It is widely accepted that Board Members should not and do not involve themselves in the day to day operational management of aged care services (or any other business operation for that matter), but is this to say that boards should not understand the risks associated with the provision of care services.

Over the past two decades the face of aged care in Australia has changed dramatically. In the early to mid 1990’s, aged care was just beginning to emerge from the ‘Cottage Industry’ mentality.  It used to be a place of sanctuary for older retiring nurses who just wanted to work in relative comfort without the rigours of hospital life until they reached retirement. In some instances board members would comprise a cross section of well intentioned, well meaning locals, who often had no real concept of what the realities of aged care were. Aged care was also a place where otherwise fit and healthy and independent people would be admitted to a hostel ‘Just in case’. They of course would like to keep their car. Staff ratios were high, cups of tea in the sun were the norm with walks in the garden a daily occurrence. Providers would enjoy 7 or 8 percent returns or higher on their investment annually.

In the mid 1990’s the ability of governments to fund aged care to the extent the industry had enjoyed reached breaking point. In 1997, the introduction of the Aged Care Act and Accreditation Standards, placed providers on notice that governments expected greater returns to the consumer in the level of care and accountability for services. Consumer awareness increased and within a short period of time the level of expectation in standards of accommodation and services generally increased significantly.

In 2011 there is an expectation that our senior staff can interpret profit and loss statements, balance sheets, measure market changes and cost analysis and respond accordingly with detailed summary reports, action plans and measured financial outcomes. Combined with the complexities of understanding accreditation standards, funding models and increasing consumer expectations, the roles and functions of senior staff have expanded significantly. This may be the need and expectation of an industry struggling under the pressure of failing federal funding and increasing consumer demands, but is it achievable without the most basic fundamentals of organizational planning, strategic thinking, commitment to education and training, and financial resourcing of a staff compliment based on having the most appropriate skill mix and attitude to meet the increasing industry needs rather than a work force based on numbers and inappropriate distribution of responsibility, workloads and reporting lines. Industry reports from all sectors clearly demonstrate falling profit margins, rising construction costs and shrinking returns on investments.

But what are the expectations placed on the Directors and Board Members who’s insights and decisions impact so severely on the ‘Clinical operations and outcomes’ of facilities as well as the operational and fiscal governance outcomes.

It is widely accepted that Board Members should not and do not involve themselves in the day to day operational management of aged care services (or any other business operation for that matter), but is this to say that boards should not understand the risks associated with the provision of care services. How does the board monitor the clinical success and failures of a facility, and how do they know what and when to question.  In most organizations this is a well established process and one where the Chief Executive and Chairman have a strong line of communication and trust that is sacrosanct. But what if the Chief Executive does not understand what to monitor and the board does not know what questions to ask. While not wanting to make sweeping generalizations, nor to imply that all boards accept this level of risk, there is evidence that particularly in the smaller regional services, where experience and expertise of CEO’s and Boards is limited, that the realities of this level of risk to business operations hit home and become financial and operational catastrophes. The first signs of clinical and operational failure are usually non compliance.

The Commonwealth Department of Health and Ageing have just received the recommendations from the productivity commission into the industry. These recommendations while just that, would deregulate the industry from the wrong perspective.  The Accreditation Standards imposed on the industry have achieved their goal, and from any perspective focus on the individual facility and not enough on those charged with managing the outcomes. Perhaps it is time to reflect on the manner in which we measure our industry, refine the outcomes standards and include a range of standards to monitor board outcomes as well.

There is not enough focus placed on the knowledge and reporting processes of Boards across the industry. When a facility becomes sanctioned, the financial burden can and usually does run into hundreds of thousands of dollars comprising lost revenue, consultant’s fees, and loss of reputation and staffing costs. But is the board ever held to account?  One could argue that rarely if ever in this industry is a board or a Chairman or individual member ever held to account for not having the knowledge and insight to identify that there is significant exposure to clinical risk.  It is sadly inevitably the Facility Manager, Clinical Manager or both that find themselves being held to account. 

Summary

Boards and individual directors of companies are legally bound to understand the nature and governance issues of their business. Their ability to understand the clinical and operational governance of aged care services must be measured at an accreditation level with a standardized range of key performance indicators introduced for boards to monitor the clinical and operational outcomes of their service. IN adopting this approach, the future risk of noncompliance and introduction of sanctions can be significantly overted.