Vulnerable markets

Markets are impersonal mechanisms responding to market pressures.  If the pressures are in the wrong direction and competition is strong then humanitarian values are unable to constrain them and they are at high risk of failing.  When they fail its the vulnerable that are harmed.  The markets that are failing today are failing because the vulnerability of participants, usually the customer, is not recognised and addressed.  My argument is that aged care is only one example of a failed market.

Please note that this is a selection of articles to show the level of concern about aged care and the reason why we should be looking much more closely at what is happening there and collecting accurate information. The links on this page are what you find if you look around.

The official government and industry position is reflected by this quote:

The Australian aged care system is a global benchmark for best practice, thanks to strong government funding, a robust framework for accreditation, quality and regulation, and a long history of cooperation between government, service providers and the community.

Source: Aged Care: Setting the Global Standard for care - The Austrade website

Staff in some nursing homes see it like this:

Principles? Principles? What have principles got to do with aged care? There are NO principles in aged care, it's all about money, one way or another. Saving money, cutting costs, cutting corners, cutting staff, cutting quality care, that's what aged care is about, and I doubt if you will find any principles involved in that lot!! And, as XXXX is constantly pointing out, it is actually getting worse. Over my 9 years of continuous involvement with aged care, it had declined hugely.

Source: Comment on Aged care Crisis discussion forum in 2009

I worked as an agency worker for many years and the things i saw in nursing homes will haunt me forever

Source: Comment on Frontline workers can help clients achieve adequate food intake Australian Ageing Agenda Aug 29, 2015

Failed Markets - examples

Whenever money can be made out of vulnerable people some will find a way of doing that and justifying this conduct to themselves. It is only when exploitation is so bad that the law is broken that the matters are exposed and prosecuted.  It may be many years before this happens.

  • The Collusion and Price Fixing Scandal Mayne Nickless 1970s to 1994 Corporate Medicine web material   A price fixing collusion scandal in trucking  that destroyed and undermined smaller competitors  pushing up prices for consumers of all transported products.  This went on for 20 years.  After this trucking was no longer profitable.  Mayne turned to health care.   It became Australia's largest health care company until put out of business by doctors in 2002/3 because of unacceptable but not illegal business practices.

Wall Street and international banks:

Banks in Australia:

Financial advice

Government funded markets

The unemployed:

Vocational Training including for aged care:

Vulnerable groups

The poor:

Gambling addicted and the young:

Employees exploited

The market is not unique: Whenever there is a power imbalance there is a risk of exploitation of some sort.  Examples include Elder abuse and sexual abuse.   Children and the handicapped are most at risk of sexual abuse.  Cultures develop that downplay, justify and try to hide what is happening.

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Aged Care

Red flags or rare exceptions

There are those who see the reports alleging poor care as red flags pointing to a systemic problem and those who see  them as rare exceptions or a beat up by the media.  The Aged Care Act 1997 "reformed" aged care by turning it into a free market in 1997.

The early years 1997-2011

I first became concerned about the corporatisation of health care in the USA in the early 1990s and then later in Australia.  I started writing web material on my Corporate Medicine web material in 1996 tracking developments and continued until about 2009 writing over 600 pages.  I added material about aged care in Australia starting in 2006.  They tell the story of what happened during those years.

The main Australian pages on the Corporate Medicine web material hierarchy are:

Three landmark scandals stand out on that site as red flags to the wider problems during that period:

After the rape scandal, a few more examples of sexual abuse were discovered:

This was followed by more about bad care in South Australia.  The industry response is there:

2007 to 2009:

2010 and 2011:

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The years 2012 to 2015





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What people were saying

The current accreditation system with its emphasis on measuring against Providers’ benchmarks has resulted in inconsistent and inaccurate findings; good nursing homes are punished while bad ones continue to be allowed to operate.

Care is much more than glossy posters stating that they respect the dignity of the Elderly. A ridiculous statement when they allow this kind of neglect to go on with absolute disrespect of an Elder person's dignity. I am tired of the excuse - not enough staff. If they don't have enough staff then they shouldn't be accredited.

The Nursing homes in Australia dispense some mind boggling disgraceful care.

And the onus is not on the staff, the DON and the RN and all the others in the mix. The onus is on the owners to stop treating the elderly like cash cows. And the onus is on the government to enforce much better compliance to proper standards. And the onus is on the Accreditation people to make more spot checks and open their eyes to the horror that exists in these homes and the misery inflicted on so many vulnerable old people. It is a disgraceful situations. And I am sick of the false rhetoric that passes off as caring words but is just window dressing, spin and PR speak. Not good enough.

I can go on and on, years of frustration and angst against a system of systems that are so different and uncaring, and the only reason I stay is because I look at my clients and KNOW they deserve better than what they are getting.

Well, thanks for 'listening''. I am sorry it is a long post. I am in tears as I write this as I just feel I have let the poor residents down with the shocking non existent care that they receive at night because we just cannot possibly get through the workload. The powers that be just don't give a stuff. Shocking to the core.

I don't blame you in the least for resigning. I've done the rounds of Aged Care Complaints and it wasn't worth the 20 cent phone call for all the good it did. Absolutely useless. Accreditation is a joke.

Source: snippets from the discussion on the Aged Care Crisis Forum between 2008 and 2012

Over the years 2008 to 2012 Aged Care Crisis website provided a forum where staff and families could raise issues and discuss them. Much of that discussion was very critical of the aged care system. The one thing that appears on multiple occasions is the issue of understaffing and deskilling. Families and caring staff are bitter about the pressures on staff and the quality of the staff that have replaced nurses. It is not underfunding they complain about but the focus on cost cutting to fuel profits.  It is not the staff but the owners they blame.

This is what is happening in 2014 and 2015.  Look at the angry response in the discussion of the second article by following the link.  Sounds familiar 3 years later!

A SYDENHAM nursing home’s decision to axe 46 employees and cut rostered hours has been criticised.

The Arcare Overton Lea facility offers both high care and dementia care across 120 beds.—————He (Arcare spokesman) said dedicated staffing (a reorganised program) involved employees committing to work at least three shifts a week with the same group of residents.————However, as mentioned, this enhances the care that residents receive, and we have offered redeployment for those affected at other Arcare residences where ­appropriate.

Source: Concern as Arcare Overton Lea in Sydenham cuts 46 jobs and scales back hours Herald Sun Nov 25, 2014

She (Aged and Community Services NSW & ACT CEO Illana Halliday) said while skilled RNs were necessary in the provision of palliative care or short-term acute care in a facility, not all high care residents would require an RN to meet their needs.

“It is probable that many residents with a high score in ACFI may still not need an RN, as the care they require is not acute or curative, it is about comfort and quality of life,” Ms Halliday wrote in a ACS NSW & ACT position paper.

Source: Providers push to review RN staffing requirement Australian Ageing Agenda June 25, 2015 (NB see multiple comments on this article)

Aged Care Crisis (ACC) included a selection of extracts from letters and emails in its submission to the Senate Community Affairs References Committee - Inquiry into Aged Care, in June 2005.  In 2015 it put them on its website asking the rhetorical question "what's changed?"

The topics from 2008 to 2012 are still available on the internet and the discussion is revealing because they show the experience of staff and of families along the path aged care followed over the years and where much of it still is - see below:






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Ownership was once considered to be an important factor. By 1997 there was abundant international data to confirm this. The degree of control, as measured by ownership stake was an important consideration in determining whether a company met the regulation's probity requirements.   The government elected to ignore this evidence and probity requirements were abolished in 1997.  Key personnel (managers) were considered to be all that mattered.  After a few owner/managers caused problems legislation barred them from being key personel if they had a criminal history.  The assumption was that they could no longer control or influence what happened in the nursing homes.  The sliders below look at the evidence about ownership impact on staffing and care.

Types of ownership

Not-for-profit are government, community and church organisations

For-profit include:

  • Private for-profit is ownership by individuals or a small number of individuals
  • Public for-profit are shareholder owned and listed on the share market – managers are accountable to shareholders.
  • Private Equity  are risk taking companies that typically buy unprofitable businesses and make them profitable as rapidly as they can before selling at a profit.  They are accountable to wealthy investors who can afford to take risks.

Aged care studies

In the USA:

In Australia:

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Ownership and multiple failures in care

If ownership and corporate culture rather than managers are important then some companies will have more homes with failures in care than others.  Multinationals are likely to have problems in more then one country.  Not--for-profits pursuing a more agressive finanancial strategy might show a similar increased rate of failures.

For-Profit Ownership

Reports by Walkley Award winning jourmalist: These articles relate to nursing homes owned by two companies:

The Australian company (above)

The multinational company (above)

In Australia:

International operations:

Not-For-Profit Ownership

A not-for-profit owner with alleged failures in multiple homes

Not-for-profits and increasingly having to behave like for-profits in order to compete with them in this marketplace.  There is a particularly interesting example of a church owned not-for-profit grouup in Queensland.  Nurses blew the whistle on serious problems and on management's attempts to conceal these.  A senior member of management spoke out confirming the issues. (He was reportedly fired.) The Quality Agency visited and found problems in several of the groups nursing homes.

Management believed they had been wronged accused and they responded very aggressively with denials and legal actions against The Australian, which exposed what was allegedly happening and against the Quality Agency.  The Australian responded by publishing more details. Its an interesting story and ongoing.

NOTE:  The company has consistently denied most of the allegations made in these articles and has had some success in challenging them in court. Further court actions are unresolved.

This article sums it up

Related letters of interest

Carinity claims that its position has been vindicated (Added Dec 2015)

Carinity's action against the Quality Agency succeeded after the parties reached an agreement.  The court accepted that Carinity had been unfairly treated. The agency was "forced to withdraw a finding that residents were at serious risk of harm".

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The health and aged care marketplace

Markets are competitive and consequently high pressure.  There are winners and losers but the pressure to win varies with the type of owner and at different times.

Market warnings for health care


Health USA:

Health Australia:

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Articles about the market

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High Pressure and exciting

Home Care Assistance entering Consumer Directed Care in Australia

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Private Equity

The UK has experienced major problems with Private Equity in aged care both financially and with poor care

Private equity has been an issue in the USA for many years

Australia does not collect data so although we have had private equity ownership we cannot compare it.  Two submissions warning of potential problems were made to the senate in 2007 but they were ignored.

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Advertising Australia's aged care system

Advertising the Aged Well Campaign to the public.  This was the reform that NACA and Government implemented followed the 2010 Productivity Commission Report – The final article is a criticism.  Some feel that this gave the market what it wanted and ignored the needs and safety of the community.

Selling Australian aged care businesses to the world

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Other issues

There are a number of broad issues in aged care:

  • The not-for-profit sector is divided over whether market or mission matter most.
  • Communities are being hollowed out losing their knowedge,skills and confidence
  • Funding has become increasingly complex and difficult to understand
  • A new initiative Consumer Directed Care (CDC) has been introduced into home care and will be introduced into nursing homes in the future


Not-for-profits are generally community based or government organisations whose only purpose is to serve the community and give it the best they can.  They are now required to compete with for-profit companies in the marketplace.  There are fundamental cultural conflicts.

Aligning or not aligning with for-profits

Is a mission important or irrelevant

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Hollowing out communities (aged care and disability services)

An argument has been made that the assumption of increasing control of the affairs of society by government and large corporate interests has been at the expense of local government and communities.  They have lost their knowledge base, their skills, their confidence and so their interest in the affairs of the community and the state.  This issue is also addressed on the page "Developments in social thought"

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Aged Care Funding

Aged care funding has become increasingly complex as government has tried to make it fits its model.  There are cracks for the unwary to fall through and complex decisions have to be made  under pressure.

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Staffing Issues

Nursing is the largest cost for nursing homes and too often profitability comes at the expense of staffing.

US studies have convincingly shown that care and staffing levels/skills are closely linked. These studies show that profits and staffing are inversely related. In Australia we do not collect data about staffing levels or measure standards of care so we don’t know what is happening.

In the USA 4.5 hours of care per resident per day is the recommended level of nursing and below 4.1 hours “may provide a level of care that results in harm and jeopardy to the residents”. These standards are not met by the majority of for-profit providers in the USA.

A US government study also found that below 2.9 hours “most residents ‘needlessly suffer harm.’”

A leaked industry report suggest that in Australia nursing homes may be giving as little as 22 hours of care per fortnight (Registered nurses 5.2 hrs and Personal Care Assistants 16.8 hrs). That suggests that they may be getting as little as 1.6 hours of care per resident per day but we really don’t know.

Other articles from the USA

Other articles in Australia

 The NSW Government has recently conducted a study into the necessity of registered nurses in aged care at all times.  The submissions and proceedings are available online

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Consumer Directed Care (CDC)

CDC is part of the Age Well Reform program.  It has been under trial for some time and was introduced fully in July 2015.  It is very appealing.  Concerns relate to its implementation, particularly as a market in a vulnerable sector and to the protections and lack of involvement of communities.

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Retirement Villages (CDC)

Most of the complaints about retirement villages are about the natures of the contracts management induces people to sign, the mechanism of paying and the difficulties in selling a unit under ther terms of the contracts when the retiree vacates it.

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We would love to hear your thoughts on the direction aged care should take in order to make life worth living and working in Australian nursing homes: Join our conversation  Author: Dr. Michael Wynne, Copyright 2015