Prior to 1997, owners and providers of nursing homes were vetted under probity requirements to be sure that their past conduct showed that they were good citizens and could be trusted to care properly for vulnerable people. Citizens with knowledge of bad behavior by an applicant could supply it to the departmental vetting body, and object to the issuing of a license to operate.
Approved provider status
In 1997, the system was replaced by a secretive behind closed doors "approved provider" process. Owners who bought an existing provider, and so came to control the purse strings, no longer needed to seek approval. All that is required is that managers ("key personnel") that are appointed to run the newly acquired subsidiary, do not yet have a criminal conviction. An owner could easily require them to squeeze care in order to increase profits.
Approved provider status has become a commodity which is clearly of considerable commercial value to a company whose suitability may be questionable. The issue of suitability arises from a contrived, artificial and invalid separation of owner from approved provider in the regulations. This invalid construct sees the two as quite separate, whereas some are owners as well as providers.
Owners are clearly intimately concerned with the profitability of the businesses they own and clearly consider that they have every right to participate in the management of these businesses, particularly when they are not generating profits.In contrast, the owner is not seen by the Government to influence the provider, or to participate in any way in decisions that might impact on care. This is unrealistic.
This is about care and ultimately almost all financial decisions impact on care. There is clear evidence that ownership is one of the most important determinants of the sort of care that is given in nursing homes.
Residents, families and communities who have worked hard to find a suitable facility operated by managers they can trust, have no say in who is going to control the care they receive when their facility or service is sold. They can find themselves sold off into the hands of a totally different type of service, one whose only focus is on squeezing as much profit from their care as they can. This is unacceptable. A totally different vetting system is required.
Probably very few of the private equity groups, banks and wealthy individuals who have taken control of our for profit nursing homes by acquisitions have had to gain approved status in their own right.
The Minister confirmed this in writing in 2008. We were told that ownership had no impact on care and it was the key personnel in the providing company that were responsible. They were barred from employing anyone with a criminal history. When remonstrated, he was told that the rigorous accreditation process would protect our system and ensure that good care would be provided.
… As you are aware, an organisation which acquires a controlling or significant interest in an organisation that already has Approved Provider status is not required under the Aged Care Act 1997 to apply for Approved Provider status. BUPA, therefore was not required to seek approval from the Department of Health and Ageing…
Dr Wynne – Responding to DOHA, 2008
This is a glaring loophole in the regulations and places frail and vulnerable citizens at risk of exploitation by unscrupulous commercially focussed entities with little knowledge of the requirements of the frail aged or interest in anything other than the potential profitability of the sector.
Although some changes were made in December 2008, they have not properly addressed the issue as companies can still buy into the nursing home sector without having to seek approved provider status in their own right. In other words, the recent changes have been inadequate in dealing with the protection of frail and vulnerable citizens.
Once a group attains approved-provider status, that status can be transferred to any individual or company that buys the holder of approved-provider status. No assessment is required. This status then becomes a commodity, which is clearly of considerable commercial value to a company whose suitability to care for frail, vulnerable people may be, and sometimes is, questionable.
Pre 1997 requirements
Prior to 1997, probity provisions in the aged-care regulations required those licensed to own and operate nursing homes to be fit and proper persons - in essence, to be the sort of person whom the community would trust to provide the particular service to vulnerable people and not exploit their vulnerability. In making the assessment the degree of control as measured by ownership stake was critical.
This was seen to be an obstruction to the legitimate operation of the free market so was abolished in 1997. Instead, an "approved-provider" process was set up. This was a 'behind-closed door process' protected by commercial in confidence legislation. The identity of applicants was not disclosed, and there was little vetting, if any, of suitability.
After a number of scandals, those with criminal convictions were barred from holding management positions involved in care, but importantly, not from ownership.
This is unrealistic. This is about care, and ultimately, all financial decisions impact on care. Even more concerning is that corporations that purchase aged-care homes or provider groups that already hold approved-provider status do not have to reapply for it. Thus, even people with a criminal record can be found to own aged-care homes.
Key personnel
Requirements to notify the department of changes to key personnel were no longer required from the 14 October 2016.
All shielded by "in confidence" provisions
Aged Care Crisis is concerned that there is no public disclosure when entities apply for approved provider status. Members of the community are neither encouraged, nor given the opportunity to object, to a particular provider or to supply information which might be extremely pertinent.
Giving those with knowledge, or with the time and interest to do research, the opportunity to provide additional information would minimise the risk that unsuitable providers might end up caring for frail and vulnerable people.
Our correspondence has illustrated that an application for approved provider status is "in confidence". The communities involved, the residents, their families and concerned groups, are all excluded. People with relevant information do not know, and the community is locked out and so unable to protest or rock the boat.
Commercial interests are protected over the rights of the community, who will be the customers, and over the interests of the frail elderly trapped in a nursing home now controlled by an operator with a very different agenda.
The resident and their family may have chosen with great care, but all that effort was wasted. They might as well have pulled the name out of a hat.
"Choice" the new mantra
"Choice" is the new mantra from recent aged care reforms. The reforms seek to make aged care into a free and "competitive" market.
Government have ignored the loophole in the approved provider process - and the lack of choice for residents, who are the profit bodies sold off for the new owner to exploit.
FIRB does not vet most aged care transactions
The suggestion in corresponence from the Department, that the Foreign Investment Review Board (FIRB) might vet the process, was explored.
The FIRB web site indicates that US companies have special privileges. Except for a few at risk sectors they are only required to seek FIRB's approval when making large investments in companies valued at over $1,005 million. For other companies the figure is $231 million. The sensitive health and aged care sectors are not listed among the exceptions.
Few Australian aged care companies would exceed this limit. Dr Wynne sent an email to FIRB in regard to Blackstone to confirm that this was the situation and asked what sort of protection there was for these sectors. He did not get a reply.
Conclusion
It can only be concluded that regulations do not protect the aged care system or the residents from the risks posed by dysfunctional multinational predators.
It is also clear that both political parties are so deeply in debt to the providers and their marketplace backers that they will not do anything about it.
