The Unique Challenges of Governance in the Aged Care Sector

On 16 September 2018 the Australian Government announced the establishment of the Royal Commission into the Aged Care sector. The Royal Commission will primarily look at the quality of care provided in residential and home aged care to senior Australians and young Australians with disabilities living in residential aged care settings. On 9 October 2018 the Terms of Reference for the Royal Commission into Aged Care and Safety were announced. The Royal Commission’s interim report is to be provided by 31 October 2019, and its final report no later than 30 April 2020.

Prior to the announcement of the Royal Commission, and in response to the Oakden Report, the Government undertook an independent Review of National Aged Care Quality Regulatory Processes. The Review examined why regulatory processes did not adequately identify the systematic and longstanding failures of care. The Review identified improvement to the regulatory system that will increase the likelihood of immediate detection, and swift remediation by providers.

The Review of National Aged Care Quality Regulatory Processes (the Review) report was released on 25 October 2017 where the Minister for Aged Care, the Hon Ken Wyatt AM, MP released and announced broad support for the direction of the report. On 18 April 2018, Minister Wyatt announced:

  • the establishment of a new independent Aged Care Quality and Safety Commission from 1 January 2019
  • enhanced risk profiling of aged care providers, to inform the frequency and rigour of visits and to ensure failures are quickly identified and rectified by providers
  • the development of options, in consultation with the sector, for a Serious Incident Response Scheme to ensure the right systems are in place to identify an incident and prevent it from occurring again;
  • the introduction of a performance rating against the new quality standards
  • the development of a user-friendly provider comparison tool on the My Aged Care Website.

The Minister also announced that the Government would move as soon as possible to replace announced re-accreditation audits with unannounced audits in residential aged care services.

A significant part of the reforms to the aged care system includes a Single Aged Care Quality Framework with:

  • a single set of quality standards for all aged care services
  • improved quality assessment arrangements for assessing provider performance against quality standards
  • a single charter of rights for all aged care recipients
  • publication of improved information about quality to help consumers choose aged care and services.

The single quality framework will:

  • increase the focus on quality outcomes for consumers
  • recognise the diversity of service providers and consumers
  • better target assessment activities based on risk
  • reflect best practice regulation.

Single set of quality standards – the Aged Care Quality Standards

There are currently four sets of quality standards depending on the type of aged care service being delivered. These will be replaced by the new Aged Care Quality Standards. The new Aged Care Quality Standards are contained in the Quality of Care Amendment (Single Quality Framework) Principles 2018.

Transition from the existing standards to the new Aged Care Quality Standards began in July 2018. Providers will continue to be assessed against the current standards until 30 June 2019, with assessment and monitoring against the new Aged Care Quality Standards starting from 1 July 2019 and include the following:

Governance in the Aged Care Sector

Evidence shows that the problems are not restricted to any one part of the aged care sector, whether it is for profit or not for profit, large or small facilities, regional or major metropolitan. In response to the Review and the upcoming Royal Commission, Boards of aged care providers are already subject to increasing scrutiny. Boards will need to ensure that they are capable of making informed and effective decisions and have in place governance frameworks to enable this.

In response to the recognised support needed by Boards of the aged care sector, the Governance Institute of Australia (the Institute) has produced a practical guide called Adding Value to Governance in Aged Care for board members of aged care providers to assist in a time of upheaval and change for the sector.

The Institute says that “Boards will need to ensure that they are capable of making informed and effective decisions and have in place governance frameworks to support the wide-ranging and fundamental reform as the Australian Government seeks to introduce a more consumer-directed, market-based model of operation to improve the sector’s financial sustainability.”

Furthermore, the Institute also outlines in its guidance that “reading the guidance should be mandatory for all new and existing board members of aged care providers in order to comply with their obligations and understand how they can best add value to the governance of their organisations.”

The comprehensive guide includes chapters on the role of directors and board members, the relationship between board and management, risk management, interacting with stakeholders and the unique challenges of governance in the aged care sector including consumer driven models of care.

It explores all the models of care including community care, home care and the residential sector as well as transformational leadership, compliance, and financial issues under the move to a market-based system.

It also provides advice for those taking up a position on the board of an aged care provider as well as pointing to what boards should consider when inviting a new member on-board.

Adding value to governance in aged care: A practical guide for any potential or current member of a board of an aged care provider can be downloaded here.

OCM is here to help

OCM has a team of highly skilled professionals who can work with you to address your Governance, Risk Management and Compliance needs.

OCM can assist with the transition of the new Aged Care Quality Standards by way of bench-marking or undertaking gap analysis; better defining the decision-making processes for both financial and non-financial areas and the underlying schedule of authorities; establishing or enhancing existing governance, risk and compliance frameworks; policy development; reviewing project governance structures; facilitating risk assessments; and assessing the effectiveness of your Board or the Audit and Risk Committee.