Aus­tralia’s largest aged-care com­pa­nies are cau­tiously back­ing the gov­ern­ment’s lat­est royal com­mis­sion that will probe the $17 bil­lion sec­tor as a way to put fund­ing for the in­dus­try on clearer foot­ing, as in­vestors brace for an­other bruis­ing probe.

Three listed aged-care providers — Regis Health­care, Es­tia Health and Ja­para Health­care, which ac­count for a com­bined $1.5bn in rev­enue each year — are firmly in the crosshairs of the com- mis­sion, which Scott Mor­ri­son will in­struct to investigate ev­ery­thing from be­hav­iour of staff mem­bers to how the in­dus­try should be funded to cope with the na­tion’s age­ing baby-boomer pop­u­la­tion.

The Prime Min­is­ter will work with in­dus­try mem­bers over the com­ing weeks to fi­nalise the in­quiry’s terms of ref­er­ence, which are likely to ex­am­ine the ex­tent of poor care through­out the sec­tor, fund­ing and de­mo­graphic chal­lenges, and the needs of young peo­ple and those with dis­abil­i­ties liv­ing in aged care.

Mr Mor­ri­son said the royal com­mis­sion would start as soon as pos­si­ble and was likely to run into the sec­ond half of next year.

“We should brace our­selves for some pretty bruis­ing in­for­ma­tion about how our loved ones have been treated,” Mr Mor­ri­son said yes­ter­day, not­ing he had seen “a very dis­turb­ing trend” in a rise of abuses and non-com­pli­ant ser­vices in the in­dus­try since tak­ing over from Mal­colm Turn­bull.

The snap de­ci­sion, just three weeks af­ter tak­ing the top of­fice, comes ahead of an ex­pected ex­plo­sive Four Cor­ners re­port tonight, and marks the sec­ond royal com­mis­sion launched into a high­pro­file in­dus­try by Mr Mor­ri­son, who last year re­luc­tantly set up the bank­ing and fi­nan­cial ser­vices royal com­mis­sion.

Mr Mor­ri­son yes­ter­day did not rule out an in­quiry into the na­tion’s en­ergy sec­tor.

The new royal com­mis­sion also fol­lows an in­ves­ti­ga­tion into re­tire­ment vil­lage busi­ness Aveo mid-last year that al­leged ex­or­bi­tant fees in­clud­ing exit fees and com­plex, lengthy con­tracts, and af­ter South Aus­tralia’s Oak­den fa­cil­ity was shut down af­ter hor­ri­ble con­di­tions were re­vealed.

No­rah Bar­low, chief ex­ec­u­tive of the na­tion’s sec­ond-largest listed aged care op­er­a­tor, Es­tia Health, wel­comed scru­tiny of the sec­tor if it found any mea­sures to in­crease safety and qual­ity care and if it re­sulted in a more sus­tain­able sec­tor. “Car­ing for the el­derly is a priv­i­lege and enor­mous re­spon­si­bil­ity,” Ms Bar­low said.

“We will con­tinue to work with gov­ern­ment to build a vi­able sec­tor that older Aus­tralians de­serve.”

Aged-care com­pa­nies are heav­ily re­liant on gov­ern­ment fund­ing, and many have been un­der in­tense fi­nan­cial pres­sure due to the freeze last fi­nan­cial year of the Aged Care Fund­ing In­stru­ment. The three main ASX-listed groups, Regis, Es­tia and Ja­para, all re­ceive close to $200 a day from the gov­ern­ment for each oc­cu­pied bed. How­ever, wages in the sec­tor have grown about twice as fast as sub­si­dies.

The sec­tor also had to deal with a num­ber of sur­prise 2016 fed­eral bud­get de­ci­sions tar­get­ing the abil­ity for com­pa­nies to claim higher amounts of money un­der the ACFI for res­i­dents with greater needs.

The gov­ern­ment was con­cerned that com­pa­nies were gam­ing the sys­tem for greater rev­enue, and sought to cut close to $2bn from the sec­tor over four years.

The bud­get changes forced aged-care com­pa­nies to start look­ing for ways to be sus­tain­able while re­ly­ing less on tax­payer fund­ing.

Con­sul­tants Ste­wartBrown

es­ti­mate nearly half of all aged­care fa­cil­i­ties are op­er­at­ing at a loss, a rate that wors­ens in re­gional ar­eas.

When asked about the bud­get changes yes­ter­day, Mr Mor­ri­son said he was not “go­ing to put up with lies about what’s hap­pen­ing in the sec­tor” and that the royal com­mis­sion would be work­ing “not at the agen­das of ad­vo­cates” from the sec­tor.

Angli­care Aus­tralia ex­ec­u­tive di­rec­tor Kasy Cham­bers said mis­treat­ment in aged care was un­con­scionable, but called for “pro­mot­ing well­be­ing, in­stead of just pre­vent­ing mis­treat­ment”.

“That means con­fronting a ma­jor chal­lenge: fund­ing the sys­tem so that ev­ery­one has ac­cess to the care they need, with­out com­pro­mis­ing qual­ity,” Ms Cham­bers said.

Mu­tual re­tire­ment liv­ing group Aus­tralian Unity wel­comed any fo­cus on “the loom­ing short­fall in aged-care work­ers”, not­ing that 180,000 ex­tra car­ers would be needed by 2025.

“It will re­quire all those in­volved in the de­liv­ery of aged care, in­clud­ing providers, gov­ern­ment and unions, to work to­gether to avert this loom­ing cri­sis,” Aus­tralian Unity said.

The sec­tor needs to find close to 90,000 ex­tra beds for res­i­dents over the next decade, but fewer than 4000 new beds are avail­able each year.

Ja­para Health­care’s lat­est ful­lyear net profit fell 21.5 per cent to $23.3 mil­lion af­ter a se­vere flu sea­son saw its av­er­age oc­cu­pancy rates fall. The com­pany also warned of cuts to gov­ern­ment fund­ing that had put pres­sure on its earn­ings, but did not re­spond to re­quests for com­ment yes­ter­day.

Regis Health­care, with a mar­ket cap of $1.1bn, also warned of gov­ern­ment fund­ing cuts at its most re­cent full-year re­sults, when net profit dropped 12 per cent to $53.9m. Regis did not re­spond to re­quests for com­ment.

Es­tia Health, the $800m aged­care gi­ant, re­cently re­ported a ful­lyear profit of more than $41m. It has more than 8000 res­i­dents and about 70 per cent of its fund­ing comes from the gov­ern­ment.

Fed­eral Trea­sury es­ti­mates show that over the next 40 years the pro­por­tion of the pop­u­la­tion aged over 65 will al­most dou­ble to 25 per cent.

Shares in the $1.3bn Aveo have tanked more than 30 per cent since har­row­ing sto­ries of for­mer res­i­dents were re­ported, such as heavy-handed evic­tions for wi­d­ows or wid­ow­ers, and ne­glected res­i­dents left to die in abysmal con­di­tions.

Hun­dreds of for­mer res­i­dents have signed up for two sep­a­rate class ac­tions against Aveo, while the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion is in­ves­ti­gat­ing the group.

Aveo, which has de­tails of its aged-care com­mu­ni­ties across four states on its web­site, yes­ter­day re­fused to an­swer ques­tions from The Aus­tralian.

“Aveo doesn’t run aged-care homes/com­mu­ni­ties,” a spokesman said.

Lead­ing Age Ser­vices Aus­tralia chief ex­ec­u­tive Sean Rooney said the peak body had “re­peat­edly told gov­ern­ment that the aged­care sys­tem set­tings have not kept pace with the in­crease in de­mand” for care and ser­vices.

“Re­view af­ter re­view has been con­ducted and suc­ces­sive gov­ern­ments have failed to re­spond ef­fec­tively,” Mr Rooney said.

“While the royal com­mis­sion is un­der way we must press on with ad­dress­ing key work­force and fund­ing is­sues, and not lose sight of mak­ing the sys­tem bet­ter right now.”

No­rah Bar­low

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.