Aged Care - "national embarrassment" caused by same conflicts of interest as Financial Services.

Great to see the Royal Commission pulled no punches. "Shocking tale of neglect" that "diminishes Australia as a nation".

But we still haven't got to the cause of the problem. It isn't money - that's the easy culprit that everyone blames so that there can be another review and the problem gets pushed down the road.

The cause of the problem is institutionalised conflicts of interest. $22 billion a year of government funding creates massive vested interests to ensure the system doesn't change. By 2030 we will spend more on aged care than Medicare. That's a massive pool of funds for the unscrupulous to be attracted to, and then to defend through lobbying groups and resistance to change. Sound familiar?

Two Royal Commissions into the abuse of consumer rights. The banking RC identified the conflicts as a root cause very early on. But the aged care RC hasn't got there yet.

Commissions paid by aged care providers to placement agents or comparison websites mean that people are being recommended a home that is in the best interests of the operators, not the best interests of the consumer. Same problem, different industry.

Like financial services, the implications of the wrong recommendation are life-changing. In many cases the implications are worse in aged care than financial services. So like in financial services, not applying the best-interests test or worse still, misleading consumers, is simply not acceptable.

Yet in aged care, it is accepted.

The reason the aged care RC hasn't reached this topic is that the problem of disclosure has never been tackled. Financial services regulator, ASIC, has set rules around the disclosure of conflicted payments, so the RC was able to easily tackle breaches of these rules. In aged care, there are no such rules. The ACCC could tackle the problem, but they have their hands full protecting consumers in every other industry.

The problem with conflicted rem is that the poor products survive if they can pay more. In this case, the industry isn't forced to improve, they can just pay more to get new residents.

And with such a massive pool of government funds at risk, the industry is doing their best to defend their gravy train. The same old arguments that the banks used: "It is too expensive to change"; "It is more complicated than that"; "The government needs to make the rules clearer"; "If you put more pressure on us we won't be able to offer consumers the service at all"; "It's the vibe of thing Your Honour" (ok that one might be Dennis Denuto, but its actually the best argument!)

Here's an example of what they are doing to defend their right to get more government funds. The industry has 4 lobbying groups: ACSA, LASA, COTA and The Guild. Each spend millions of dollars a year, funded by the same aged care operators that are crying poor and demanding more funds from Canberra. Each has a CEO and a Board, each is lobbying Canberra for their own agendas. What a disgraceful waste of money. None of those boards or CEOs want to see a merger for fear they lose the jobs and power - more conflicts.

Yet the biggest conflict isn't commissions or lobbyists. It is the system itself. We need the industry to re-invent itself, but the industry doesn't need to because of the government gravy train. Or they can't because there are too small (we have 900 operators operating around 2700 homes), but don't want to consolidate because that typically means the boards and CEOs lose their jobs - more conflicts.

We need government to force change, but the failure of successive governments to get the Department of Health bureaucrats to change the industry suggests systematic problems there too. That's a more insidious conflict - bureaucrats don't like to rock the boat for fear of losing their jobs.

Thanks to these conflicts of interest, the Industry won't change, and Government can't change.

Senator Colbeck at least has called it plainly, making for a refreshing change: "It puts the Government on notice and the industry on notice...". Yep. Question is though - why did anyone need this draft report to be put on notice?! We have seen the same shocking stories for 20 years now, thanks to the tireless work of a few in the media.

Enough "notice". That hasn't worked. What is needed now is radical change. Break the system and rebuild it. This won't be the right list - you can make up your own minds on that, but it is at least pushing the attention away from blame and getting to the real causes of these problems: poor transparency, poor disclosure, poor incentives for change.

1. Force transparency and remove conflicts of interest. The aged care industry makes financial services look like saints. Conflicts are rampant. It isn't ok for a financial adviser to push a financial product that pays them undisclosed commissions, but it is ok for a placement agent/adviser/consultant to push a particular home without disclosure.
2. Same for the advertising sites. These sites ask a series of questions and give you recommended properties. You can literally change your budget by 100%, or even add dementia, and get exactly the same results. These sites are paid advertising. It is not ok with this life-changing topic to have such blatant conflicts and non-disclosure.
3. Get rid of the lobbying groups. 4 industry organisations all funded by the same industry that is crying poor, is a disgraceful waste of money. One industry body is all they need, and if they won't consolidate to one, government should force it or reduce the industry's funding by whatever they are paying to these lobbying groups.
4. Give the regulator real teeth. They can't actually take away licences if there are no backup homes to put people into - we all saw the disaster on the Gold Coast when residents had to be moved at the last moment. So build some slack into the system so that there is backup.
5. Fund the alternative. At-home care is a viable alternative for so many more people, but the waiting lists are huge and most people can't afford to self-fund. More funding to at-home will result in greater vacancies in residential care, which then means the regulator can shutdown poor operators.
6. Fund technologies and innovative models that can actual deliver better care for less money. Call me a radical, but trying to do the same things with less money and hoping for better outcomes is madness. Medical technologies and innovative care models must be supported. If Australian investors, backed by Government if they want to help, can solve the conundrum of aged care, the export opportunities in the next 20 years are massive.
7. Give the consumer more information. It is not acceptable that the industry isn't forced to disclose conflicts of interest like commissions and advertising, but it is even worse that the Government doesn't make it easy for find out which homes have compliance breaches or have terrible quality ratings.

If we let the industry dodge accountability, blaming the government, we will still be right here, running Royal Commissions every few years, by the time my parents reach aged care in around 2030, and probably when its my turn in 2060!