Aged care in crisis: Privatised system is failing workers, older people

April 12, 2023
Aged care providers cry poor to justify cost-cutting. Photo: Sabine van Erp/Pixabay

Workers in the mostly privatised aged-care system face poor conditions and substandard pay due to bipartisan neoliberalism.

This was reflected in the damning findings of the 2018 Royal Commission into Aged Care Quality and Safety, which revealed that at least a third of aged care residents have experienced substandard care.

Daniel* who has worked in aged care for eight years, works as an Assistant in Nursing (AIN) at a privately-owned aged care facility in the Hunter region in New South Wales. He told Green Left about the “frustrating” experiences of working in a for-profit and underpaid industry.

Daniel said there is a “disconnect” at his facility between management and workers, where decisions to prioritise profits over quality care are made.

“Decisions are made on a financial basis, not care,” Daniel said. “They won’t [improve care] because of that profit incentive: it’s completely motivated by that.”

The former John Howard Coalition government’s Aged Care Act 1997 opened the way for the privatisation and deregulation of the aged care sector. This led to a boon for private companies and a rapid decline in the quality of care.

The scrapping of mandated minimum staffing levels and qualifications and regulatory oversight of aged care providers’ financial activities, such as how much of their funding is spent on direct care, allowed providers to purposefully under staff their facilities using low-paid, often migrant, workers.

Under Julia Gillard, the federal Labor government accelerated the opportunities for corporate profit-making, with reforms in 2012 that included allowing providers to charge more for accommodation. The industry grew into aged care behemoths.

Daniel said that chronic understaffing means that residents are “left in isolation” and “deprived of social connection”. More than half of the residents in certain areas of the facility have depression.

“We’re not facilitating [quality care]; we’re just giving them medication for that problem. But that’s not how you solve something like isolation or depression,” Daniel said. Staff members are not given enough time to provide quality care.

report released by researchers at the University of Technology Sydney in 2021 found that direct care staffing time nationally is well below the levels required under the minimum standards. Only 1% of all aged care homes meet the lawful standards for “minutes of care” for state-run homes in Victoria.

Many of the conditions workers endure are the result of management’s decisions to cut costs, Daniel said. They include constant equipment failures and shortages of materials to provide the care.

Daniel said that because they only have one laundry staff at his facility there is a constant backlog of laundry. Because management refuses to hire staff on Sunday, and pay penalty rates, no laundry is done on Sunday.

Aged care rort

Aged care providers cry poor to justify cost cutting and lowering their standards of care. Meanwhile, they use sophisticated tax avoidance methods and exploit the lack of regulatory oversight to amass billions of dollars in assets.

The federal government spent $14.3 billion on residential aged care in 2021, which goes mostly to aged care providers.

Private for-profit providers make up 41% of the industry, while religious organisations and charities account for 23% and 19%, respectively.

While the government is essentially subsidising the corporate operations of aged care providers, there is little regulatory oversight on how these providers spend public money, particularly how much is spent on direct care.

A Centre for International Corporate Tax Accountability and Research (CICTAR) report, released in March, detailed how some of the biggest aged care providers are siphoning off federal government funding to profits, while often providing abysmal care.

Case studies from seven aged care providers — that received more than $2 billion in federal funding in 2021 — show how they paid out millions in dividends, expanded their assets and avoided paying tax, while neglecting their vulnerable residents and exploiting workers.

Regis Healthcare, which received more than $500 million in government funding, paid out $18 million to shareholders (majority-owned by multi-millionaire founders Ian Roberts and Bryan Dorman) in 2021. It was also revealed that it underpaid workers about $40 million over the previous six years.

Meanwhile, Regis Healthcare is notorious for its systemic neglect of residents in its aged care facilities — a fact it tried to cover up. The ABC’s 7.30 revealed shocking cases of preventable deaths at the Regis Nedlands facility in Perth.

Not-for-profits profiteer too

The so-called “not-for-profit” aged care providers, mostly religious organisations and charities, are not a lot better.

They often generate a huge “surplus” (profit) to fund their bureaucracies, expand their operations in other sectors and buy up assets.

Calling these providers “not-for-profit” is a misnomer, as their pursuit of profits is indistinguishable from privately owned providers.

Bolton Clarke, the country’s second-biggest provider, enjoys tax-exempt charitable status and nearly $500 million in yearly government funding, despite running extensive for-profit operations across Australia and other countries.

While claiming to operate at a loss, Bolton Clarke bought rival aged care company Allity in December 2021 for $700 million and then paid another $700 million to expand its operations and develop new properties.

Uniting Care Queensland (UCQ), controlled by the Uniting Church, received $159.3 million in JobKeeper payments between 2020–21, despite not facing a decline in revenue or having to lay off staff. UCQ — whose operations are heavily subsidised by state and federal government — holds nearly $2.3 billion in assets. It posted a $65.8 million profit at the height of the COVID-19 pandemic and raised bonuses for “key management personnel”.

UCQ paid $26.3 million directly to the Uniting Church in 2021, including $3 million to reach legal settlements with victims of child sexual abuse. There appears to be no restriction on how the huge religious entity can use the $662.3 million in government grants given to its aged care subsidiary.

Despite amassing huge profits and assets, providers refuse to raise wages — aged care workers are among the lowest paid in the country.

COVID-19 continues

The COVID-19 pandemic laid bare the cruelty of the profit-driven aged care system, during which thousands of preventable deaths have occurred.

“COVID-19 has not stopped in these facilities,” Daniel said. “We’re dealing with the pandemic, constantly.”

There were at least 408 active COVID-19 outbreaks in aged care facilities across Australia as of April 27, up from 190 at the end of March.

More than 5000 aged care residents have died from the virus since the pandemic started — the rate of COVID-19 deaths in Australia’s aged-care homes is among the highest in the world.

Daniel said that workers at his facility are forced to work 15 unpaid minutes every day, because they have to arrive early to complete a COVID-19 test.

Casualisation and the proliferation of minimum-hour contracts have forced workers to seek employment at different facilities, he said, which fuels the spread of the virus.

Burnout is “horrendous”, Daniel said, saying some work more than 100 hours in a fortnight. This is causing people to leave the workforce after being fed up with the low pay, heavy workloads and poor conditions.

The Committee for Economic Development of Australia’s Duty of Care: Aged Care Sector in Crisis report found that 65,000 workers leave the aged care sector every year. An Australian Nursing and Midwifery Federation survey of workers early last year found that 38% intend to leave their job within the next 1–5 years.

Despite his pre-election promises to “fix” the aged care crisis, Prime Minister Anthony Albanese has failed to meaningfully act on the recommendations of the aged care royal commission.

Albanese promised to have a registered nurse on duty 24/7 at every facility by July and increase minimum care standards to 200 minutes per day for every resident by October.

But he has yet to provide a concrete plan to address staff working conditions and shortages, beyond keeping the cash flowing to for-profit aged care providers

To meet the minimum care time standards that will supposedly be in force later this year, aged care facilities would have to increase total care staffing by 12.4% and registered nurse staffing by 41.8%.

Given the tens of thousands leaving the industry every year and the lack of a plan to address the workforce shortages, it is hard to see how the standards will be met.

The Fair Work Commission ruled last November that aged care workers would receive a 15% pay rise from July.

However, the pay rise only applies to “direct care” workers — nurses, AINs, personal care workers and home care workers — excluding many in lifestyle and other support roles.

It is also significantly less than the 25% rise demanded by the Health Services Union and will shrink in real terms as inflation nears 10%.

While the aged care system treats aged care residents as “consumers” rather than people, the crisis is set to worsen. Daniel said the for-profit system is the “core problem”. He said that “nationalising all these places” would be a step toward fixing the corporate-driven aged care crisis.

[*Daniel is a pseudonym.]

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