Saturday, November 22, 2008

For Profit Aged Care in Australia

I wonder if it would be preferable for the aged care sector in Australia to operate as a for profit sector. By this I mean the funding for aged care infrastructure is provided by investors while the funding for residential care is provided by the Commonwealth. Accreditation standards and classification standards could remain in place as process of quality assurance. Instead of the Commonwealth issuing 'bed licences' it could instead offer a 'operator licence'. This licence would be dependent upon the operator meeting the minimum standards of operation and care and being subject to visits from accreditation agencies.

No doubt many could think of reasons why this shouldn't happen. There may be some good arguments in favour and maybe the time has arrived for the discussion and the debate. Clearly it is not something that is going to occur overnight. It may be possible to implement a dual process and let market forces sort out the final result.

Would smaller non profit providers be the losers? Undoubtedly. Market force feeds on scale of economy, systems and processes and the ability to share costs over a wide base. Many, larger, non profits have already moved in this direction. It may be that over the next twenty years the majority of smaller non-profit aged care operators in Australia will have been acquired and merged into larger groups anyway.

The age care sector requires a massive investment towards infrastructure over the next three decades, in addition to simply maintaining wages levels in line with cost of living increases. This is a significant drain on Commonwealth taxes. Why not transfer that cost and risk to institutional investors?

Would the consumer be disadvantaged? Those opposed to this concept will raise this scenario immediately, yet it may not be the case. Look around you. Even today, with vastly improved acceditation standards and continuous improvement processes in place over the past decade, still the papers are full of stories of aged care operators who have a complete disregard for the resident. These breaches continue to occur for a number of reasons, including; poorly trained managers and staff, inadequate enforcement of standards, low levels of funding for staff, resources, equipment and infrastructure and last but not least an inherent belief that you have to literally kill someone before you lose your operating licence. Even if that were to occur the financial cost is viewed differently by the facility operator. Private investors would not tolerate losing their licence to generate revenue and would likely be equally or more diligent in meeting the required legislative requirements.

Just a thought . . . .

John Coxon
Taking You From Frontline Manager to CEO

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