What to expect from the latest reforms

The Australian aged care sector is set to look radically different over the next two years as the Albanese government rolls out the nine key reforms it cemented following the Royal Commission into Aged Care Quality and Safety.

As providers grapple with the newly introduced star rating system and the impending requirement for a 24-hour registered nurse presence, many are wondering how the upcoming changes will further impact their working conditions.

Aged Care Lawyer and Principal of Russell Kennedy Rohan Harris said the forthcoming requirements around board composition and minimum weekly care minutes could cause headaches and predicts a range of knock-on effects for the sector.

Resource-driven challenges

On the first of December 2023, boards of existing approved providers will need a majority of independent, non-executive directors; and at least one of the board members must have clinical experience.

Harris said the independence requirement could particularly challenge smaller private owners/investors, many of whom are used to having total control of their business.

“Many providers are concerned this will have implications for the financial performance of their business. My short answer is: ‘Yes it could, but mainly if your focus until now has been primarily commercial’.

“That is the whole point. It’s a measure designed to prevent the ratification of decisions that could be at odds with resident or staff wellbeing,” he said.

For not-for-profit organisations, the requirement could bring similar challenges, Harris said.

“My experience tells me that board membership is increasingly a professional position and not something that can be done on a purely benevolent or voluntary basis,” he said.

However, according to Harris the criteria by which board members are deemed ‘independent’ is currently a grey area.

“It is yet to be seen how rigidly these new laws will be applied in practice,” he said.

More M&A activity

Already, Harris has seen an increase in mergers and acquisitions, as providers submit to resource-driven challenges in their quest for compliance.

In fact, 2021 and 2022 have already been record years for M&A activity in the aged care sector, with the momentum continuing into 2023.

Harris believes these transactions are generally positive, with well-resourced providers benefiting from economies of scale.

However, he warns that buyers could inherit hidden liabilities in the form of underpaid wages or other non-compliant practices. This could create unforeseen financial challenges and, in turn, uncertainty for workers.

For staff at the coalface, however, a merger or acquisition can also bring welcome change. “M&A activity can certainly lead to positive outcomes at all levels. For many, it presents an opportunity to upgrade their working conditions and become affiliated with a reputable provider.

“Organisations who perform strongly and provide top levels of care also tend to have higher levels of employee engagement. Providers might benefit from improved retention as a result,” Harris said.

Technological disruption

From the first of October 2023, providers will be required to deliver a sector wide average of 200 daily care minutes and 40 daily registered nurse minutes per resident. Harris predicts more providers will turn to technology as a result.

“Demonstrating that a case-mix adjusted target for each facility has been met will be a lot more complex than filling in a time sheet,” he said.

“It will require sophisticated care management systems that differ greatly from what some providers are still trying to manage with.

“I expect that when the law comes into effect later this year, providers who have still not abandoned paper-based methodology simply won’t be able to comply.”

Consequences for failing to demonstrate minimum care or nurse minutes could be significant.

“The repercussions are in line with regular assessments. At the lower end of the scale, providers could be given an opportunity to remedy their non-compliance. If there are serious or multiple failures, however, providers could lose accreditation. In turn, they could lose funding, or the right to take bonds from residents.”

At present, Harris is unclear on whether assessors will be lenient towards providers crippled by COVID-induced absences.

“Again, we will have to wait and see how stringently providers are held to these standards,” he said.

Better conditions for all

Despite the challenges ahead, Harris is optimistic about the reforms. Workers should benefit from upcoming obligations around training and career progression, while providers should benefit from improved staff retention, he said.

“The reforms are certainly going to continue to shake things up and may present teething challenges. I can’t imagine things will be easy for providers with a low star rating, for those based in regional, rural or remote areas, or for those with lower-than-average budgets.

“We will certainly keep seeing more mergers, acquisitions and takeovers. But the net result will be that both the sector and providers are in better shape,” he concluded.

Image credit: iStockphoto.com/Tennessee Witney