Background

The new minister for aging, the Hon Justine Elliott MP introduced revisions to the aged care act of 1997. These were complex and difficult to understand. The legislation claimed that it gave greater protection to residents and focused more attention on the owners who had financial control.

I had since 1999, repeatedly written to urge various ministers to alter the legislation regarding approved provider status. This currently allowed operators with truly dreadful track records to buy nursing homes - often without undergoing any sort of scrutiny. Prior to the 1997 bill owners and operators were required to meet probity standards. These matters are extensively addressed in regard to the liberal party in the web page dealing with the purchase of DCA by Citigroup and in regard to the labour party in regard to DCA's onsale to BUPA. Both pages refer to, and link to, letters going back to 1999 in regard to the same issues.

The issues I addressed in this correspondence were

• 
  the failure to assess owners who had financial control over the company, appointed managers and determined the financial policies and so services provided,
• 
  the failure to consider the conduct of persons outside the aged care sector when applying for approved status,
• 
  that totally disreputable organisations or individuals could purchase nursing homes and take over their approved provider status without being required to undergo any sort of review themselves, and
• 
  the extreme limitations placed on the removal of approved provider status when it was required.

My objections to authorities in regard to some of these groups had not been evaluated because the oversight bodies did not have the legislative power to do so.

The Senate Community Affairs Committee

When the amendment was tabled and put before the Senate Community Affairs Committee for examination I made a submission in which I supported the general thrust as expressed in the ministers explanations - but in which I expressed doubt about its extent and whether it actually what was claimed. I made several criticisms. As far as I could see it did very little to ensure that unsuitable owners were kept out or forced to leave the sector when their conduct indicated that this was needed to protect residents.

The final paragraph of the summary of my submission stated

"My gut impression is that the Bill still protects the interests of the providers more than the residents. I note that the providers (called stakeholders) were extensively consulted and get the impression that changes could not be made without their approval. There is no reference to discussion with critical community groups. Having watched the US and Australian systems over the years it concerns me that the increasing dependence on the marketplace has given these operators so much leverage over policy that little can be done without their approval – however eager the minister is to make changes. This is not the first time this has happened in either country"

Click Here to go to the Community Affairs Committee web page where submissions can be downloaded. (see Wynne, Dr J M for my submission)

Click Here to go to the committee's report

Testing the Legislation using Milstern as a test case

The legislation was passed into law in December 2008. It clearly needed testing.

Milstern and its owner, Millie Phillips had been the subject of multiple negative press reports, and been involved in a large number of law suits. Ms Phillips operated in the general market, in the nursing home sector and in Retirement Villages. There were large numbers of critical press reports in each sector over the years. Milstern Retirement Villages, one arm of the Phillips empire had been in dispute with the residents of at least two retirement villages and had been severely criticised by various courts. The publicly available information marked it as a suitable test case to test the legislation.

The allegations and criticisms were such that no body with the power to investigate the suitability of an owner to be an approved provider could legitimately refuse to do so - regardless of the conclusion that was finally reached about Ms Phillip’s or Milstern’s suitability. The reports related to all sectors of Ms Phillip’s operations. The recent issues related to another related very vulnerable sector, retirement villages. There had earlier been extensive criticism of the company's nursing home operations.

The covering letter stated

The complaint relates primarily to the recent conduct of the parties in Queensland but most of their nursing home operations are in NSW. I trust therefore that this will be addressed at a federal level.

I need only point out

1. that in this instance the parties unsuitability seems to be beyond question,
2. the importance of sending a strong message about such conduct to the market in decrepitude, and
3. that this is a test case to see whether the changes made to the legislation are more than window dressing.

Click Here to download the letter

The Authority's Response

It took the authorities almost 3 months to reply. The convoluted reply from the Office of Aged Care Quality and Compliance ultimately speaks for itself

The concerns you have raised relate to two retirement villages, Lindfield Manor Retirement Village (New South Wales) and Urimbirra Retirement Village (Queensland).The Commonwealth does not regulate retirement villages. These are regulated under the relevant State and Territory legislation.

Therefore the Aged Care Complaints Investigation Scheme is not empowered to investigate your complaints about these two retirement villages. On this basis, your complaints should be directed to the following bodies which regulate retirement villages:

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  - New South Wales Office of Fair Trading, ph:133220; and
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  - Queensland Office of Fair Trading, ph: 13 13 04

Click Here to download this letter

Conclusions

In essence it does not matter what an owner or any other operator does outside their nursing homes, however unsavoury that might be. It is seen to be irrelevant to their activity in nursing homes. Their character, their conduct elsewhere, in essence their probity are of no relevance and are not considered to impact on the care they provide to vulnerable residents. Note that prior to 1997 “probity” was a key regulatory requirement for an operator of nursing homes and kept unsuitable people out. Under pressure from the “industry” probity requirements were removed from aged care regulations by the Howard government in 1997.

A reply was sent to the office. It indicated that

1. 
   the revisions to the aged care act made in 2008 fell far short of what was required.
2. 
   corporate owners are not considered as “persons” as it is in other heath and aged care legislation. Corporate culture, a major concern, is not considered.
3. 
   management can address corporate cultural problems by simply appointing someone who does not yet have a bad record to do what they require.
4. 
   Aberrant companies and individuals can still buy nursing homes without seeking approved provider status themselves. Approved provider status therefore has a commercial value for the seller and the buyer.
5. 
   there is no mechanism for reviewing an individual or company’s approved provider status when conduct occurs outside the nursing homes it owns.
6. 
   regulation concentrates on ever stricter and more onerous extrinsic oversight by outside bodies and does little to alter corporate culture.
7. 
   there is still no tracking and public reporting of easily documented markers of care including staffing ratios, incidence of pressure sores, weight loss etc.

The letter went on to address some of the deficiencies in the current administrative arrangements, the responsibility of the department to advise the minister of the problems and some suggestions as to how remediation could be approached.

Click Here to download this letter

Finally I remind you of the comment in my submission to the Senate Community Affairs Committee “that the Bill still protects the interests of the providers more than the residents”. The test case and the subsequent correspondence bear witness to this.

Web Page History This page created February 2010 by Michael Wynne