Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)
  Home ...... Australia
Alpha Healthcare
Overview ...... Outline ...... References ....... Dissent

When I received copies of court documents setting out the claims made by a number of patients against Sun Healthcare I wrote directly to the minister for aged care asking her to whom I should send the documents given the failure of the authorities to acknowledge receipt. It was an opportunity to make a number of other points, including some about the productivity commission inquiry into aged care. As I recall I did not send the documents to her. I wanted a response.

13 January 1999

The Hon Bronwyn Bishop MP
Minister for the Aged
Parliament House
ACT 2600

Dear Minister,


PLEASE ADVISE:- I write to you for advice. I am now in possession of detailed information relating to the court proceedings taken by 5 separate aged citizens or their families against three facilities owned and/or run by Sun Healthcare in California. I do not know who to send them to. I understand that these actions are representative of those being taken by elderly citizens and their families against Sun Healthcare and other corporate chains across the USA. It is equally clear that a large number of these actions are succeeding. There is consequently every reason to believe that the serious allegation that Sun deliberately and systematically neglected patients to boost profits, made in all these cases has substance. It is increasingly obvious that the suffering and serious complications described in these documents were a direct consequence of Sun's business practices. These court documents illustrate the concrete human consequences of these practices. They give detailed meat and meaning to the newspaper reports and senate hearings.

As I indicated to you in my letter dated 7 January 1999 Sun/Alpha/Moran have indicated their interest in providing long term care facilities which will be used by our senior citizens. In fact Sun's reports in the USA indicate that they already run long term care facilities here. I understand that the Department of Health and Family Services are responsible for assessing the probity of the providers of these facilities prior to granting licences. This department has for over a year refused to acknowledge registered documents and correspondence impacting on Sun's probity.

I am therefore writing to you as the minister responsible for protecting the welfare of the aged to ASK YOU TO WHOM I SHOULD SEND THIS MATERIAL SO THAT ACTION WILL BE TAKEN. There is little point in sending it to state authorities. A 1993 report by the WA Health department indicated that Victoria was the only state with the powers needed to address the problems created by foreign multinational health care criminals from countries where the legal system allowed them to escape criminal convictions. The court documents are far too bulky to photocopy and send to all those involved in the health debate, or responsible for health care regulation.

THE CONNECTICUT FRAUD:- I am also accumulating material about the investigations in Connecticut where Sun is accused of fraud. The information which I have is that an audit in 1993 by the department of social services into Sunrise, Sun's nursing home subsidiary disclosed numerous instances of overcharging. An inquiry was also commenced into whether false and misleading reports had been given by the company. An audit report (I think in 1995) indicated problems. In 1995 documents were subpoenaed to get more evidence.

I understand that the investigation has been finalised and that there is little dispute about what happened. In keeping with US practices a financial settlement is being negotiated. Sun will pay money in some way but will not be required to admit guilt. Sun will also be required to send a letter to all other states in regard to some of the matters.

I have not been able to confirm the accuracy of this account. As indicated above I do not know to whom I should send the documents, already in my possession relating to the investigation in Connecticut. I believe that they support the allegations of fraud made by Connecticut authorities.

To the best of my knowledge none of this additional material was available to Victoria when they did their probity assessment. I did not supply it to them.

SUN'S SEC FILINGS:- Finally I note with interest that all the filings made by Sun Healthcare to the US Securities and Exchange Commission since 1 July 1998 have been pulled off the SEC www site. I have previously examined 9 recent reports which are no longer there. While there may be a simple explanation for this I believe it more likely that these documents have been pulled because the information in them was not accurate and because the SEC believes that the market and Sun's shareholders have not been properly informed.

THE PRODUCTIVITY COMMISSION:- Finally I note that the Productivity Commission is due to hand its report on aged care in Australia to you today. The very name "productivity" reflects the paradigms being used and the likelihood that the commission's members will be drawn primarily from business, economics and management and that they will concentrate exclusively on cost savings and efficiency. Like other government committees they will very probably work within the competition policies around which Australian society is being restructured. Our health minister, Dr Wooldridge indicated in 1996 that he was restructuring health care within this framework. The commission is therefore likely to favour corporate marketplace solutions. Members might have little hands on experience in actual care and as a consequence they are likely to rely entirely on measurable outcomes. They might not understand the difficulties in quantifying "humanity" - the critical and most time consuming component of aged care.

CONJECTURE:- Sun Healthcare is likely to have followed the advice of international health care consultants. If so, then Sun's chairman and staff will certainly have lobbied politicians over the last 18 months to "exploit their pain" and offer corporate solutions to their problems. I do not know whether Sun's influence contributed to the decision to establish the Productivity Commission's assessment of aged care services. My past experience of corporate chains, and the accuracy of my predictions about their behaviour have made me overly suspicious.

STAKEHOLDERS AND THE COMMISSION:- It is currently fashionable either to appoint "stakeholders" with a direct interest in outcomes, rather than independent authorities to government bodies. These bodies will also seek input from stakeholders. It is therefore likely that the Sun/Alpha/Moran complex would have had a major input into the commission and have promoted the notion of "cutting the fat", claiming that there is plenty of fat to cut. As you will by now be aware corporations like Sun Healthcare claim credibility on the basis of their extensive international expertise. I trust that the extensive material I have sent you over the last many months has persuaded you of the fallibility of this and revealed the true nature of this expertise.

CUTTING THE FAT IN AUSTRALIA:- The idea that there is fat in the system which can be reduced is already prevalent in government and corporate administration. This is evident from a report from Australian nurses which found that in 31% of instances in Queensland nursing home staff were not replaced when they left. Extensive unpaid overtime was worked in 32% of homes. It is easy to discredit nurses by claiming self interest but the situation in the USA shows that their accounts of the misuse of patients and their bitter battles with corporate chains were soundly based. They had a lot to be unhappy about. The consequence of ignoring their whistle blowing is now only too clear.

HUMAN CONCERN:- The purpose of these comments about the Productivity Commission is to remind you that care comes from human concern and this is what motivates it. Overwork, poor salaries and a surfeit of temporary agency staff destroy team spirit and this impacts adversely on care. A management structure which fails to genuinely recognise the humanitarian contributions made by staff, which fails to address the paradigms used and which ignores the impact of the working environment cannot maintain proper care over a period of time. The consequences of profit generating management practices like these is revealed in the US nursing home situation and particularly in the conduct of Sun Healthcare.

RATIONING:- Finances for the care of our aged citizens may well be insufficient and we may have to ration services. Clearly money should be spent efficiently. Rationing and efficiency at the expense of care, simply to take more money out of the system and boost corporate profits is immoral and unacceptable.

I ask therefore that the productivity Commission's report should be carefully considered in the light of all the material which I have made available to government departments (FIRB & Health and Family Services) and yourself - including of course the court documents.

PROPER PROCESS:- I am reminded of a conversation I had with a pompous Canberra bureaucrat from Veteran's Affairs in late 1993. He boasted of his experience in making decisions, indicated that he knew all about National Medical Enterprises, did not need any more information about the fraud settlements, and that proper processes had been followed when the company was short listed to buy a Vets Affairs hospital in Brisbane. Queenslanders took a very different view when they saw the documents Canberra had refused to consider. I sincerely hope that in assessing the Productivity Commission's report common sense will triumph over "proper processes".

THE USA SEES PROFIT PRESSURES AS A PRIME CONCERN:- I enclose a copy of an article from the Mercury News in San Jose in California, the state where there is so much concern about Sun Healthcare. US parties who have studied corporate nursing home chains first hand consider removal of the profit motive as one of the critical factors in addressing the problems. The article tactfully suggests that corporations should follow the advice which Andrew Turner gave to government in 1996 and "butt out" of health care. It points to the benefits of restricting the operation of nursing homes to community groups which are motivated by a genuine desire to care for the weak and frail. This is what I have been saying for many years.

Yours sincerely,


 Attachment:- (Note the following article sent to the minister is copyright and is reproduced here as fair practice to stimulate discussion in the public interest and for the public good. I should not be reproduced for any other purpose)

Published Monday, January 11, 1999, in the San Jose Mercury News


The opinion of the Mercury News ::::: Nursing homes: the final indignity

MORE than 20 years ago, investigations of California nursing homes revealed a shameful tale of neglect and abuse. Stung into action, legislators passed laws reforming the industry and demanded that nursing homes treat residents properly.

Thirteen years ago, the Mercury News revisited the issue and found that a decade of reform efforts had failed to end conditions that made the last months of life undignified and miserable for thousands of patients. Despite some improvements, poor care and outright abuse still led to many deaths.

Then, last July, news stories showed that the suffering is still going on. A report by the federal Government Accounting Office revealed that patients in California nursing homes are dying from malnutrition, dehydration, bed sores and other results of poor treatment.

A California nursing home inspector testified before the U.S. Senate's Special Committee on Aging that patient care has, if anything, gone downhill in recent years.

She said nursing home operators hire too few staff members to provide adequate care, use political influence to avoid aggressive inspections, and fail to prevent staffers from abusing patients or demented patients from hurting each other.

Something is very wrong when the nursing home industry makes tidy profits while our parents and grandparents, our former teachers and retired engineers endure humiliation and pain in the final months or years of their lives.

There are laws in place which are intended to make nursing homes, their owners and staffs accountable. But many times, they are not enforced. Fines are waived or reduced. Abusive staffers escape punishment. Filth and carelessness are excused if operators promise to clean up their act before the next annual inspection. Some laws actually perpetuate poor conditions by giving the homes financial incentives to cut staffing and trim levels of care. And the staffs the homes do have are mostly poorly paid aides who lack adequate training.

Advocates for the elderly have many suggestions to improve this abysmal situation:

 Keep as many people as possible out of institutions by making it easier for the elderly or disabled to stay in their own homes or in relatives' homes. President Clinton's long-term care proposals announced earlier this month are a small but important part of this.

 Change federal and state funding formulas so that assisted living facilities, home health care and other arrangements can help more people. The On Lok Senior Health Care Facility in San Francisco is cited as a model of how a non-profit organization can provide excellent care in the least restrictive settings for poor senior citizens, when rigid rules are waived. Staff members move clients in and out of different care settings depending on what they need at the time, not on whether they fit into one bureaucratic box or another.

 Increase enforcement of nursing home regulations. State and federal laws are good as far as they go, say advocates, but enforcement is poor. Fines should be collected fully and promptly. Inspections should be rigorous and unannounced, and should include evening and weekend visits. Deficiencies should be corrected immediately, under threat of sanctions.

 Require more registered nurses and licensed vocational nurses per shift, and require more training and better pay and benefits for the aides who do the vast amount of patient care.

 Create capital funds, or expand existing state loan programs, to allow more community-based, non-profit organizations to build or buy nursing homes.

Removal of the profit motive is seen by both the National Senior Citizens Law Center and the California Advocates for Nursing Home Reform as an important route to quality care.

Government cannot do it all, of course. Most nursing home residents have living relatives who should be monitoring their conditions. Nursing home operators should either make patient care a priority or get out of the business. Employees should routinely treat the elderly with compassion. But human nature being what it is, government still has to look out for the frail, vulnerable elderly by setting minimum standards and seeing that they are met.

California's legislators should look carefully at the GAO report and the recommendations that advocacy groups are preparing this month. Then they should take action. In the not-too-distant future, some of them -- and many of us -- will be among the nursing home population. Anything they do now to ensure quality care will help; whatever they fail to do will come back to haunt us all.

Copyright San Jose Mercury News

(the bold italics are mine and were not in the original)

Next Letter

Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)
 Home ...... Australia
Alpha Healthcare
Overview ...... Outline ...... References ....... Dissent
This page created Sept 2001 by Michael Wynne