Prime Minister Scott Morrison has warned the nation to brace itself for “bruising” information during a royal commission announced on Monday into the nation’s $20 billion ailing aged care sector.
The announcement came hours before an ABC Four Corners exposé detailing a system rife with resident neglect, and wiped an estimated $500 million off the sector’s market value.
The $75m royal commission – which will examine all aspects of aged care provision in Australia – will commence before year end and be similar in nature to that currently being conducted into the financial services sector.
Mr Morrison is yet to reveal his terms of reference or appoint a commissioner, but it is expected the proceedings will examine the quality and extent of care offered to elderly residents, the challenges of providing care to the disabled, the impact of rising rates of dementia, and the opportunities and challenges for delivering services posed by the ageing population in metropolitan and regional areas.
Industry taskforce report
The royal commission announcement follows the release in June of a final report by the Turnbull government’s aged care workforce strategy taskforce recommending reforms to support safe, quality care for senior Australians.
The $1.92m, nine-month exercise explored short, medium and long-term options to boost supply, address demand and improve productivity for people working in aged care, with particular emphasis on retention of the “right workers with the right aptitudes”.
On delivering the “transformational” report, taskforce chair Professor John Pollaers said the industry needs to act on some of the recommendations immediately, such as implementing better workforce planning, holistic individual care plans and improved strategies to attract and retain high quality staff.
“In undertaking our work, we uncovered some inescapable truths that impact on how the community views aged care and indeed, how the industry sees itself,” he said.
“It is critical that we shift these views and attitudes if true transformation of the workforce is to occur.”
The taskforce recommendations have now been put on hold pending royal commission findings.
The business of aged care
The royal commission news was delivered a few hours before an investigative report by ABC’s Four Corners program into stories of elderly abuse and neglect in aged care facilities.
The show was the first in a two-part episode touted as “the biggest crowd-funded investigation in the ABC’s history”, created from over 4000 responses to an callout by the broadcaster earlier this year asking Australians for their experiences with the sector.
It examined the business of aged care and relayed disturbing accounts of overworked staff and neglected residents – experiences that were controversially defended by Leading Age Services Australia chief executive Sean Rooney.
When asked if the reported spend of $6 a day per resident on food was appropriate, Mr Rooney’s reasoning that aged residents have “a low nutritional requirement” drew the wrath of social media followers, with many calling for him to be removed from his post.
Federal Minister for Senior Australians & Aged Care Ken Wyatt, while initially charming in his responses, was likewise ultimately dismissive of reported staffing issues.
“I would expect every aged care provider to have the mix of staff that is important to look after anybody who lives in that facility… that is their home and their home should be a safe environment in which they are provided with support and quality care,” he told the ABC.
“I am deeply saddened by the stories and there can be no excuse for such practices.”
But despite ongoing staffing issues, he saw no need for an immediate reform of current policies such as the introduction of mandated staff-to-resident ratios.
Workers are currently the biggest cost in aged care facilities.
With the exclusion of state-run homes in Victoria, there are no mandated minimum staffing ratios in nursing homes, which often results in under-staffing.
“We have not mandated a staffing ratio [for aged care facilities] partly because each aged care provider is a business in its own right,” he claimed.
“If I find that there [are] continued failings after we establish the [royal] commission and after the new standards come into play then certainly there will be further discussions in respect to workforce.”
Aged care by numbers
Australia’s Productivity Commission estimates one million workers will be needed by 2050 to service the 3.5 million Australians expected to qualify for aged care help.
Currently 1.3 million senior Australians access some form of aged care help, with 240,000 living in aged care facilities.
Another 84,000 people rely on in-home care packages so they can stay in the family home, while the remainder rely on home support services such as Meals on Wheels.
Current demand for home care packages outstrips supply, with a backlog of more than 100,000 seniors waiting for assistance.
The aged care royal commission will investigate the quality of residential, home and community aged care services, including home care and support, as well as aged care staff numbers and remuneration, which has been considered as not competitive with similar industries.
Mr Morrison warned the nation to brace for “bruising” information during the commission, which is expected to deliver its first report by mid-2019.
Share price slumps
Australian aged care stocks were dealt a savage blow following Mr Morrison’s unexpected announcement, tumbling by close of trade Monday on high volumes.
Unlike the nation’s banking royal commission, the inquiry into the aged care sector was announced without much of a build-up, with experts suggesting the market was “probably a bit unprepared”.
Japara Healthcare (ASX: JHC) fell 21% to a low of $1.32 before closing the day at $1.39 a share on Monday trade and closing Tuesday only marginally higher at $1.42.
The company said it welcomed the royal commission and the opportunity to “constructively contribute” to consultations regarding the terms of reference.
“We hope it facilitates further reform to the sector that supports better outcomes for all aged care residents now and in the future, as well as providing long term sustainability for our important industry,” said Japara’s chief executive officer Andrew Sudholz.
Estia Health (ASX: EHE) shed 18.9% to reach a low of $2.39 before closing Monday trade at $2.40. On Tuesday the company made a marginal recovery to finish at $2.47 a share.
Estia also supported the call for a royal commission and scrutiny of the sector.
It said any measures introduced would help ensure the safety and quality care of its residents and provide a sustainable sector for all those in aged care.
“Caring for the elderly is a privilege and enormous responsibility [and] we will continue to work with government to build a viable sector that older Australians deserve,” said chief executive officer Norah Barlow.
Meanwhile Regis Healthcare (ASX: REG) has remained tight lipped during the saga.
The now sub $1 billion company plans to move into retirement living developments co-located with aged care facilities.
Regis shares end Monday 17% down at $3.00, with $188 million wiped off its market value.
On Tuesday the company traded in a wide range as the sector seeks to normalise, closing the day at $3.07.
Retirement village business Aveo Group (ASX: AOG) closed Monday 7% down at $2.06 after having reached a low of $1.92 during the day’s trade.
Although the company has also not commented on the royal commission, its 2018 annual report announcement was an ironic ode to current events.
“The wellbeing of our residents remains our highest priority,” Aveo chief executive officer Geoff Grady said on the report’s release.
“The high levels of satisfaction that they express for the retirement communities that we are creating for them – especially with innovative healthcare services enabling them to age in their own homes – means we are well positioned to evolve to the next stage of our development.”
Many investors will be waiting on the sidelines to see if the aged care can start to recover, although doubt remains on the strength of that recovery, if any, as the royal commission’s finer details are still undecided and more news is set to come out.
However solutions to some of the issues identified in the aged care royal commission may be close at hand.
Technology offers a solution
In July, former exploration company Antilles Oil & Gas (ASX: AVD) announced a major change to the nature and scale of its business with the acquisition of Australian aged care technology provider HomeStay Care.
The acquisition – which will see Antilles rebrand to HomeStay Care Limited – followed news that the Federal budget would include $1.6b over four years to support 14,000 additional high-level home care packages, allowing more senior Australians to receive at-home care.
The HomeStay group uses a proprietary Internet of Things platform to provide technology-enabled care that can help seniors live independently in their homes for longer periods of time.
Driven by artificial intelligence, machine learning and predictive analytics, the platform connects with electronic wearables and sensors on home appliances to provide in-home monitoring for elderly users, and can offer on-demand services connecting users to a raft of experts in areas such as cleaning, gardening and home maintenance.
Available as a free app for mobile or tablets, the technology also has a healthcare data management option and “intelligent homes” functionality which utilises advanced AI and predictive analytics to alert family, friends and caregivers to a potential incident based on data collected.
Out-of-the-box thinking solutions incorporating the latest technology like this may be the answer to the many issues yet to come out from the commission’s findings.