Those who try to adhere to the not-for-profit ethic, but have to compromise and do what it takes in a competitive market, are uncomfortable and conflicted. They lose identity, a sense of mission, and no longer know what they are doing there so struggle to survive.
Entrepreneurs, in smart suits, in the consultancy business, with an eye open for opportunities, are soon fanning their anxiety and warning them of the consequences if they don't change the way they think and behave. They offer their services to restructure, partner and amalgamate.
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Business Consultants rushing to advise
No organisation wants to be faced with closure, and no community wants to lose its local aged care facility, but that's exactly where many aged care providers could find themselves if they fail to adapt, leading experts tell AAA.
"The bank would have foreclosed. Someone would have probably bought it, but at a fire sale, the directors may have been liable and it would have ended in tears and disaster after 56 years of non-profit institution," Goldsworthy (Australian Strategic Services) says.
It is a widely-held sentiment. Patrick Herd, principal consultant with Community Business Australia, says as the sector is being manoeuvred toward a freer market dominated by the consumer, operators need to adjust their ways to remain viable.
Herd agrees with the need for robust discussions. He says he often tells organisations if they don't have them now, then down the track somebody will be making the decisions for them.
If this questioning leads to an amalgamation or merger, a name change and transfer of ownership could leave some in the community with a sense of loss, Goldsworthy says, but he argues it is not a real loss.
If the business is looking unviable, Bailey (accounting firm RSM Bird Cameron) says while anyone can have a form slump, if an operator has lost the desire to win then it's time to get out of the game. "If you have been trending down for three or four years and things are getting worse then you need a fundamental change at the top."
Partnering with an organization is one of the strategies organizations will look at to ensure their competitiveness in this new marketplace, says Patrick Herd, principal consultant with Community Business Australia.
That includes a good change manager to facilitate and project manage the process and provide technical advice. He recommends those with little or no experience get somebody in. If using an internal person, Goldsworthy says they need to be very skilled and understand the process from beginning to end.
Source:Experts advise on viability and sustainability - Australian Ageing Agenda, 18 Sep 2014
This article brings to mind a hospital staff meeting called to "vigorously debate" our predicament and suggests solutions, after a US consultant had been invited by the administration to assess our hospital and give advice. I was chairman of the medical staff association at the time. Our hospital was bursting at the seams with long waiting lists and we were clearly very popular because of our not-for-profit misson, but there was change and we were told this could not last.
From my study of the US system, I knew his mindset and where he was coming from. I thought the problem he identified was illusionary, because the paradigm was flawed. Others more sympathetic to the process had been cultivated by the administration and had accepted the consultants interpretation of the situation. I was soon out of "the loop".
At the meeting I challenged the paradigm that had been created by the introductory speakers, and suggested that we should be asking another question instead. This was not why the meeting had been called so was not welcomed and my suggestion was immediately ruled out.
The railway track led from A to B and there was tight control to see that the train did not get off the track. By then, my career could not be affected, so I listened to staff from all sections in the hospital to see what they would have liked to say, then contributed by raising the issues they dared not at every meeting. It may have caused embarrassment, but did not derail the train. That happened some years later.
Now, in regard, to the consultants in the quote above, the biggest problem for profitability is the cost of staffing, which is between 60 and 80% of the cost of running a nursing home. This is not mentioned in the article. One wonders what sort of experience in care these smartly-dressed, impressive business operators have, and how they will address this problem. There will be plenty of plausible rationalisations and ways of explaining away the need for sufficient qualified staff. These men will be true believers but do they really understand the consequences that their advice might have?
The reason why things have often gone pear shaped, particularly in the USA, (see examples on pages in this section) is that managers who provide good care rather than make a large profit are fired and those who do whatever is necessary to be profitable get massive bonuses. Senior management were wilfully blind to the consequences.
What these helpful and impressive consultants are doing, apart from making themselves wealthy, is to move the confused and distracted not-for-profit further into the corporate for-profit camp and further away from the community on whose support and affirmation their mission depends. They are forced to do whatever it takes (eg reduce staffing) which deep down they know is contrary to their core beliefs. They become increasingly conflicted and erratic.
The managers who care and have difficulty in finding ways of doing what the market requires - those who have a "desire to care" and have lost the "desire to win" because it will compromise care - will, on the consultants' advice, be replaced by those with ambition, who want to win, and will do so whatever it takes. The values on which the not-for-profit system is based, enshrined in this manager and his/her style, and admired by staff, are devalued and go out the door, with him/her. The identity crisis and staff alienation are compounded.
The referral to a market "dominated by the consumer" shows just how out of touch they actually are with the reality of aged care. The only effective response is for Australians to band together and ensure that it is not the frail consumer but the local community empowered by knowledge and with power based on effective economic leverage that providers of care have to deal with.
This is why the proposed community hub is so important for the future of aged care in Australia. If the not-for-profit culture is to survive then the community must re-engage with them, reaffirm their mission and give them the support they need to rediscover their identity and what they are here to do. This the hub can do.
These advisers are busy: Five months later and, on the advice of one of these impressive consultants The Bendigo Council was planning to close down its home care service. A letter to the newspaper Bendigo Advertiser shows how local councils have responded to these impressive young men. This is one of those who made the presentation above.
They are closing the council's Home and Community Care service which provided HACC aged care services and it will be contracted out by the state - possibly to a for-profit company.
State members for the sregion were strongly opposed to the move and condemned the council for its actions. Local expertise would be lost as outsiders in a for-profit company came in to provide the service. These politicians were willing to meet the council.
But by following Goldsworthy's advice, the council would no longer be paying $1.32 million yearly towards the care of locals. The responsibility would revert to the state. Government's policy is consolidation. It wants to divest government supplied services and hand them to the marketplace. The financial incentives in the system clearly support the government's poilicy of corporate consolidation and away from not-for-profits. Was it something that was deliberately bult into the regulations?
... As a concerned client of the council's Home and Community Care service, I was very interested in the letter sent to all clients advising of the proposed closure and the input and advice given by a Michael Goldsworthy into the council's deliberations and decision.
Now, without being able to read the report in full, nor having been given the opportunity to have input, I went to the website of Australian Strategic Services Pty Ltd and found some interesting information ..."
It is obvious that councillors have taken the "Occam's razor" approach - when there are difficult decisions to be made, accept the simplest or easy way out and ignore other opportunities. - - - Why not take up the offer - - and discuss opportunities for council to continue to deliver HACC services on behalf of the state government?
Source: Letter: Taking the easy way out - Bendigo Advertiser, 5 Feb 2015
There was a large community meeting with plenty of opposition to Goldsworthy’s proposal. Three months later the council revised its decision to accept Goldsworthy’s advice. and decided to continue providing home care. In many other towns they have not done so.
The story is in these links:
- Home and Community Care workers fear redundancies Bendigo Advertiser 12 Feb 2015
- State members disappointed council set to withdraw from home care Bendigo Advertiser 13 Feb 2015
- Council faces questions over HACC decision Bendigo Advertiser 18 Fen 2015
- Home Care, Community Services Decision to remain in the delivery of HACC services City of Bendigo web site 6 May 2015
The hollowing out of local communities
In their 2013 article Community Sourcing and Social Care Chris Yapp and Chris Howells writing for the Centre for Welfare Reform in the UK use the term "hollowing out" of local communities to describe what has been happening to local expertise, local knowledge, local identity and local innovation as central governments centralise and local governments contract out to large organisations whose main concern is not the local community. They argue that this has had a large negative impact.
The cost benefits are minimal and the community's losses large. The focus of the Centre for Wefare Reform's thinking and activity is towards returning control to and rebuilding local communities.
The Centres web page describe Yapp and Howell's thesis as:
...Many problems can only be solved at the level of local communities - bringing together local understanding, leadership, expertise and resources. Many of today's problems no longer suit centralised solutions with their bureaucracy, elitism and patronage. The authors of this discussion paper argue that it is time to change our understanding of both the role and structure of local government".
It is time to move to new organisational structures that embrace local innovations and encourage local capacities. The current model of privatisation, procurement and tendering only serves to hollow out the capacities of local government and local communities. Profit, expertise and leadership are all exported outside the community and into organisations that neither know nor care about the local community ..."
While the interest of these authors is in social work and in disability, it is clear that aged care services in Australia are victims of exactly this hollowing out of the interest and involvement in aged care of local communities in Australia. The aged care community hub this website proposes has very similar objectives for involvement of local communities in aged care.
The hollowing out of Australian aged care communities has taken two forms. The first is a consequence of marketisation and a managerial approach to community services. The second is the consolidation of the sector and the abandonment of services by governments.
Marketisation and managerialism
Aged care which was once a personal service in which family and community participated has been turned into a commodity, a product traded in the marketplace. The services is now offered and provided by experts who despite their claimed credibility and advertising, are market and profit focused and not particularly skilled even as they claim expertise. Real expertise in the form of trained medical and nursing staff has been markedly reduced.
The community not-for-profit organisations which arose from community and religious groups are struggling and increasingly their mission and their services are being marketsed. Their close links with their communities is eroded as the members of the community become no more than customers buying a service package offered by the commercial providers - a role which these once humanitarian bodies are now required to fill.
Both in government and in the ever larger consolidated businesses (both for-profit and not-for-profit) the management structure has become more hierarchical with policy and decisions made centrally and their implementation becoming process driven. There is little room for intimacy and empathy. Even as the rhetoric about person centred care becomes louder accounts from the coal face suggest it becomeing more structured with fewer trained staff and so more task focused and impersonal.
In a sector where customer beware has now superseded trust as the core attribute required the customer is increasingly vulnerable. Family and community are marginalised and powerless.
Consolidation and privatisation
Consolidation of the sector has meant that smaller groups, which are more directly involved in care, both private for-profit and not-for-profit have sold, amalgamated, partnered with other groups, or simply decided to close their older facilities. Instead of rebuilding facilities or refurbishing in areas where there is a need but where the community is less profitable they seem to be focussing on more profitable places. Unprofitable facilities are being closed and residents left to find accommodation further from family and friends.
In keeping with the free market policies adopted by both major parties, governments have abandoned their role in providing their traditional services, particularly care in the community. A much more personal and individualised approach was required here and local councils and groups provided these. They have now sold out to the market sector and large market structured and managed companies are now providing these.
Management of aged care by local and global financial institutions
The first wave of consolidation occurred under the Howard government in the 2000s. The consolidation was driven by local and international financial institutions.
When a new wave of consolidation started with the Abbott government in 2013 a number of Australian companies looked like tasty morsels and Australian Business Review was enthusiastic about institutional buyers from Canada.
EVIDENCE is emerging that global institutions are starting to circle the nation's $11.5 billion aged-care sector, with suggestions Canadian pension funds including Alberta Investment Management are among three groups in talks to buy Macquarie Group's stake in the $550 million Regis business -- the industry's second-largest player.
As well as the $69bn AIM, one of Canada's largest institutional investment fund managers, Borealis, also of Canada, could be a suitor too, sources said.
Source: Global pension funds eye local nursing home chains The Australian Business Review 2 October 2013
With the new trade agreements since 2013 Australian aged care businesses might be even more tempting. It is interesting to look at what happened when Macquarie Bank, a major player in the first wave of consolidation, bought a company in Canada and managed it. Macquarie insisted on returns being underpinned by strong financial management. They brought in "professional third-party providers" to decide the number of diapers to be allocated to each patient per day - the ultimate managerialist disempowerment of staff.
An east Toronto nursing home is threatening to fire front-line staff for hiding extra diapers in residents' rooms – a practice workers say is necessary to ensure that residents are not left in wet and soiled briefs.
Staff at Leisureworld West Hill said they grew so frustrated by diapers kept under "lock and key" that they called in the Ontario health ministry to investigate. A spokesperson for Health Minister David Caplan told the Star that investigators visited the home on Aug. 11 and cited it for violating the nursing home act.
Many homes now use diapers that come with a claim that they can be worn comfortably until they are 75 per cent full of urine and feces – a practice that sparked outrage last summer when it was reported in the Star. The Ontario Federation of Labour filed a human rights grievance over the practice.
Original article “Staff risk firing for 'hoarding' diapers” The Toronto Star August 22, 2008
Source: Quoted by Private Equity Banks, Trusts and Financiers invest in Australian Aged Care Corporate Medicine web site 2006/8
Would Canadian fund managers investing in Australia adopt similar management styles here. They would have little adverse impact on Canadian investors if there was similar adverse publicity in Australia?
The issues surrounding and the impact of international and local private equity, financiers including Babcock and Brown, Macquarie bank, ING, Westpac, AMP, MFS and others in Australia during the first wave of consolidation were addressed in the page above and on the several pages linked from it. It also describes the purchase of not-for-profit Salvation Army's nursing homes by Macquarie Bank.
Large financial institutions seized the opportunities presented by the marketisation of aged care in 1997. They focused on the sort of controlling management that would give them the profits they needed. This contributed substantially to the hollowing out of the expertise and skills within aged care facilities and in our communities during those years. The recent renewed focus on consolidation, private equity and share market listing has continued the process.
The way in which not-for-profits groups, a core component of civil society, are adopting marketplace thinking, become separated from their community base, assume the morality and values of the marketplace and become indebted to government and corporate sponsors is another example of the hollowing out of civil society. Not only do they align themselves with the marketplace that civil society constrains and controls but their freedom as responsible citizens to speak out and criticise when this is required is constrained by the financial bonds that bind them to market and government. These golden handshakes readily become golden handcuffs.
Large not-for-profit owners selling to for-profits
Background: In 2006 I wrote a web page analysing the large cultural changes required of not-for-profits when the activities they had carried out to provide care in vulnerable sectors were turned into markets. Many saw what they were being required to do as harsh and immoral and several decided to vacate these sectors.
- The Not-for Profit Dilemma Corporate Medicine web site 2006/7
In aged care the changes made in 1997 created large problems for the most charity driven not-for-profits. They had focussed primarily on the poor. Their members had raised money in their communities to build nursing homes. Many of these facilities were old and the new legislation required them to find the resources to upgrade or rebuild the homes.
While not-for-operators have generally provided better care some struggled in this new marketplace where they had to compete with newer for-profits who could more easily raise capital and often did not have this problem.
Morale deteriorated and some facilities had problems with care. It is difficult to gauge how much of this was the difficulty they had in accommodating to a more ruthless profit focused environment.
I reviewed some of this on a web page in 2006. At around the same time I wrote another describing the impact that major financial institutions were having in aged care.
- From humanitarianism to markets: Not for profit nursing homes Corporate Medicine web site 2006/7
- PRIVATE EQUITY Banks, Trusts and Financiers invest in Australian Aged Care Corporate Medicine web site 2006/8
Selling up in aged care: Traditional not-for profits with traditional values started getting out of aged care and selling to for-profits during this period. The trend has continued, even accelerated.
We can only speculate about the reasons and the extent to which these not-for-profits decided that they could not stomach what was required of them in this new sector. We might speculate that these were potentially the better more motivated providers, who were consequently the least able to adapt, reduce staff etc and so vacated the sector. In that case then it is likely that a perverse form of social Darwinism operated with only those who could compromise their mission surviving. In the USA it is easier to identify this happening.
I looked at the extent to which not-for-profits that did not have much appetite for the competitive market were getting out and selling in the last slider of the earlier page “Not-for-profit operators”. This section is a brief reminder and adds some additional examples.
FINANCIAL pressure is forcing the NFPCompanyV Society to sell its 18 aged-care centres in NSW to a corporate buyer, raising concerns about the future care of the elderly poor and the adequacy of Federal Government subsidies.
The society, which has run aged-care facilities for 40 years, cares for 900 residents, more than half of them poor people with few assets.
The society is following the path of the Salvation Army’s southern command which sold 15 aged-care centres in 2004, to a consortium backed by Macquarie Bank, for $125 million.
Source: NFPCompanyV sale raises fears for aged care Sydney Morning Herald 10 Nov 2006
In 2015 NFPCompanyV sold its six facilities in Victoria to NFPCompanyW, a group that has adopted a strong market focus and is building luxury facilities.
As indicated in the previous account another major traditional not-for profit provider, NFPCompanyU, has been providing services to the needy aged in Australia for over 50 years. It has been selling down its aged care facilities and they have all ended up in the hands of large for-profits.
- 2012 Sold 4 South Australian Nursing homes to NFPComppanyZ which sold them on to private equity owned FPCompanyJ in 2014 when it too decided to vacate the nursing home business
- 2014 Sold off properties in Victoria
- 2015 Sold its retirement villages in South Australia to Stockland which has a partnership with FPCompany Newname C to run nursing homes in its villages.
- 2016 Sold its Queensland aged care portfolio to market listed FPCompany G
For the residents: Consider what was likely to happen when these facilities fell into the hands of a for-profit group which like FPCompanyJ has a private equity owner whose financial policy as stated on its home page (Accessed 2 July 2016) is “A hands-on, operational approach is an essential part of Axxxx Cxxxxx’s investment process, from opportunity assessment to ongoing portfolio company management”. What do the managers of this private equity group really know about aged care and the consequences of their money making practices for the residents? Because we don't collect data on staffing and care we don't know.
For the community: These are all charitable community organisations whose members had raised funds to build and run nursing homes for the needy long before government started funding them. This was their charitable activity, the way these citizens fulfilled their responsibilities as citizens by serving their communities. The community’s values, norms and humanity were expressed and given form in what they did.
Their knowledge and understandings of life were developed in the service they gave to their communities and the relationships they had with them. With commercialisation and then free markets this was all shredded and finally abandoned. To maintain values and norms like these a society needs to constantly reaffirm and excercise them in action in real situations. Without this intimate contact with the real world these civilised attributes atrophy and are lost.
The market is certainly doing what the government wants, eliminating those providers who are less efficient at keeping costs down (or are unwilling to put profits before care), but at what cost to the residents and to our communities?
Small acquisitions - example
Example: Ann Nichol House
... The privatisation plan upset Ms Nichol and the other volunteers who established the aged care home (Portarlington aged care facility Ann Nichol House) and raised almost $700,000 to build it in the 1990s.
"I plan to take whatever steps I can to have my name removed," she (Ann Nichol) said.
"The naming rights were given to me to represent all the people who fought so hard in this community to build this home, but this decision goes against those values."
Community leaders have questioned BCH's right to sell the home, explaining it was "gifted" to it without payment in 2002 when local volunteers could no longer manage it. They also argue the Crown land should not have been sold for private use.
"This is a very sad day for the Bellarine community to lose its last not-for-profit community aged care facility; one it fought so hard for," she said.
"The Government is now clearly up to its neck in the privatisation of Ann Nichol House."
Source: Ann Nichol wants her name stripped from aged care home after sale to FPCompanyF - Geelong Advertiser, 23 Sep 2014
These are not-for-profit community facilities. Dedicated community members worked hard to build and fund this nursing home. It represents the core community humanitarian values that once characterised the not-for-profit sector's mission. These homes were entrusted to their local councils in good faith.
But now council managers schooled in business-think and marketplace ideology are betraying this trust. Generic managers have no understanding of the social dynamics of aged care and are selling it off to the highest bidder - the one who thinks they can make the most profit from it. Community protest and anguish is being brutally overridden.
It is not reassuring that the purchaser, FPCompanyF, is the same for-profit company, that has received wide publicity after a coroner's strong criticism of the standards of care and poor staffing that contributed to someone's death. Little wonder that the once dedicated, but now sadly disillusioned lady, who worked so hard to have this facility built, wants her name removed.
Over a year later on October 5th an independent review commissioned by the state government found that "talks with eventual buyer FPCompanyF were already in motion when BCH held public meetings supposedly to discuss the centre’s future" and that at the time "service delivery was largely meeting clients needs".
The community group that had fought so hard stated "there is no excuse for BCH board and chief executive (Jxxn Fxxxxk) to have hidden this issue and engage in a clandestine operation to sell off these assets, with total disregard for the community contribution in establishing these facilities,”. It was simply "a further stepping away from core responsibilities".
By then it was too late to reverse the sale. The community called on Bellarine Community Health (BCH) to return the money it made selling the bed licenses to FPCompanyF but the request was rejected on the basis that there were no legal grounds for it. The community responded that this was a moral and not a legal issue.
- Bellarine Community Health reject petition’s claim for payback Geelong Advertiser 10 December 2015.
I have a nasty suspicious mind and it would interest me to know if any of the influential people in the BCH negotiations have moved over to work for FPCompanyF at an increased salary. In the takeover frenzy of not-for-profit hospitals in the USA, deals were facilitated by hidden incentives like this. But perhaps competitive pressures are not yet strong enough to need this here.
Example: Local councils in South Australia
In South Australia, Port Augusta is only one of 3 of the 68 councils still providing nursing home care. It is now selling. The mayor blames the lack of support by government for these community aged care services.
PORT Augusta City Council voted to seek a new operator for its two aged care facilities, AM Ramsay Village and Nerrilda Nursing Home. - - - The decision came on the back of specialist aged-care consultant G88 Consulting presented a report to Council in March this year - - -
Mayor Johnson suggested residential aged care is changing, both through the increase in residents with complex care needs, and through the impact of federal government aged-care reforms.
“Aged care is a changing industry with increasing complexity of legislation around the provision of aged care and is better suited to large, specialist aged care organisations, which can attract higher funding levels and invest in capital upgrades,”
“The majority of councils historically providing aged care have moved out of the industry, with Port Augusta just one of three Councils of 68 in South Australia that still operate aged care facilities,”
Source: Port Augusta Council votes to sell aged-care facilities The Treanscontinental Port Augusta 24 May 2016
The damage is far wider than just one or two nursing home in just one or two communities. It is happening across the country. Monash Council faced an intense Community backlash when it sold off its nursing homes in 2013-14. The community opened a web site in mid 2013 enlisted political support, and mounted a strong protracted campaign through most of 2014. Chanel 7's Today Tonight program supported them aggressively.
Instead of heeding the views of their community, the response of the council was to feel aggrieved and indignant. They lodged an objection about Channel 7's choice of words to the Australian Communications and Media Authority (ACME). ACME ruled against the council. The facilities were sold off.
Nursing home closures
Homes that are old are being closed rather than renovated or rebuilt. In some instances the land on which the facilities are built has increased in value and councils can make money by selling and not replacing. Many of these are needed but particularly in rural areas are not going to be profitable and in a competitive market even not-for-profits now give profitability dominance over need. Government policy is directed to creating and supporting markets and not to directing its resourcesw to areas of real need. Both not-for-profits and for-profits are focussed on the wealthy. A failure to do so impacts on profitability and survival. This is happening at a time when all sections are ageing and when the wealthy are getting wealthier and leaving the poor behind. Their need for care as they age is being ignored and the facilities that serve them are being closed.
Example: Hillside Haven
This is an example where a country nursing home was caught up in a private companies misdemeanours. The community lost the entire community built aged care facility after it had contracted a private company to run it. Residents lives were radically disrupted and the community lost more jobs as politicians and other providers stood by and watched. In this market there was no place for any emppathy or humanity.
Collinsville is a Queensland coal mining town that has suffered from the downturn. It currently has a population of over 1500. Its nursing home Hillside Haven was founded in 1992 after the land was donated by a local family and the community raised the money to build the facility. The private company contracted to operate the nursing home went into liquidation amidst allegations of misappropriation of funds. The issue of ciminality arose and the matter was referred to ASIC. Then there there was the tragic and unexplained death of the manager.
The administrators were able to sell the other six homes owned by the company and so keep them open but could not find a buyer for Hillside Haven. It could not find anyone to take over the facility- even a not-for-profit in nearby Bowen. It was a small facvility and would not have been profitable. The liquidators also planned to sell the land to pay creditors even though the contract specified that it was eventually to be returned to the community. It seemed that the company had borrowed against this community owned asset.
Its closure devastated the community and the dedicated local staff who lost their jobs. In spite of an outcry and pleas by the community no one could find any funding to keep it open. Compassion came a poor second to money and the residents in their late 80’s and 90s, who had lived in the town for most of their lives were relocated to Bowen 87 km and over an hours drive away from family and friends.
One of the staff summed up the situation well and the minister's response was a typical denial of what is happening to the elderly across the country. The sort of respoinse that is wearing very very thin as problem after problem gets this sort of response
Former Hillside Haven activities officer, Vikki May, said the current system was failing the elderly in small regional towns.
"The generation is getting older, they have to realise that removing aged care is not going to solve the problem, it's making it harder and harder.
"I can't see an immediate fix on that unless the Government changes their attitudes."
She said there were not enough safeguards in place to protect small nursing homes from closing.
"This is horrendous, they are literally ripping families apart here and they are condemning some to a very miserable remainder of their life.
The federal Minister for Regional Development and Rural Health, Fiona Nash, said there was no need for an overhaul of the aged care system. - - - - - "By and large aged care is working really quite well out in the regions”.
Source: Hillside Haven nursing home worker urges aged care overhaul as Collinsville facility set to close ABC News 22 April 2016
This debacle received extensive press coverage including
- ABC News 17 March 2016 - - - 19 Apr 2016 - - - 22 April 2016
- Townsville Bulletin 19 Mar 2016 - - - 22 March 2016 - - - 2 April 2016 - - - - 15 Apr 2016
- Daily Mercury 17 March 2016 - - - 22 Mar 2016 - - - 31st Mar 2016 - - - 12 Apr 2016
- Whitsunday Coast Guardian 15 Aprl 2016
Example: Winston House
NFPCompanyY, a large national not-for-profit group is closing a nursing home in Gympie that contains 51 residents because “it was designed for low care needs, because that's where the greatest demand was then” and “The building design simply can no longer support the quality, continuous care we want to provide”. This was even though “Aged care beds in Gympie are in short supply and the region needs more beds not less.” A community of 51 elderly residents had to be split up and relocated - friendships broken. In spite of this there are no plans to upgrade or build a replacement.
- Gympie's Winston House aged care facility is to close Gympie Times 11 Nov 2015
- Winston House closure is not good news Gympie Times 12 Nov 2015
"He is so settled - it will be awful for him to leave.
"I know he will find it hard to settle into a new environment at his age (93 years).
I was told to look at Maryborough, Hervey Bay and Sunshine Coast but this takes our loved ones further away."
Source: Winston House closure putting stress on local families News Mail 14 Nov 2015
Example: Stanthorpe Nursing Home
On the last slider of the earlier page Not-for-profit operators I described how a small private operator that staffed well but was not competitive was forced to close a 36 bed home putting 65 staff out of work and scattering its residents into neighbouring towns.
Example: Darley House in Victoria
Government is also closing down older nursing homes without building replacements. Aged care has been handed over to the market and they are walking away. This is in Melbourne Repatriation facility attached to the Repatriation Hospital
Darley House residents forced to find alternative accommodation
A HEIDELBERG West nursing home will close, with more than 50 residents set to find a new home because of ageing facilities.
Austin Health has announced it will close Darley House - - -.
“The closure is taking place because of the poor physical condition of our facilities, which no longer meet the standards expected by the community,” Dr Murphy said.
Mr Baker said it was a great home and the families and residents wanted it to stay open.
Source: Nursing home set to close: Heidelberg Leader 14 June 2016
Example: Darling House in Sydney NSW
Governments have traditionally supported community endeavours by renting them properties at nominal peppercorn rentals but in the new era economy comes first and NSW is reviewing all of these rentals. A $250 a year rental might go up to $200,000. The community run and funded aged care facility at Darling House in Millers Point is one such facility and it was closed largely as a result of this.
The move has been made as the NSW government looks to earn market value for buildings such as Darling House. Other inner city community service sites are attempting to negotiate this removal.
“It’s not just Darling House; in the report I read they talk about all peppercorn rents so that’s going to affect other public services and threaten community centres. The government removed the peppercorn rent so they can make money.”
It just looks like a big disaster. Where are those residents going to live?” said Cr Doutney.
Source: Darling House impacted by new rent agreement Alt Media 30 Oct 2014
Communities who have devoted many years of their time and raised large amounts of money see all of that effort disregarded. Millers Point residents feel that some of the money received from selling the valuable property should go back into running community housing projects to maintain facilities for the elderly residents. But the balance between markets and community has been altered and all of society is now costed and managed accordingly and that is unlikely to happen.
Community group calls on government to acknowledge money spent on Darling House over years
Residents estimate that over the 21 years the heritage-listed property was in use as an aged-care home, the community injected specific payments of more than $200,000 as well as $500,000 for ongoing maintenance.
“In every way this community has been spliced up and we’re looking for some sort of acknowledgment from the government,” Mr Dunn said.
Source: Push for slice of $7.7m windfall: Central Sydney Magazine 9 Mar 2016
Home care traditionally operated by state and community run organisations is being privatised across the country - sold off to large for-profit providers. Some of the bidders and providers of services are likely to be large US multinationals. These groups, including the one with the aggressive buseiness strategy described in the article "Profits are Golden", have entered the country to capitalise on the opportunities presented by the new Consumer Directed Care initiative. Under the new system, the large number of disabled people funded under the dissability funding system and cared for by Ageing, Disability and Home Care (ADHC) are also to be contracted to the same or similar private organisations.
Multinationals INTFPCompanyB and Serco (the group that runs prisons and detention centres) were among those named as front runners to take over the services ADHC provides to about 90,000 people in NSW. Both groups have been criticised in Australia and internationally. We should remember that these are now commercial decisions made by bureaucrats under instruction and not by citizens - so issues like this are not assessed.
People aged over 65 comprise a large proportion of those receiving ADHC services and they will not receive support under NDIS. Instead, they will be supported through the aged care system. It is far from clear how the aged care system will adapt to meet the special needs of those previously served by the disability sector.
... By 2018 all disability supports in NSW, including services provided directly by Ageing, Disability and Home Care (ADHC) and disability funding, will be funded by the NDIS.
The NSW Government is starting this process by moving responsibility for the delivery of a range of disability and aged care services to the non-Government sector. We will begin with the Home Care Service of NSW (Home Care), which will move to non-Government sector by mid-2015.
Other NSW Government operated disability services will move to the non-Government sector by 2018 ..."
Source: Letter from NSW Government to recipients of disability services - 31 Oct 2014
Simon Duffy from The Centre for Welfare Reform in the UK, visited Australia in January 2013 and consulted on the early stages of the NDIS in South Australia. He was highly critical of the way it was to be implemented describing it as "deeply flawed" and "the worst of all possible designs". This is exactly what he advised against and it seems our politicians with their ideological blinkers firmly in place, have ignored every criticism.
The government in NSW in contrast are privatising their entire home care service and justifying this by saying it is necessary because of the NDIS and other changes made by the federal government. This has caused intense anxiety in the community and there are grave concerns for rural services particularly for those serving the aboriginal community and giving many in those communities employment. NSW government's Home care has a 70% share of this mareket.
... There is mounting concern over the long-term future of rural and remote and Aboriginal-specific home care service provision in NSW as the State Government seeks to privatise its home care unit by mid-year.
The government has presented the privatisation as a necessary response to the rollout of the National Disability Insurance Scheme and the Commonwealth's changes to community care.
However, stakeholders say that as a government-run entity, Home Care NSW is a "provider of last resort", operating in rural and remote areas that may not be financially viable for non-government providers to service.
Additionally, within Home Care NSW, is another entity, Aboriginal Home Care, which is a unique provider of home care and support to Aboriginal people. Aboriginal Home Care is officially described as one of the largest employers of Aboriginal people in the state.
Source: Service provision fears ahead of NSW privatisation - Australian Ageing Agenda, 16 Jan 2015
In the face of strong criticism NSW chose the middle ground and sold its home care business to Australian Unity. Australian Unity is a private for profit company and has a reasonably good reputation in aged care. It is probably preferable to a market listed or private equity company. Strong aged care critic CPSA seemed relieved.
As indicated, Australian Unity, like IntFPCompanyB is structured as a mutual company with a 175 year history. It is there to serve its members. Like IntFPCompanyB its web site suggests its members are those who insure with it. Like IntFPCompanyB it has expanded into a large provider of services but is not yet global.
Its web site indicates that it is “a national healthcare, financial services and retirement living organisation providing services to around 850,000 customers, including 300,000 members nationwide” Only a third of its customers are members and presumably these are those who insure with it and not those who receive home care. It also states that “We are a diversified group of businesses offering healthcare, financial services and retirement services. We employ more than 2,000 staff - - -.”
It is a general insurance company offering home, car, travel, life, income and landlords insurance as well as home loans. It offers health insurance, operates dental centres, retirement villages, nursing homes, home care and financial services.
We need to ask about the status of the 550,000 customers who are not members. Is their service being provided for the benefit of members (eg. to reduce insurance costs) and if not in what way does their committment differ from the other for-profit organisations. If it is going to compete with its larger mutual global competitor INTFPCompanyB it is going to gave to adopt the same aggressive markeplace strategies.
Mutuals as a middle of the road solution
Mutuals received specific mention by Professor Ian Harper in his competition review and also in other reviews of the Welfare system. They seem to provide an intermediate more secure alternative for consolidation and seem to be better suited to a market than not-for-profits. An article in The Australian puts it this way.
Yet there remain significant regulatory barriers to the sector in raising capital and playing a broader role in social infrastructure delivery.
“The nation undeniably needs more social infrastructure — residential aged-care hard infrastructure but also workers who can care for older people at home — so instead of governments blaming and cost shifting with each other, they should be seeking others to deliver,” Mr Mead said.
“Given the volatility of the publicly listed sector and shareholder expectations for quick returns, mutuals offer the best path forward.”
Australian Unity is on look out for more retirement and aged-care facilities in NSW to grow its $450m pipeline to more than $600m.
Source: Aust Unity: Mutuals want bigger role in social services The Australian, 8 Jan 2016 (Paywall)
Australian Unity is happy to step into the breach and do what governments want but it needs government to change the rules so that it can be more competitive.
On the surface this all sounds very sensible but if we look at the way that the other mutual INTFPCmpanyB has become a profit focused global predator and conducted its business we need to have strong reservations. As I argue on these web pages it is not the companies and individuals that are the main problem. It is the sort of market that they have to operate in that is the problem and the patterns of thinking that develop there. These require them to behave in ways that are dysfunctional. But if the proposed aged care community hub was in place it might work better with mutuals than with other profit focused entities.
When it comes to hollowing out then there is currently little difference between the management structure adopted by for-profits, mutuals, modern not-for-profits and increasingly government.
Hollowing Out: Australian Unity is a large centrally organised and structured business organisation and as such it is managed and structured from above so is likely to contribute to the hollowing out of local communities who will lose control as well as knowledge and expertise. Its ability to adapt to the needs of each local community will be limited. How will they cope with the particular needs of aboriginal communities, an area of particular concern?
Potential for change: There is always the possibility that as it gets more profitable Australian Unity will, like MBF (Medical Benefits Fund), be tempted to demutualise and float on the share market - or if nursing homes are not profitable sell them. It might sell off those who trusted it to a group that they would not have considered as trustworthy. Alternately like MBF it could sell to either INTFPCompanyB, a for-profit organisation or another multinational. Its 300,000 members like those at MBF could grab the cash offered and so vote for this.
IntFPCompanyB has abandoned those who trusted it and elected to use its services. When they were not profitable enough it.sold off its hospitals in the UK some years ago. Falling profits caused it to sell off its home care division in 2015. Rumours in 2016 are that it is trying to sell off the vast majority of its troubled nursing home empire. It has been buying in Australia where it is still profitable. It seems to follow the money and is happy to desert those who trusted it when they are no longer profitable. Will Australian Unity behave similarly?
Victoria leads the way in home care but even there the City of Wodonga and the Shire of Strathbogie have sold off their HACC services to the private sector. Bendigo decided to do so in February 2015 but after extensive community input they abandoned the plan in May 2015.
The withdrawal in Bendigo was prompted by “the process of moving from state to federal government administration” which was focused on privatisation. Critics were concerned that “their withdrawal could lead to new providers ‘cherry picking’ who they will help based on costs”.
The mayor indicated that "- - - councils across Victoria were in a difficult position due to uncertainty around program funding, the introduction of the National Disability Insurance Scheme and the Victorian Government’s intro-duction of a rates cap. - - - most states and territories would move to federal funding on July 1, Victoria had negotiated a transition period until 2018".
- Concern over services for aged rural residents as councils consider future of home care The weekly Times 18 March 2015
- Home Care, Community Services Decision to remain in the delivery of HACC services City of Greater Bendigo 6 May 2015
Consequences of these developments
The damage to the community's Samaritan traditions by this hollowing out of community services is far reaching and it is Australia wide. It is being eroded and destroyed across the country as this sort of thing becomes acceptable - even desirable. These brick and mortar structures and publicly funded and run services in the community are embodiments of our values and traditions. These values and traditions are shredded with sales like those described here.
These are the values that underpin the not-for-profit mission and give it validity and meaning. The services, which the not-for-profit sector (including public services) provides, depend on the way participants identify with these values. This is happening to the communities the not-for-profits depend on to give support and validity to their mission - the communities that are the reason for their existance.
But the ideologists, wedded to an ideology based on an impersonal mechanism, answer this by claiming that these community values are obsolete and no longer relevant in modern society. But then it follows that, so is the whole idea of community and community values.
On the one hand, government is promoting care in the community as part of its solution to an ageing population, and looking to individuals to care for their frail parents at home. On the other, they are destroying the cornerstones of the community culture that motivates these citizens to participate, and on which their participation and involvement depends. What could be more counterproductive? Ideology trumps logic every time and destroys insight.
It is this destruction of community values and ethics that poses the greatest threat to the implementation of a community hub, but which the hub would seek to counter.
This takeover of not-for-profit facilities is one of the factors that undermined and destroyed the proud Samaritan community-focussed health and aged care tradition in the USA. Enthusiastic corporate entities, focused on growth, used their financial war chests to compete in snatching up vulnerable not-for-profits. Market analysts applauded. The companies involved were described by critics as PACMEN after the well known computer game (see section "PACMEN").
Transgender organisations - What about INTFPCompanyB?
INTFPCompanyB - For-profit or Not-for-profit?:
As shown in the previous page the nice clear distinction between for-profit (those who are in business for the benefit of their shareholders) and not-for-profit (those community organisations there to benefit their communities) seems to be disappearing as not-for-profit organisations lose touch with their community and seek to compete with for-profit organisations and think like them. They are conflicted and suffer a loss of identity.
But there is another group of organisations that are more confusing. They do not have owners or shareholders, but they don't fit into the not-for-profit description either. They may have other objectives than serving their communities. These are mutual organisations, provident associations, companies limited by guarantee - a variety of complex structures intended to benefit others indirectly. The UK based multinational group INTFPCompanyB is the most prominent of these in Australia. Its history is here. Australian Unity is another locally grown example, although it does not seem to have enbraced the same global ambitions and may have adhered to its mission to serve its members more closely.
When I first wrote about INTFPCompanyB in 2007, I had no doubt from what it said on its web site that it was not-for-profit. I was disturbed by some of the things it did and regarded it as a not-for-profit that had lost its way.
I have now looked back at the original 2007 INTFPCompanyB web pages. I see that INTFPCompanyB never actually uses the word not-for-profit although its protestations and claims sounded so similar that I never doubted it. Nowhere on any of its web pages does it claim to be either for-profit or not-for-profit. It avoids the terms.
"Members" ... but who are they? On the 2007 pages the company claimed, and it still claims, that it is here for its "members" but nowhere is it clear who its members are. They might be those who insure with it but they don't reap any additional benefits when compared with other commercial operators - and certainly don't feel like "members".
Many Australians used to be members of the Medical Benefits Fund (MBF), which was there to serve them. But they were paid out when MBF privatised and sold itself to INTFPCompanyB. The relationship with INTFPCompanyB is of clients/customers and they don't see themselves as "members" in the sense that members are part of an organisation.
I don't think that even INTFPCompanyB would consider the frail elderly in the nursing homes in its vast global empire as members. So, it is far from clear what it is there for - and who it is there to benefit.
So, when INTFPCompanyB responds to the question "Is INTFPCompanyB not-for-profit?" on its FAQ web pages, it does not answer with Yes or No. The response refers to members and leaves you with the impression that it means "Yes". On another web page it uses the word "and fulfil our purpose" but does not tell us what its purpose is. If we look at its activities it is clear that this purpose is empire building.
Building an empire: It is likely that INTFPCompanyB did once more fully identify with the values and commitments that appeared on its earlier web sites. Its financial success and international growth started when it appointed Vxxx Goxxx to run the group in about 2003/4. By 2007, its surpluses had tripled and it had a vast growing global empire. I think it is significant that the previous chairman resigned from the committee in 2007 because a "watershed had been reached". It is reasonable to conclude that this was because of the extent to which INTFPCompanyB changed direction.
A for-profit organisation: In Australia, INTFPCompanyB's businesses are classified as for-profit organisations. It is clear that it thinks and behaves like a for-profit. Its focus is on growth and its drive to increase profits is in order to grow. Its acquisitions are directed towards growth and profitability to enable further growth. It buys successful companies that will improve its business rather than companies where there is a genuine unmet need. Whatever it might claim, it does not look like a company that has entered Australia for humanitarian reasons - to benefit Australians. If it wanted to help the global needy it would have gone to Africa.
There have been a succession of reports describing problems in its nursing homes in Australia, Scotland and England, and this is what you see in so many of the aggressive for-profit health and aged care multinationals.
While INTFPCompanyB talks like a not-for-profit, it does not claim to be one. It is considered by our government to be for-profit and it behaves like an aggressive for-profit organisation. The concerns about standards of care in its nursing homes mirror what we see in the for-profit sector. It is simply Australia's largest for-profit nursing home owner and we need to treat it as such.
What does not-for-profit really mean?: Like for-profit, the concept of a not-for-profit is not nearly as clearcut as we like to think. We think of these organisations being charitable or having a charitable or public good focus but that is not the case. If we look further we find that not-for-profit is often defined simply as not having shareholders.
Wikileaks considers mutual organisations to be non-profit and specifically lists "mutual societies" as nonprofit in Australia. INTFPCompanyB and Australian Unity are listed on the government's list of aged care providers as "private incorporated body" and I believe that Baldwin in his survey classified them as for-profit.
Both are mutual and do business for the benefit of their members who are also their customers - but only a proportion of their customers are members. Both are large profitable businesses. The only structural difference between them seems to be that INTFPCompanyB is also a provident society and is 'limited by Guarantee'.
As a mutual, the responsibility and duty is to the company’s members rather than to its customers. So who are the members and how do they interpret this. What are their responsibilities in regard to maximising benefits and perhaps profitability for members.
If only a third of Australian Unity’s customers are members, are they required to put the interests of their members (presumably those who insure) ahead of the customers who are not members (presumably including home care and nursing home residents). How does this compare with the fiduciary duty of market listed corporations to put the interests of their shareholders first. Are there similar implications for vulnerable customers who are not members?
Its all pretty murky. The two articles below throw a little more light on not-for-profit status. Perhaps we need a third grouping for these big businesses when we assess and compare.
- Is INTFPCompanyB a social enterprise? - Paul Gosling, Freelance Journalist, 1 Apr 2009
- The Power of Three Words: Not-for-Profit - Sustainable Brands, 3 Feb 2014