Outsourcing has become central to the aged care business model and regulation has failed to keep up with it, creating an ideal environment both for the spread of infection and the avoidance of responsibility for deaths and illness in the residential care sector.
With private residential care providers expanding their role in the sector over the last decade, and around four out of every five residential provider part of a larger aged care group, the outsourcing of ancillary services such as catering, laundry and cleaning in aged care facilities, as well as more traditionally outsourced services such as accounting and insurance, has become standard.
Governments have encouraged this: following a 2004 review, the federal government established a facility to help single-facility providers band together to obtain greater purchasing power for external services, while the Productivity Commission encouraged outsourcing as a way of reducing costs in a 2008 inquiry.
One firm has even taken advantage of the aged care royal commission to urge providers to “outsource your non core activities to the Philippines” in order to “focus on what’s important”.
A central problem with outsourcing, as one disgruntled New Zealand provider claims to have discovered, is that outsourced providers add a profit margin into services that may offset any efficiency gains, especially if the market for provision of outsourced services is uncompetitive (a particular problem in regional areas). It also does little for in-house staff morale.
Broader trends in the sector encourage outsourcing beyond cost drivers. The push to empower seniors and their families to exercise greater control over what kind of care they receive — consumer-directed care — automatically requires a more flexible and outsourced home and residential care sector in which providers can’t rely on guaranteed funding but — theoretically — must provide more tailored services that might be just one of a range of care services “consumed” by the recipient.
Outsourcing has also played a key role in regulation of the sector. In 2017, industry publication Ageing Agenda showed how the federal Department of Health spent millions of dollars in recent years contracting out major reviews of aged care funding, legislation and policy. That has continued: last year, for example, PWC received over $1.1 million from the Department of Health to develop new aged care quality indicators and review existing ones.
Not merely is providing services to aged care big business; providing services to the agencies that fund and regulate them is big business as well.
Coupled with the shift of many providers to short-hour contracts for staff, outsourcing increases the movement of people between residential facilities, which has proven a key vector for transmission of COVID-19. As late as June 30, the Aged Care Quality and Safety Commission — now under fire for its lack of residential aged care preparedness — was relaxed about people working across multiple facilities in Victoria.
That complements the broader approach of the commission to outsourcing. In its recent guidance to the sector on applying to become an approved aged care provider, the commission absolves itself of any role in ensuring the providers of outsourced services are compliant with aged care standards, placing that burden entirely on the applicant:
“If your organisation currently has, or proposes to enter into an agreement with another entity to deliver care and services on its behalf you must tell us … You must provide a statement outlining how you intend to oversee the delivery of outsourced care including who within your organisation is responsible for oversight of the other entity and how you will ensure that care is delivered in compliance with the Aged Care Act and the principles … Outsourced or subcontracted services will not be separately assessed against the Aged Care Act and the principles. This is because the organisation directly receiving funding from the Australian government is responsible for the delivery of safe and quality care and services…”
This is an elegant way to diffuse responsibility: the regulator has washed its hands of responsibility for ensuring the provision of basic services such as food and clean linen meet legislated standards, outsourcing that burden on the private or non-government provider to act as co-regulator to ensure services provided by another private provider are compliant, when it has a direct interest in cost minimisation.
To intervene earlier than July and declare that staff should not be working across multiple aged care facilities during a pandemic would have contradicted the commission’s co-regulatory model, given it has no responsibility for ensuring outsourced services provided to facilities comply with aged care standards.
The 1000-plus aged care residents who have already contracted COVID-19 in Victoria and the families of more than 120 aged care residents who have died are unlikely to be given clear answers as to who was responsible for the infection-friendly industry model we created.
Outsourcing – it’s either the same service* for a higher cost** or a lesser service* for the same cost**.
*Service will degrade over time.
**Cost will increase over time.
Q.E.D.
“is that outsourced providers add a profit margin into services that may offset any efficiency gains“.
That is the very definition of outsourced. I’ve been in the workforce for 40 years and have yet to see an outsourced service that wasn’t more expensive and less service. It’s the biggest con in the MBA led world of buffoons.
Ho Bernard – just wondering how you go squaring this analysis of the failures of the Commonwealth and its regulator with last week’s position that everything was unarguably the fault of Dan Andrews.
Maybe Bernard has read and taken notice of all our criticisms and commented regarding his opinions last week. Or maybe last week he was being devil’s advocate….
The authority that is responsible for establishment and enforcement of appropriate standards in aged care is the Commonwealth Government. If the system it put in place isn’t working the Commonwealth is responsible.
Hiding behind Commissions, private providers or whatever isn’t acceptable. The Minister for Aged Care and the Government need to use this crisis as the impetus to clean up the sector – preferably before I get shuffled off to one
Agreed David, this too smart by half attempt by the Commonwealth to contract away their respnsibilty needs to be tested under Safework legislation, where responsibility and huge fines for workplace death and injury should sheet all the way up to the minister.
A royal commission into the contracting out of safety responsibility would be appropriate.
Indeed. If pink batts were the responsibility of Rudd and Garrett, then aged care deaths are the responsibility of Morrison and whoever he wants to take down with him.
The purpose of outsourcing aged care services was never to improve quality or availability of care – it was purely to provide a generous spigot in the public trough for mates to swill. Competition? Don’t make me laugh. Efficiency? You must think I came down in the last shower. Accountability? I don’t know how you can keep a straight face.
This whole aged care ‘private’ sector is a joke. Only there to make buckets of money for L/NP ‘mates’. There was a story doing the rounds over the weekend of a couple, who own multiple aged care homes in Melbourne, listing their ‘mansion’ for sale in (I think) Toorak for just under $10 million. Obviously this sector is a ‘nice little earner’…at the expense of the residents in such aged/non-existent-care homes it would seem.
The answer to all this is to make the whole system PUBLIC, and run these establishments as we run public hospitals, using a similar system to Medicare, with Federal funds that now go to the ‘owners’ being put into a new fund…perhaps Agedcare?
And before you dismiss this suggestion out of hand…please note that the state-run (public) aged care institutions in Victoria (and probably other states) have had minimal problems with Covid-19. That’s because they are better managed, and have the correct mix of staff…especially registered nurses who know a thing or two about infection control!
Funny that!!