The Royal Commission on Aged Care Quality and Safety – Implications for boards of directors of aged care and disability providers

The Final Report of the Aged Care Royal Commission was handed down last week. Of course, the primary issue is whether the Government and the Australian community will find the necessary funding to help achieve appropriate standards of care. This article, however, focuses on the recommendations regarding boards of directors rather than the Commission’s recommendations more generally.

Of course, at this stage we don’t know what recommendations the Government will accept. Proposed legislative changes are subject to the parliamentary processes.

Key findings

The key findings in relation to the future governance of aged care providers were:

"Governance arrangements must reflect and promote the culture of an organisation. An aged care provider’s most important objectives should be to enhance the wellbeing of older people by providing them with safe and high quality care and to put the older person’s wishes and needs first … Organisational culture and governance arrangements must be designed around this core purpose. Organisations must be structured to provide a leadership environment that fosters and reinforces that culture and purpose in everything they do, and enables employees to deliver it confidently and successfully." (Volume 3B, p. 453)

Given that our company is called Purpose At Work, we love the insight that culture and governance should be organised around purpose.

The call to action is clear:

"The existing governance requirements in aged care legislation have not provided, on a consistent basis, sufficiently strong governance and leadership of aged care providers. Changes are needed to improve providers’ governance of care and their organisations’ corporate governance, to strengthen the integrity and sustainability of the system as a whole, and to sharpen the focus on delivering high quality aged care services …

"Governing bodies of approved providers should be comprised of members whose integrity, skills and independence enable them to act, first and foremost, in the best interests of the people receiving care. Evidence before us has demonstrated, in particular, a lack of adequate clinical governance expertise on the boards of some providers. We consider that each governing body should have a care governance committee, to ensure that quality of care is considered at the highest level of the organisation. The chair of the care governance committee should be a member of the governing body and have appropriate experience in providing care. The focus on quality of care should cascade from the governing body through the executive leadership to all staff.

"People receiving aged care should have a role in determining how services are delivered at an organisational level." (Volume 3B, p. 454)

The key recommendations

The Royal Commission report is unusual in that the two Royal Commissioners, Commissioner Pagone and Commissioner Briggs, did not agree in all respects to the recommendations. Most recommendations have the support of both Commissioners, but sometimes a recommendation is made by just one Commissioner.

There were five key recommendations about the governance of providers. Each ‘recommendation’ is in fact a set of recommendations. I will present the recommendations in what I perceive to be their order of importance.

Recommendation 101 is for expanded enforcement powers for the aged care regulator, including the significant expansion of civil penalties if a provider breaches the Aged Care Quality Standards and a person is harmed or could have been harmed by the breach. The sting in the tail for directors and executives is that the Royal Commissioners recommend that the legislation provide for accessorial liability if a director or executive is directly or indirectly knowingly concerned in, or party to, the contravention.

Recommendation 90 is for a new governance standard in the Aged Care Quality Standards, to replace the current Standard 8. Here the attempt is to ensure that the boards of aged care providers are focused on the governance of care, not just on finance or strategy. The governing body would be required to have a balance of skills, experience and knowledge to ensure that care is of quality and safe. Further, a care governance committee would be mandated. Finally, annual attestation would be required on behalf of the board, i.e., a statement must be made each year on behalf of the directors that they “have satisfied themselves that the provider has in place the structures, systems and processes to deliver safe and high quality care”.

Recommendation 89 is in relation to leadership responsibilities and accountabilities. Commissioner Briggs recommended that governing bodies must ensure that their leaders and managers have professional qualifications or high-level experience in management roles, along with other recommendations for strengthening leadership in aged care providers. Likewise, she recommends that providers implement plans for continuous learning and development of staff.

Recommendation 88 is for a set of amendments to the legislation, perhaps the most important being a ‘fit and person’ test apply to key personnel such as directors and executives instead of the current ‘disqualified individual’ test, i.e., that the grounds to determine that a person is not ‘fit and proper’ will be wider. Other elements of the recommendation are important to subsidiary companies.

Recommendation 91 is for the Australian Government to provide a program of assistance to providers to improve their governance arrangements. This is likely to confined to smaller providers. Let’s hope that the recommendations of any such program of assistance are evidence-informed rather than the usual consultant-speak.

Implications for aged care providers

Over the past few years, many aged care providers have been on a journey of increasing understanding of and action on responsibilities for care governance. The Royal Commission report emphasises the importance of that journey.

It is clear that aged care providers will have to continue to work hard to achieve high quality, safe and person-centred support for elderly Australians given the breadth and depth of issues identified by the Royal Commission. Boards will have to strengthen their structures, systems and practices for the governance of care.

Implications for disability service providers

Many of my clients are disability service providers, so I will take a moment to address implications for them as well. Of course, if your organisation provides both aged care and disability supports, you will be caught by the aged care reforms.

For organisations that only provide disability supports, it is likely that the Disability Royal Commission will consider the recommendations of its Aged Care counterpart. In some respects, the Aged Care Royal Commission recommended that the aged care sector ‘catch-up’ with the provisions of the NDIS legislation - that legislation is repeatedly cited in the Report’s footnotes.

However, my impression is that many disability providers are still in the early stages of the journey towards improved governance of the quality of the supports they provide. One still hears stories of boards and executives who seem more concerned about financial performance and survival that service quality (although this is not surprisingly given that the National Disability Insurance Agency has repeatedly demonstrated that it seems to be more worried about money than quality). However, the next stage of evolution for disability service providers and their boards has to be improving knowledge and action to ensure that the supports provided promote the human rights, and are of quality and are safe.

Alan Hough is the creator of Right on Board: Governing and managing for human rights, quality and safeguarding, delivered in partnership with National Disability Services.