Initial Public Offering (IPO) prospectuses for aged care companies must warn of the risks for investors. They always warn of the unpredictability of government funding. In contrast, current and prospective residents do not get the prospectus, are not warned of the risks for them, and they do not have a vote.

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Risks in the marketplace. Who takes them and who pays?

Not emphasised in the IPO prospectuses are the risks that come from the corporations themselves, from the decisions they make.  In playing the game they seize every opportunity and stretch the limits.

Directors are there to make money for the investors, and that is what the game is about. When markets later change and recession looms, loans have to be met, and contracts honoured. There are strong pressures to stretch the limits and take chances.  They are not asked before they are sold off and do not make any of the decisions.

When shareholders accept the risks, it's only money they lose.

The cost for frail residents, who did not accept the risks, is the impact on their lives. They are simply the profit vehicles being traded on the market and have no say.

If the players play the game successfully they can become extremely wealthy. Dxxx Mxxx, the doyen of the private aged care sector in the 1990s was able to shower money around and support many charities. The Courier Mail (25 Nov 2014) reports that FPCompanyQ's founder bought his son a $1.355 million luxury home. The article says that the FPCompanyQ group "has earned the family a #31 on The Sunday Mail Rich List". The owner of FPCompanyR, which runs nine nursing homes and some home care services in NSW was able to buy a $37 million home although we don't know if it all came from this business.  The founder of FPCompanyI was able to buy a $6 million property investment in a prime business area in Perth abd, according to the Australian on 11 June 2016, splurge on a black Ferrari 458 Italia and a red Lamborghini Aventador.

What is clear is that the founders and leaders of many of the country's large nursing home groups are among Australia's very wealthy. As a community, assessing the humanitarian and community values of the corporations, we should ask if they made their fortunes from aged care or did they gain their wealth elsewhere? Alternately, are they now being charitable and ploughing money back into serving the vulnerable aged?

In the USA many hospitals and other charitable enterprises have benefited from the largesse of successful entrepreneurs giving something back to society, but this is much less common in Australia.

But where does the money to support all this come from?

It is all supported by an income stream - without it you cease to be a player and the bigger the stream the more successful the player. It is used to build a war chest, to raise loans, to float on the sharemarket, to pay interest and to pay off debts.

But all of that income stream comes from the money that government and the frail elderly provide so that the company can fund their care. The less money that is spent on care, the bigger the income stream that can be generated and the more successful the player.

As with any system built on illusions, you need another illusion and a nice simple word with positive associations, that can be substituted for what is actually happening so that you can justify what you are doing. The word used is 'efficiency'.

By persuading yourself that something is 'efficient' you can justify almost anything - provided of course, that you can demonstrate that you understand what you need to do to remain accredited by the Quality Agency, but that is not difficult because they don't actually measure what is happening to the residents.

Although they don't actually use the word 'efficient', consider the explanation given by FPCompanyF for firing 46 nurses from its 120 bed FPCompanyF Overton Lea facility in Sydenham. The facility had been sanctioned in 2013 because of issues relating to staff performance. What do you think of the way FPCompanyF's management looks at this and the words used to justify the benefits of what they are doing.

One of the big mistakes that critics make is to think that managers don't believe what they say and are not genuine. But who do we believe here, the manager or the whistleblower who is risking his/her job by speaking out.

It is this startlingly different way of seeing the same thing by people who have no doubts about being correct that is so fascinating about this sector and so characteristic of culturopathy. Its as if they live in totally different worlds. I will be writing more about this and explaining how and why it happens. Look at the full article:

She (whistleblower) said the redundancies included nurses, personal care attendants and ­cleaners. - - - part-time staff would also face cutbacks - - - in their hours - - . - - - The facility is in utter chaos with no cleaning staff and staff numbers dwindling.

FPCompanyF spokesman Mxxx Axxx said a "dedicated staffing model" was now being implemented - - - dedicated staffing involved employees committing to work at least three shifts a week with the same group of residents - - . Because of the nature of dedicated staffing - - - - staff numbers need to be ­ adjusted - - - this enhances the care that residents receive - - -. All FPCompanyF aged care residences are extremely safe and clean environments.

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

But it is much more interesting than this. A year later to the day on 25 November 2015 there was an advertorial on radio 612 Brisbane about a FPCpmpanyF nursing home on the Gold Coast.

But there is a revolution going on in aged care and the way your parents, mine and the way we'll be treated in the future will hopefully be very different to the sterile environments from the past.

An idea that originally started right here on the Gold Coast has just won a Federal Government Better Practice Award which are like the Logies of aged care!

The program is called Dedicated Staff Assignment and it focuses on the relationships between staff and older residents.

Source: Dedicated staffing: a revolution in aged care started on the Gold Coast ABC radio 612 Breakfast with Tim Cox Brisbane 25 November 2015

And yes, FPCompanyF did win that award and if we do a search we find it was awarded by none other than the Quality Agency. So what do we believe? Was this a business award or an award for good care. Was it based on real figures or the sort of figures that the agency publishes. If we new what staff ratios in Australia were and could relate that to measurable outcomes then we would know what was happening.

Rostering staff so that the residents are cared for by staff that they know, trust and relate to - and so that the staff know the residents individual needs - is simply basic care and anyone not doing it should be criticised. One can only wonder at what was happening before and what they are really doing differently.

Its good that they are concentrating on this, but the interest here is that it is being used to advertise the company's services and was used elsewhere to justify staff cuts.  I wonder about that!  We need much more information about this and the other nursing homes the company runs.

If the proposed Community Aged Care Hub were in place then we would know about it.

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Risks to the care residents receive

There is insufficient reliable information collected in Australia to properly evaluate the impact of profit pressures on staffing or on care.  International studies, mostly from the USA, convincingly show that there are fewer staff and the risks of residents receiving poor care is considerably increased the stronger the profit pressures are on the provider. 

As I will show on later pages, not-for-profits perform best, for-profit corporate chains perform poorly and private equity owned facilities have the worst performance.  Dr Baldwin (UTS) and his colleagues have recently reviewed the international literature.  Their own study in Australia showed that for-profit facilities were sanctioned because of poor care more than twice as often as not-for-profit.

In Australia, the amount of nursing care provided is not measured or reported.  The USA has found that when residents are receiving less than 4.1 hours of nursing care per day standards are at risk.

Other areas where costs are cut are food and there are many complaints and studies documenting the poor nutritional content of food sometimes provided.  Then there is the rationing of essentials like diapers for the incontinent.  Nurses complain that residents have to lie in them until they are full!

Pressure to reduce staff must raise considerable concern particularly when it is trained staff, the registered nurses, that are being reduced.

A greedy market

Investors have to be kept happy. Often their money is being invested by managers working for managed funds, pension funds or even private equity. The investors are only interested in their incomes and the managers in giving it to them. Neither knows anything about aged care other than its profitability or potential profitability. All are far away from nursing homes and know very little if anything about care.

Their dividend comes from the efficiencies attained by reducing the money spent on care.  When a company reports that it has reduced costs by being more efficient and spending less on staff then its shares go up. There is no record of the impact of that because no one collects that data. It is an impersonal system putting pressure on care and no one is examining the consequences.

Alan Kohler has written about the way that dividend imputation introduced in Australia in 1987 has steadily shifted the focus of investors from capital growth to dividends. Other countries that have tried dividend imputation have abandoned it.

Increasingly investors have been demanding ever larger dividends instead of allowing companies to reinvest or pay off loans. If a company pays less dividend and invests instead, then its share price drops and it becomes vulnerable. This causes companies to compromise their operations by paying shareholders too much to keep the price up.

Short-sellers who have borrowed stock from the same shareholders are waiting to pounce on any stock that looks weak. Kohler lists several large companies that have got into serious trouble because of this.

The aged care corporations now listing on the share market are going to be operating in this environment. Will this demand for ever increasing dividends in order to maintain the share price mean less money for employing staff and providing care? If large companies start failing due to short selling are we likely to find ourselves in the same situation as the UK? What are the impacts on seniors receiving care of a fluctuating and unstable market? We don’t even know with any certainty what our present policy is doing because we don’t collect information.

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Bizarre Rumours that come true

A rumour
It started with a ridiculous rumour that providers were pushing to remove the legislated requirement for Registered Nurses in nursing homes and replace them with 'Case Managers'. This sounded wildly improbable but in a world built on illusions few look at evidence or argue logically. So anything is possible. Those who believed that you do not need trained nurses to care for elderly people were about to press for just this. Almost anything, if it is believed and asserted strongly enough can become 'real’. Provided you are not too close to the real world the words come to replace the real world (See John Ralston Saul in 'The Unconscious Civilisation').

The background
Prior to 1995 when aged care was handed to the commonwealth states like Victoria required one third of nurses in facilities that provided high care to be registered nurses (RN). The new 1997 legislation also specified when facilities required RN’s but after a charismatic US businessman who did not think you needed nurses visited them these requirements were removed. Only NSW maintained a requirement that a registered nurse be on duty all of the time. This is what they wanted to abolish. In other states it was possible to have as few trained staff as you could get away with.  Few of us understood or realised this.  We only saw the consequences.

You don’t need trained nurses
The idea that you do not need trained staff to care for the elderly was strongly promoted by a very successful con man called Andrew Turner who promoted himself as a world authority on aged care.  He persuaded politicians in the USA during the 1990s that you did not need trained people to bath and change diapers which was all aged care was. He met with our politicians in 1997 and his company then entered Australia. Fortunately his business and credibility imploded before he entered aged care.

In spite of this the Howard government embraced that idea enthusiastically and it has underpinned their policies since. Turner's ideas have been so appealing to cost conscious politicians that they have been unable to abandon them. While minister for aged care, both Bronwyn Bishop and Christopher Pyne have said things that show how influenced they were. Turner’s ideas had enormous impact in the USA and Australia. He can be seen as responsible for vast human misery and increased premature deaths in the aged.

If you think an illusion is real, then this will be real in its consequences
The illusion here is so attractive that it has survived for 19 years. The aged are simply getting old and are not sick so do not need medical care. Abbott was health minister during the Howard government soon after Turner visited. When prime minister he and his government were so persuaded by the idea that old people were not sick people that he moved aged care from the Department of Health to the Department of Social Services. He excluded it from the rollout of the PCEHR, the ehealth digital record for patients.     After strong lobbying by the medical profession Malcolm Turnbull, who replaced Abbott in a political coup, agreed to move aged care back to the department of health.

When adopting ideas is profitable then those who benefit will push the envelope. There have been allegations that untrained people are claiming to be nurses and are being used to provide care that requires trained and registered nurses. In this instance it was INTFPCompanyB and it denied doing this.

In the section 19 years of care I described the real consequences of illusionary beliefs for our aged care system. Turner can be seen as at least partly responsible for vast human misery and increased premature deaths in the aged.

Getting rid of trained nurses
The power and influence of the aged care lobby was revealed when it was reported that the NSW government was considering removing the requirement that a registered nurse be on duty at all times. The argument was that the federal government had removed the distinction between low and high care and this requirement was no longer necessary or practical.

The debate
An article published by ACSA's Australian Ageing Agenda makes it clear that providers are actually pushing for this and that government is considering it. The move by providers and their justifications for reducing staffing and not having registered nurses on duty was challenged strongly by nurses - those at the coal face.

 - - that ratios and staffing requirements were a blunt measure that did not respond to the actual needs of clients and would contribute to unsustainable costs.

- - - an RN on duty at all times in every facility with a high care resident would also be impossible to manage due to a lack of available staff and would be a waste of limited resources.

- - -  as the care they require is not acute or curative, it is about comfort and quality of life

Comments by readers:

- - -  indicates a poor understanding of resident care requirements.- —  - it’s disingenuous to state that RNs are only needed for acute care.- - -  illustrates Ms Hxxxxx’s unfamiliarity with real-world care demands;

- - (Prof Rhonda Nay) - -  of course access to a highly qualified nurse 24/7 is essential.

- - -  Narrow minded opinions like this do not assist the expertise,

- - -  It is simply madness to remove the Registered Nurse from their role.

- - -  It’s time to reassess the qualifications of those running our peak bodies. The litany of uninformed and dollar-driven decisions is a consequence of having accountants and bureaucrats at the helm; not one has ever actually cared for an elderly resident.

Source: Providers push to review RN staffing requirement - Australian Ageing Agenda, 25 Jun 2014

The suggestion that nursing homes are about 'comfort and quality of life' is a restatement of an illusion that politicians have found irresistably attractive - in the face of evidence and logic.

A letter to the Newcastle Herald soon after expressed the community's concern about what was happening.

Where the pressure were coming from, how real the romours were is revealed by the Sydney Morning Herald. The horror of the nurses, the medical profession and even the normally reticent Alzheimer’s Australia is revealed.

She (nurse) says if this move goes ahead, it could leave elderly people without the medical care needed to keep them alive and prevent unnecessary suffering.

Nurses and specialist geriatric doctors say the change should not go ahead, while Alzheimer's Australia NSW says it threatens the "basic human rights" of some of the state's most vulnerable people. However, the body representing high-care nursing homes says the law is unnecessary red tape that is not adequately policed anyway.

Alzheimer's Australia NSW chief executive John Watkins wrote to NSW Health Minister Jillian Skinner in January to express concern about potential harm arising from changes.

- - "It is inappropriate and unacceptable that steps could be taken to downgrade the qualifications of those who care for aged people with dementia in nursing homes. I cannot understand the push for such a change."

- - - Australian and New Zealand Society for Geriatric Medicine, said doctors who specialised in aged care were concerned that the current laws provided an important safety net

But Charles Wurf, the chief executive officer of Leading Age Services Australia NSW-ACT, the peak body for high-care operators, said the law was a hangover from the days when aged care facilities were primarily regulated by the states, but were not relevant now the system had shifted towards federal regulation.

He said it was flatly wrong that removing the law would negatively impact elderly residents.

But registered nurse Jocelyn Hofman says nurses are increasingly seeing the pressure on aged care facilities to do more with less. "It's all about money," she said. "The elderly are not a commodity, they are a loved one - - “

Source: Plan to remove nurses from nursing homes - Sydney Morning Herald, 21 May 2015

History tells us that the providers have ready access to NSW politician’s pockets on both sides of politics via political donations, and to their open ears through the lobbyists they pay to press their case.

It may take a community backlash sufficient to compromise electoral prospects to stop this from happening - and the community is not sufficiently engaged or interested.

I revisit the issue of staffing in NSW when I look at the widely different ways different groups in an information free zone see things.  Its on a later page  Coalface vs business that will come on line in due course. There was intense debate in the media.  The opposition partiess in the legislative Council, the  NSW UpperChamber mounted an inquiry.

This parliamentary inquiry attracted a large number of submissiions by very worried people who knew the importance of staffing.  To the relief of many the report rejected the proposal and urged the federal government to legislate staffing levels. As the government did not have a majority on the review and as those government members on the review panel supported the providers it is not clear what will happen.

The transcipts and documents give a fascinating insight into the thinking of providers, of government regulators, of staff and community groups as well as the behaviour of politicans in Australia. There is more revealed here than just staffing!

NSW government goes with providers
As predicted the NSW government rejected the inquiries recommendations .  It intends to remove the requirement for registered nurses.  Everyone with a genuine interest in the welfare of seniors opposed this and warned of the consequences.  Most were aware of what was already happening in the sector.

The requirement for NSW aged care homes to have a registered nurse on duty around the clock for frail residents will be abandoned after the Baird Government decided it was the federal government's problem.

NSW Nurses and Midwives, Alzheimers Australia, National Seniors and the Australia and New Zealand Society for Geriatric Medicine were among the groups urging the Baird Government to keep nurses in aged care homes around the clock for high needs patients.

"Doctors, nurses, gerontologists, academics, health professionals, older people and their families were unanimous in their call for 24/7 registered nursing," said Ms Barham.(Greens MP)

Source: NSW Government abandons 24/7 nursing in aged care homes Sydney Morning Herald, 30 April 2016

The consequences in the real world
The illusion that old people are not ill leads to the conclusion that you can treat them like anyone else in the community. They don’t need skilled nurses able to tell if they are sick or not or to give them pain relief when they need it. They don’t need examination rooms or doctors on call to come in diagnose and treat their ailments.

The aged are among the sickest in our community because aged organs progressively fail and that is what eventually kills us. Doctors and nurses are able to support those systems while life is still worth living and make the decisions with family when it is time to stop. When residents are in pain and need medication or are unwell then untrained carers have little choice but to send them by ambulance usually to a public hospital where those who need not go there block the emergency system.

The outcome is that many patients suffer pain needlessly, have long delayed diagnosis of illnesses and injuries and do not get properly treated.There are periodic reports showing that this happens.

Many others are subjected to the trauma of an ambulance ride and sometimes many hours in an emergency department when they could have been managed in the nursing home. Facilities like this are unable to provide effective palliative care.

Eight of the top 10 locations calling for an emergency ambulance last year were nursing homes, as frail residents were unable to receive the medical attention they needed on site.

"An example of this would be sending a 90+ year old in at 03:00 due to vomiting, even though the patient has set medication charted for said event ... So this poor elderly person is pulled out of bed and into the cold, to an already busy emergency department for treatment."

She (Emergency Department Nurse) said elderly patients can spend hours waiting for ambulance transport back to their homes.

Source: Data reveals nursing homes are top locations for ambulances Sydney Morning Herald 15 May 2016

And federally
The persistence of this illusion about ageing across all sectors of politics is illustrated by the sort of priority given to staffing in aged care.  This is a crisis area in Australia. In the 2014 budget, the coalition targeted money that the labour government had already provided to encourage more nurses into aged care and increase their skills.  Even the body representing the for-profit groups could not welcome this.

Assistant Minister for Social Services Mitch Fifield has confirmed the decision to cut 15 per cent from the Aged Care Workforce Fund in last week’s budget - - was a cost savings measure.

The decision, which saw $40 million stripped from the workforce fund over the forward estimates, has been criticised by employer peaks and unions as short-sighted and poor policy in light of the aged care workforce needing to triple by 2050

Leading Age Services Australia CEO Patrick Reid said he was concerned that workforce was not being seen as critical  - - governments could not abrogate their responsibility for workforce development and the resourcing of a strategic workforce plan.

Source: Fifield defends workforce cut, says dementia funds are safe Australian Ageing Agenda, 20 May 2015

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Cynicism about politicians

I was amused by a tongue in cheek article "The politician: a public health problem" in the Medical Journal of Australia 4 May 2015 page 452 in which the author looked at political psychology and behaviour then commented on the advances we have made in public health measures with the implication that public health needs to deal with the problem of politics. 

He concludes by stating that if we do not recognise the signs and symptoms of dysfunction then the health of the nation is at risk "especially if there are politicians listening to voices that do not exist".

But sadly, in the real world their ignorance, vulnerability to enticing nonsense and the gullibility of our leaders is no laughing matter.

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Risks for the human parcels in facilities that fail

Almost anything that happens in the marketplace, whether it is finding money to grow when the company is doing well or struggling to recover when it is doing badly places financial pressure on the facilities.  There are winners and losers in the market and the losers find themselves without the money to pay staff or provide care. 

Staff morale declines and when care is really bad the facility is closed down by government or creditors.  This causes a major disruption in residents' lives.  The family may eventually recover their bonds they paid when the resident entered care from government, but this is a protracted and traumatic process.  By the time it happens, many residents have already died.

Sometimes closure of facilities can be made for purely commercial reasons and when doing this the residents interests and their rights can be disregarded.  I will describe how this happened in a FPCompanyG nursing home later.

One would think that at the end of ones life care could be provided in a stable and secure setting and not in a sector which is continuously at war within itself, having to regroup and refinance after each sortee on the battlefield with wild fluctuations in fortunes.

Who plays this game?

I have argued since soon after I started studying large health care corporations that, in the health and aged care sectors, certain personality types are more successful at playing this game than others. Those who already have or readily adopt these personality traits succeed in this game and those who are unable to do so fail.

The argument is that in the current aged care context a perverse form of Social Darwinism operates selecting for the most successful players of the game, but that these are also the least suitable for providing care to the vulnerable. The most suitable are eliminated early or decide not to play and go elsewhere. Fourteen years ago I wrote two web pages analysing the personalities and explaining how the selection processes operated in these vulnerable sectors. I gave many examples.  I often wonder if the same sort of selection process occurs  in the political context.

The Community Aged Care Hub

The proposed hub is intended to bring a new player into this game.  It will be one who knows what is happening because it will be working with staff in the facilities and collecting information. It will work with the community to insure that its values are protected and that the requirements of its citizens are met.  This is the role that civil society plays within a functioning democracy.  It is citizens in that society who embrace their responsibility as citizens. 

This responsibility is to involve ourselves in the affairs of our society and in doing so ensure that the care and rights of our fellow citizens and the society we all live in is at all times protected.  This is called the "common good" and it has to be protected from repeated threats by individual or groups within society.  Their self-interest whether intentional or delusional threatens it.  Minority groups, the disadvantaged and the vulnerable are citizens who are particularly at risk from the self-interested. They need civil society's protection.

Please note: The first four sections of Aged Care Analysis are published and the remaining sections will be made available as soon as possible.

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