Legal Insights

The future of aged care governance

By Lucille Scomazzon

• 16 November 2020 • 12 min read
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What does good governance look like in an aged care organisation?

This is a question that the Royal Commission into Aged Care Quality and Safety (Royal Commission) has considered at various points since it commenced and in particular at the Brisbane hearing in August 2019, the Hobart hearing in November 2019 and the final hearing in October 2020.

The Aged Care Quality and Safety Standards set out a range of requirements with which approved aged care providers must comply in order to maintain their accreditation as an aged care provider and therefore their eligibility for Commonwealth Government funding. The governance requirements, outlined in Standard 8, aim to ensure that organisations’ governing bodies are accountable for the delivery of safe and quality care and services.

Prior to the challenges associated with responding to COVID-19 and the learnings emerging from the Royal Commission’s hearings, governance in aged care already required navigation of a complex regulatory system, significant financial constraints and workforce issues – all of which directly impact on the delivery of safe and quality care and services to vulnerable people.

There are a number of elements that assist in ensuring an aged care operator is well governed. We have summarised five of these key elements below.
  • 1. Quality and safety is paramount
    All the people involved in the organisation from the chair of the board through to front line staff have the care recipients at the front of their minds in the decisions they make to ensure that quality and safe care is delivered.
  • 2. Open communication
    Open communication between the board, management and staff is critical in ensuring that an aged care organisation fosters a culture of accountability, that complaints are effectively managed and that the board is kept informed with an appropriate level of detail to enable testing and interrogation of the adequacy of key systems and processes.
  • 3. The right expertise on the board
    The ASX Corporate Governance Principles provide the high watermark of what a well constituted board looks like. From an aged care perspective, what has been clear from the Royal Commission is that having a board member with clinical expertise is important and can greatly enhance the effectiveness of that board. This requirement goes hand in hand with the final item below regarding the need for a broader education program for aged care directors, management and facility staff.
  • 4. Effective complaints handling systems
    The Royal Commission has heard a significant amount of evidence from care recipients and their families about complaints being mishandled and mismanaged. Well governed aged care organisations have effective complaints management systems that ensure matters are escalated where necessary, effective solutions are implemented to prevent recurrence, and families and care recipients are shown respect and care throughout the complaints process. Complaints should be viewed as a key opportunity for continuous improvement.
  • 5. Routine organisation wide education program
    A program of training is critical to ensuring that an organisation is effectively governed. This training should not only be implemented at a management and facility staff level but also at the board level. It is essential that directors of aged care operators understand the regulatory landscape and the key issues that are faced at a facility level to ensure that they are not only asking questions, but asking the right questions of management.

Where is the Royal Commission headed on governance?

The Counsel Assisting team presented its final submissions and recommendations to the Royal Commission on 22 and 23 October which the Commissioners will now consider in preparing their Final Report. Governance of aged care providers featured prominently in those recommendations.

Recommendation 22: A general duty to provide high quality and safe care

The Counsel Assisting team recommended that the proposed new Aged Care Act should include a general, positive and non-delegable statutory duty on approved providers to ensure that the personal care or nursing care they provide is of high quality and is safe so far as is reasonable having regard to:

  • any foreseeable risks to any person to whom the provider provides, or is engaged to provide, that care
  • the wishes of any person for whom the provider provides, or is engaged to provide, that care
  • any other relevant circumstances.

The recommendation also provides that any entity which facilitates the provision of aged care services funded in whole or in part under the proposed new Aged Care Act should have a duty to ensure that any worker whom it makes available to perform personal care work has the experience, qualifications, skills and training to perform the particular personal care work the person is being asked to perform.

Counsel Assisting noted that they see this as being among the more important of the recommendations and noted that the Act does not set out a clear statement of the approved providers' basic responsibility to ensure that the care provided to residents is safe and of high quality. Mr Rozen QC also submitted that,

“such a reform would send a clear message to providers, the community and the regulator about the primary duty of an approved provider to protect the health, wellbeing and safety of its residents.”

Counsel Assisting noted the similarity between this new duty and the employer duty under the occupational health and safety laws. In particular, Counsel Assisting noted that the employer duty requires “…employers to take an active, imaginative and flexible approach to potential dangers … and requires employers … to be proactive and not reactive in meeting the duty”. It also requires “…employers to ensure their staff are instructed, informed, training and supervised, so they can work safely”.

Mr Rozen also addressed how this might work for platforms that connect care workers and people looking for care – a model he describes as the 'uberisation' of personal care. He notes that in such relationships there is often no direct relationship between the provider and the care worker and asks how the law can ensure that care provided in such circumstances is of high quality and is safe. The recommendation proposes that any entity which facilitates the provision of aged care wholly or partly funded under the proposed new Aged Care Act should have a duty to ensure that any worker whom it makes available to perform personal care work has the experience, qualifications, skills and training to perform the particular personal care work the person is being asked to perform. He proposes a more limited duty that is proportionate to the risk i.e. a platform should have a duty to ensure that any person they make available has the skills, qualifications and training. Mr Rozen explained that it would not be enough for the platform to say they have a portal for training, rather there should be a positive obligation to ensure workers avail themselves of such training before providing care.

Recommendation 52: Legislative amendments to improve provider governance

Mr Rozen submitted in the hearing that better governance will increase the prospect of higher quality care. Making the connection with organisational culture, Mr Rozen stated that a provider’s most important objective should be to enhance the wellbeing of older people by providing them with safe and high quality care and that governance arrangements should include systems to achieve this primary objective.

Recommendation 52 sets out the following:

  • By 1 January 2022, the Aged Care Act 1997 (Cth) should be amended to require that:
    • the governing body of an approved provider providing personal care services must have a majority of independent non-executive members (unless an exemption has been granted by the Aged Care Quality and Safety Commissioner)
    • the constitution of an approved provider must not authorise a member of the governing body to act other than in the best interests of the provider – potentially overriding the current position under section 187 of the Corporations Act 2001 (Cth) which permits a director, in certain circumstances, to discharge the duty to act in the best interests of a wholly-owned subsidiary company to act in the best interests of its holding company
    • an applicant for approval to provide aged care services must notify the Aged Care Quality and Safety Commissioner of its key personnel and an approved provider must notify the Commissioner of any change to key personnel within 10 business days of the change
    • a ‘fit and proper person’ test (replacing the ‘disqualified individual’ test) applies to key personnel
    • an approved provider must provide an annual report to the Secretary of the Australian Department of Health containing information to be made publicly available through My Aged Care including: financial reports including profit and loss and balance sheet information; details of provider’s related-party transactions; names and positions of all key personnel; annual attestation requirements (see Recommendation 53); information on staffing levels, qualifications, hours worked, employment status and turnover; information on service capacity and utilisation and turnover of people receiving aged care services; and information on the number, type and outcome of complaints.
  • The Freedom of Information Act 1982 (Cth) should be amended to remove references to the aged care legislation to increase transparency.
  • The proposed new Act should contain provisions reflecting both the amendments to the Aged Care Act and the system governance arrangements provided for in that new Act. Under the proposed new Act, the system governor and quality regulator will be the Australian Aged Care Commission.

Recommendation 53: New governance standard

A new governance standard for aged care providers developed by the Australian Commission on Safety and Quality in Health and Aged Care should require every approved provider to have:

  • members of the governing body who possess between them the mix of skills, experience and knowledge of governance responsibilities, including care governance, required to provide governance over the structures, systems and processes for ensuring the safety and high quality of the care delivered by the provider
  • a care governance committee, chaired by a non-executive member with appropriate experience in care provision, to monitor and ensure accountability for the quality of care provided, including clinical care, personal care and services, and supports for daily living
  • allocate resources and implement mechanisms to support regular feedback from and engagement with people receiving aged care, their representatives, and staff to obtain their views on the quality and safety of the services that are delivered and the way in which they are delivered or could be improved
  • a system for receiving and dealing with complaints, including regular reports to the governing body about complaints and containing, among other things, an analysis of the patterns of and underlying reasons for complaints
  • effective risk management practices covering care risks as well as financial and other enterprise risks, and give particular consideration to ensuring continuity of care in the event of default by contractors or subcontractors
  • a nominated member of the governing body to attest annually on behalf of the members of the governing body that they have satisfied themselves that the provider has in place the structures, systems and processes to deliver safe and high quality care

If such an attestation cannot be given, explain the inability to do so and how it will be remedied.

Recommendation 54: Program of assistance to improve governance arrangements

Counsel Assisting submitted that the Australian Government should establish an ongoing program commencing in the 2021–22 financial year to provide assistance to approved providers to improve their governance arrangements, including their care governance arrangements.

Recommendation 109: Civil penalty for certain contraventions of the general duty

Counsel Assisting submitted that there should be a civil penalty for certain contraventions of the general duty (with parallels to be drawn from the work, health and safety legislation and the environmental protection legislation) which we have set out below.

Counsel Assisting drew on a range of evidence to support the introduction of this recommendation including:

  • the findings of a coronial inquest and report in which the coroner noted that “... senior management and the governing bodies of aged care providers should be subjected to a system of personal accountability when standards of care are not met
  • the Aged Care Quality and Safety Commission's advisory panel's options paper supporting the imposition of legislated financial penalties on directors or key personnel in appropriate circumstances where an approved provider is not operating to the expected standards
  • supportive evidence from officers of the Department of Health including a remark by one officer to the effect that having options of this kind would be "amazing".

Recommendation 109 provides that the new Act should provide that on application by the Australian Aged Care Commission to a court of competent jurisdiction, the following is a contravention of the Act attracting a civil penalty:

  • a breach by an approved provider of the general duty to provide high quality and safe aged care so far as reasonable (see Recommendation 22)
  • where the breach gives rise to harm, or the risk of harm, to a person whom the provider is providing care or engaged under a contract or understanding to provide care
  • where a failure to provide high quality care is taken to occur if and only if the approved provider has failed to comply with one or more of the Aged Care Quality Standards.

The new Act should provide that the contravention attracts a civil penalty, and attracts accessorial liability for directors, key personnel and any other person who:

  • aids, abets, counsels or procures the approved provider to commit the contravention
  • induces the approved provider to commit the contravention
  • is in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by the approved provider, (who should be defined as a person ‘involved in the contravention’).

Recommendation 110: Private right of compensation for certain contraventions of the general duty

Counsel Assisting have also proposed a private right of compensation for care recipients where there has been a breach of the general duty.

Recommendation 110 provides that the new Act should provide:

  • an order may be made on the application of the Australian Aged Care Commission to a court of competent jurisdiction that an approved provider that has contravened the civil penalty provision (referred to in Recommendation 109), or a person involved in the contravention, pay damages for any loss and damage suffered by a person as a result of the contravention
  • for a private right of action for damages in a court of competent jurisdiction by or on behalf of a person who has suffered loss and damage as a result of any such contravention, in which proceeding any findings or admissions of the contravention in another proceeding may be adduced in evidence as proof that the contravention occurred.

Will these recommendations become law?

It is now up to Commissioner Briggs and Commissioner Pagone to decide which of Counsel Assisting’s recommendations they will adopt in their Final Report which is due to be published on 26 February 2021.

Although Commissioner Briggs did not appear to agree with every one of Counsel Assistings' recommendations more broadly, it was clear from her comments that she considers the recommendations about governance to be extremely important. She commented that one of the great challenges of the aged care system is that the Government doesn't run the system nor deliver the services itself. She said the Government can regulate, it can set standards and it can change institutional arrangements but only those delivering the services can change the day-to-day approach to the delivery of care. Commissioner Briggs agreed with Mr Rozen’s submissions commenting that the real value-add comes from leadership and culture on the ground in every service. Leadership and culture were clear themes that came out of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and it is likely they will also appear in the Final Report. If the Commissioners adopt these governance recommendations (including the timeline proposed by Counsel Assisting), directors of aged care providers will be subject to the new general duty by 1 January 2022.

This article was published in Edition 2 of The Prescription.

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