcomes are compared. The 2002 Romanow Commission in Canada carefully considered all the evidence and found no benefits for health care. Romanow canvassed community opinion and found that citizens did not want a market in human misfortune.

There can be little doubt that Australians would feel the same way if the matter was opened for discussion and put to them in clear terms that did not invoke the unrelated debate about public versus private care, which is concerned with who pays rather than who provides.

I hope that the minister will accept these arguments as a constructive contribution to the debate.

Yours sincerely,


J Michael Wynne

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Web Page History
This page created July 2007 by
Michael Wynne
Updated 26 October 2007