pdfAn article that I wrote in 2005 about the difficulties for doctors in health care having to work within a conflicting culture, was published in the journal "Health Issues".  What I wrote there is, I feel, equally applicable to the conflicting culture in the marketplace where not-for-profit and for-profit entities are required to compete.

Both doctors and not-for-profits come from a tradition of cooperative community service focused on "the common good". The people they cared for were vulnerable and needed protection. Ethical and moral values dictated that the interests of the vulnerable take precedence over all else. 

It was a softer, kinder, more considerate environment in which people's welbeing, including that of colleages and competitors, was generally considered to be important. Experts in the health field in the USA describe what happened to all this when the market took over.

Some health policy experts like Uwe Reinhardt, an economics professor at Princeton University, see the situation as "brutal and inhumane." But, Professor Reinhardt said, doctors and hospitals are trapped in it.

Mark Pauly, a professor of health care systems at the Wharton School of the University of Pennsylvania, said there was no real villain. "I don't think it's exactly good versus evil," he said, "it's just business."

Source: Quoted from a 2001 article in The New York Times

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The dilemma for not-for-profit operators

"A market culture and a market idiom are becoming pervasive, even among nonprofits" and " - - big nonprofits are now defensively emulating Columbia/HCA and other for profits."

Source: Kuttner R- "Columbia/HCA and the resurgence of the for-profit hospital business New Eng J Med 1 Aug 1096 p 362, 8 Aug 1996 p 446

In the USA, and also in Australia, not-for-profit operators have had to adapt and operate in a marketplace where they compete with profit-focused corporations. Robert Kuttner wrote about this in the USA some years ago. In 2006, I wrote a web page about the dilemma that not-for-profit organisations faced. It focused on and quoted an article in The Age.

In Australia prior to 1996, not-for-profit health and aged care dominated and business operators had to measure up to the standards and accept the values the not-for-profits held dear. Market culture was frowned on. In both the USA and Australia not-for-profits were and still form the largest sector in health and aged care, but their culture has lost credibility and influence.

What has changed is the balance of power. The system is now organised for corporations. Market culture is sanctioned and supported. It is credible and dominant. Not-for-profit ideas are seen as obsolete. As in the USA, not-for-profits have brought in managers from the for-profit sector to help them adapt and compete. Those adopting corporate thinking would have succeeded and the not-for-profit entities would increasingly operate like a for-profit operator, while still professing not-for-profit values.  We are now seeing more reports suggesting that not-for-profits are making more money but are failing when it comes to providing care.  We are left wondering what is really happening.


In 2015, The Australian (16 Feb 2015) published serious but strongly denied allegations about a not-for-profit and the Quality Agency identified problems in other nursing homes it owned.  The indignant company took the Quality Agency to court and won its action claiming that it had been completely vindicated. 

On the 8th June 2016 and again on 11th June The Gold Coast Bulletin published articles making very serious but strongly disputed allegations of poor care in a nursing home owned by another not-for-proft.  Nurses are also claiming that the care in not for profits is little different to that provided by for-profit providers.

Without something like the proposed Community Aged Care Hub in place, it is difficult to know what has been happening in the not-for-profit sector, but once again there is growing concern that all is not well and that some at least are not delivering the sort of care that we expect from them.

Losing their identity:  When conflicted not-for-profits can compartmentalise the two paradigms and so avoid confronting the contradictions in what they are required to do. But at a very deep level, the fundamentals of their existence, they are confused and divided. They don't know who they are and what they are doing here. They have lost touch with the community from which they arose. Instead of serving them, they are now trading with them.  Staff at the bedside can find it even more disturbing because of their expectations and their motivation in choosing to work for a not-for-profit.

As a consequence, their statements and actions can be unpredictable and conflicting. This is because they are framed within one or other of the two patterns of thinking. Many not-for-profits now adopt a greater commercial focus and have embraced the marketplace paradigm. As converts they can hold these beliefs even closer. But at their hearts they are conflicted and unsure and so do not perform well.  This uncertainty and lack of market experience might result in their sometimes out-doing the for-rpofits as they copy them.

At the same time, because their image of themselves (their identity) is still so linked to their mission of care they might be more aggrieved by any allegations, more defensive and more aggressive in defending themselves and attacking their critics.  There are some examples where the response suggests this and there is no doubt they are genuine. The concepts of compartmentalism and bad faith would lead us to expect this to happen.  I will look at this elsewhere.

The late Adele Horin, a journalist at the Sydney Morning Herald describes some, like Sxxxxx Jxxx from HxxxxxxCare and those at Fxxxx Care, whose organisations retain their identity by staying focused on the not-for-profit ethic of charitable service rather than profitability. They are doing well. I argue that, for many not-for-profits, a loss of a genuine sense of mission has consequences for staff motivation, for care and for quality of life.

But in a sea of mediocrity, and examples of poor and abusive practices, there are some examples of innovation and high quality aged care.

Source: A nursing home can be a new beginning - Adele Horin Blog, 21 Sep 2014

Most recently, Jxxx has cast a critical eye over Australian charities more broadly and concluded, in his provocative style, that they suffer an identity crisis. He has recently co-authored a book, Driven by Purpose, with his wife, Anne Robinson, a respected charity lawyer, and Felicity Errington, in which he takes charities to task for having lost their way.

Source: Straight shooter with a soul Adele Horin, Sydney Morning Herald, 6 Oct 2012

The genesis of the book, says Jxxx, goes back to when he interviewed 30 chief executives of not-for-profits in the U.K., U.S., Western Europe and Australia. One important question was inspired by governance guru John Carver: "Who are the moral owners of your organization?"

"What shocked me," says Judd, "was that so many of them couldn't tell me answers to that question! When you ask a guy with a billion-dollar organisation, who are you and why do you exist and he can't give a clear answer, you're really gobsmacked. Is that the exception? No, it isn't."

A fundamental issue for Jxxx and his co-authors is that those sorts of questions give an organisation a compass for what it will do and what it won't do.

The authors hold that charities are in crisis, but it is not a crisis of professionalism or even of money, but rather a crisis of identity - a failure to understand who they are and why they do what they do. And they argue that having a framed mission and vision statement on the wall or posted on the website is not necessarily the same thing as understanding the identity and purpose of one's organisation.

In short, when an organisation has lost sight of its who and why, the effects can include a loss of passion among staff, loss of engagement with its community, and ultimately its ability to serve those in most need of it.

Source: Identity and Purpose: Natural Prerequisites for Innovation by Gene Mitchell, Leading Age Magazine Mar/Apr 2013 - (Extract from Interview with Sxxxxxx Jxxx author of "Driven by Purpose: Charities That Make the Difference")

Jxxx is describing the consequences of the irreconcilable internal conflict that I have just described.

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What leading not-for-profits are saying

It is interesting to look at the views expressed by "a panel of experts" at an Aged Care Summit in 2012. Twenty years ago few not-for-profit operators would have had any doubt about their distinctive mission. Now there are those who see no difference between themselves and for-profits, and only a few doubters who still have reservations.

They are now in a situation where to remain successful and credible, they have to conform to a dominant cultural belief system that is in direct conflict with their traditional value system. As explained earlier, this is how people respond. Doctors in the USA did the same thing.

Not-for-profits have always had to make money, but they made money in order to provide care, so funds were stretched to provide the best possible care. When they had more money they would spend it on care so it would be even better. In selecting what to provide they selected the services that they saw were needed.

For-profits on the other hand, are in the sector to make money. They provide care in order to make a profit, so care is squeezed in order to generate profit. In selecting what to provide they much more readily select the services that are profitable and avoid those that lose money even when they are needed. That is how the market competes for money. They may not do that openly, or even consciously, but if they staffed as well as they could, and spent all the money on care, they would not be there. No one would buy their shares.

One CEO of a not-for-profit even said there is now no difference. The extracts below, may well reflect the situation that now exists and accurately describe how the not-for-profit operators have to behave. But they do that because they have been placed in a situation where stretching their money to provide better care is not competitive. I am going to argue that they have been put in this situation by believers in a dominant ideology that is based on illusions.

International and local studies by academics consistently show that not-for-profits have fewer failures in care. This is so even though most now operate like a for-profit. Imagine how much better their results would be if they had not done so - if they were still providing care where it was needed and not where it was profitable.

In my view the belief that there is no difference is another example of a situation where fact and logic are ignored and instead are being replaced by illusions. If this is said loudly enough and asserted with enough conviction then everyone accepts it as real.  But to maintain the illusion you have to ignore the strong evidence that not-for-profits staff better and have fewer failures in care.

I will be devoting a full web page to illusions and their important role in culturopathic cultures. To maintain one illusion, a cascade of additional illusions becomes necessary.

The difference between the ‘not-for-profit' and ‘for-profit' aged and community care sectors is mostly ideological rather than real, as there are just as many discrepancies among organisations with the same kind of profit motive, as there are between sectors.

Although different aspects of the two sectors were keenly debated, overall the aged and community care practitioners agreed that in an increasingly competitive aged care market, differences between organisations are not created by ideology but varying mindset, culture and business operations.

 Panellist and CEO of NFP provider Cxxx Coxxxxx, Pxxxxx Oxxxxx, said the preconceptions that NFP and FPs are really different "aren't true".

Chair of the session, Cxxxxx Pxxxx from SxxxxxtCare, commented that market segmentation, which drives organisations to meet different consumer needs, will determine how a provider is defined - not their type of profit motive.

Source: Profit is not a dirty word - Australian Ageing Agenda, 29 Mar 2012

But there is hope. Even at this session, where the arguments were so strongly made, some suggested that a loss of mission might have an impact:

 - - -Cxxx Gxxxxx from UxxxxCare - - - How much strain does [the mission] come under if [the organisation] seeks to be competitive and sustainable in a completely different market?

"What [services] disappear out of the organisation so that it becomes sustainable and competitive?"

Will an organisation loose residential aged care beds to provide a different kind of service, he asked?

"Does the mission become a struggle or do the other parts [of the business] become a struggle?"

Director of aged care services for Cxxxxxx Health Australia (CXXX), Rxxxxx Gxxx, concurred but commented that achieving the right mix between commercialisation and mission is difficult for most NFPs.

Source: Profit is not a dirty word - Australian Ageing Agenda, 29 Mar 2012

But profit can too often be a dirty word

What should we think when we see letters in the press from family members along these lines.  If this is happening and there is much to suggest that it is too common then surely "profit" far too often does beccome a "dirty word":

In the high-care facility, significant cutbacks in staff numbers along with general management disengagement from resident service delivery is of great concern to those who visit daily, some twice daily.

All too often relatives have to help with tasks from feeding, bathing and room cleaning because staff are too pressed. Management too often does not see what actually occurs in residents' rooms and common areas – preferring to remain in their offices.

Curiously, NFPCompanyW, a not-for-profit organisation, recorded a net profit of $3.9 million for the year ended June 30, 2015, and bought a new head office in Malvern and added six aged care homes to its portfolio.

Source: Relatives bear load Letter to The Age, 19 Apr 2016

My father spent nearly two years in a church-affiliated, not-for-profit aged care home.- - - It looked good but it wasn't

The staff worked hard but never had enough time - - -. Short-cuts - - - : food was not cut up, personal care of residents was often minimal. Group outings were rare - - - one part-time physiotherapist for nearly 100 residents. Mobility maintenance was not encouraged: - - - Dental care was non-existent - -

PCAs did not always understand what they should do and were poorly supervised. Standard hygiene protocols were frequently ignored.

People familiar with other aged care homes confirm these are widespread problems not limited to the for-profit sector.

Source: Aged care woes build Letter to The Age, 5 Jul 2016

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"Hollowing out" of not-for-profits' missions

Academics have also been looking at what has been happening to mission. 'Hollowing out' seems to be becoming a popular term. The report quoted below is based on a PhD thesis examining the impact of  government funding and government contracts on the mission of not-for-profits.  This loss of mission described here consequent on competitively seeking government funding seems to be related to what I have been writing about above. 

On an earlier page I commented on the potential impact that public criticism and advocacy by not-for-profit providers of services has on the likelihood that for-profit donors and sponsors will perceive not-for-profit organisations is search of funding as credible and that government funders will still support them financially when government policies are criticised. 

When you are largely dependent on government funding, then even the fear that this might happen might prevent you from speaking out on behalf of those you are helping.  Being there to help is better than not being there at all.

  - - on average Governments provided 47 per cent of the income received (by NFP) and that one third of respondents indicated that they received 80 to 100 per cent of their income from Government. 

- - the outsourcing of government services will continue in years to come in areas like Out of Home Care, Disability and Aged Care. Despite the many obvious benefits, there are some unintended consequences and risks. In my experience most NFP Boards and Executives, if they are not careful, will lead their organisations into ‘dangerous waters’ oblivion unless they carefully reflect on the key risks and develop risk mitigation strategies.

Doug Hynd’s research for a PhD at ACU on ‘Conformity, advocacy & resistance by ‘church-related’ social welfare agencies in an era of government contracting’ clearly identifies these risks. Whilst it’s written for organisations that have a relationship with Christian Denominations, the principles apply to any Not For Profit that has a unique tradition or distinct mission it brings to its services that is worth preserving (one hopes that would be most Not For Profits).

Hynd identifies the greatest threat of Government contracting for Not For Profits, is the potential ‘hollowing out’ of one’s mission and the risk of becoming ‘funder determined’ resulting in a loss of identity. The great loss in this process for the Australian community is the role Not For Profits have traditionally played in advocacy, identifying emerging community needs and addressing them with new initiatives that mobilise community resources.  

These arguments aren’t particularly new because providers of Employment Services have been identifying them out for some years. Wilma Gallet crystallised this well when she asks ‘is it right to gain market share but retreat from your mission?’

Source: BLOG: Strategies to Stop NFPs Being ‘Hollowed Out’ by Government Probono Australia, 11 Jun 2015

What about Willful Blindness and Bad Faith:  It is clear that not-for-profits are accommodating to the situations in which they find themselves.  To what extent is Willful Blindness or Bad Faith being used to enable them to do so? 

The final paragraph can be set against the exposure of fraud and the misuse of the vulnerable job seekers that the providers of employment services were contracted by government to serve. The way in which they were misused and exploited was exposed on ABC Four Corners. Under strong competitive pressures simply identifying the problems did not protect the vulnerable  and even though government knew what was happening little was done to stop it.  For-profits were the prime offenders but not-for-profits competed in this market.  ABC Four Corners claimed that two charities paid back large sums of money they were not entitled to.  Not-for-profit providers would have had to adopt the same practices in order to remain competitive.

In 2005 a major Government investigation targeted the Salvation Army in Victoria. During a taped interview, a staff member made admissions of - - - “Unethical and criminal behaviour relating to fraudulently upgrading jobseekers to the highly disadvantaged classification, thereby increasing payments and bonuses for staff”.

Sandeman says charities are being forced to behave increasingly like commercial operators in a race for Government contracts.

And if you look at the international experience, often it means that the welfare agencies who operate for no profit - we plough our resources back into our services - are supplanted by large international organisations who have a very strong profit motive.

Source: The Jobs Game -  ABC Four Corners, 23 Feb 2015

Could so many groups and so many people delivering these services have carefully conspired to be evil and exploit the system at the expense of vulnerable people who came seeking help in a time of need?  Could this have been a massive conspiracy going on for so long?  Its not very likely. 

We don't know enough detail about this to attribute it to Wilful Blindness or Bad Faith but, we can ask how this could possibly have happened without Willful Blindness or Bad Faith by vast numbers in both the for-profit and not-for-profit sectors - let alone the government officials who knew about it.  These can all be seen to be culturopathies.

What about aged care?

If we turn to the aged care marketplace and ask ourselves if there is any essential difference from  the situation in which both the for-profits and the not-for-profits found themselves in the Jobs marketplace   If we then look at the multiple other sectors where there are vulnerabilities we can see that, in the vast majority, any vulnerability has sooner or later been exploited. If the vulnerability is in employees or in customers then they have been harmed. 

Could this have been deliberate fraud in all of these instances.  It seems to be the normal response to the situation that these people find themselves in.   In the culturopathy page I argued that Willful Blindness and/or Bad Faith were normal processes that allowed us to respond and survive when we found ourselves in difficult situations. By this I mean situations where you have to look the other way if you are going to prosper and become "someone" - the existential imperative to be!

So if we come back to aged care we must ask what the chances of it escaping from these same forces and processes are?  What is the likelihood that the participants won't exploit the multiple vulnerabilities and that willful blindness or bad faith will not allow them to do so.   On the web page Consequences of marketplace thinking I described the multiple ways in which the aged care industry has already exploited the vulnerability of the aged care funding system. 

What are the chances:

  • that the vulnerable residents and even the vulnerable nurses are not also being exploited by the system? 
  • that all of the many examples of failures in care in the 19 Years of Care section were isolated exceptions in a world class system rather than red flags to a pervasive but hidden problem?
  • of all those residents complaints being due to "difficult families", or all of those complaining nurses being "disgruntled employees". 

What is the likelihood of aged care being a full blown culturopathy? I would think pretty high!

The proposed Aged Care Community Hub

Aged care and other community services are the services that we as a civil society provide for those in our society who are in need or in other ways vulnerable.  It is our responsibility to involve ourselves in these activities and have them delivered under our close supervision.   The proposed hub is designed specifically to minimise the risk of a culturopathy and to correct it when it is encountered. 

By having a multitude of points of view focused on the "common good" we create a context where the thinking and the practices that give rise to a culturopathy are confronted.

On the web page Aged Care Roadmap in the introduction section of this web site I use a table to explain the difference between what the government is doing now and planning to continue doing by contrasting it with what the proposed Aged Care Community Hub proposes.

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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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