This article is part of a series looking into the Final Report from the Royal Commission into Aged Care Quality and Safety. Click here to see the series as it's published.

The Royal Commission into Aged Care Quality and Safety has released its Final Report. In this article we explain the Report’s recommendations regarding provider governance in residential aged care, and set out some practical steps you can take right now to improve your governance.

What do we mean by “provider governance”?

“Provider governance” refers to the systems and processes that a residential aged care provider uses to control and monitor their organisation. Provider governance is about what the leadership team do to govern the aged care facility/s. It is distinct from what the Australian Government and the Quality Regulator do to govern the aged care industry more broadly. The Final Report made recommendations in both areas. This article focuses on provider governance only.

What’s wrong with provider governance?

The Royal Commission’s Final Report found that some boards and governing bodies:

• are not sufficiently independent
• lack professional knowledge about the delivery of aged care, including clinical expertise
• focus on financial risks and performance, without a commensurate focus on the quality and safety of care
• lack accountability and transparency
• fail to model good workplace culture
• act in the best interests of a “parent company” rather than in the interests of the organisation that is directly providing care to residents
• have inadequate risk management and complaints management systems.

The Royal Commission’s Recommendations

These are the recommendations in the Final Report that directly relate to provider governance:

• Recommendation 88: Legislative amendments to improve provider governance
• Recommendation 89: Leadership responsibilities and accountabilities (Note: this recommendation was proposed by Commissioner Briggs alone; the others were proposed by both Commissioners Briggs and Pagone)
• Recommendation 90: New governance standard

These recommendations are complex and overlapping but can be understood as falling into these categories:

Governing body membership: independence and “fit and proper person” test

• The governing body of a residential aged care provider must have a majority of independent non-executive members (unless the provider has an exemption).
• To become a member of a governing body a person must pass the “fit and proper person” test.

Currently, to become a member of a governing body a person must pass the “disqualified individual” test. This is a narrow test that says you can become a member unless you are disqualified because of a criminal record, past insolvency, or mental incapacity. The recommended “fit and proper person” test is much broader and will require a person to demonstrate their suitability for the job.

Governing body membership: qualifications and performance appraisals

These recommendations were made by both Commissioners Briggs and Pagone:

There should be a new Governance Standard that requires every approved provider to:

• have members of the governing body who possess between them the mix of skills, experience and knowledge of governance responsibilities, including care governance, required to ensure delivery of high quality care
• have a care governance committee, chaired by a non-executive member with appropriate experience in care provision, to monitor and ensure accountability for the quality of care provided, including clinical care, personal care and services, and supports for daily living.

This recommendation was made by Commissioner Briggs alone:

As a condition of accreditation, governing bodies must ensure that employment arrangements for the executive and other senior managers include performance appraisals that cover leadership, team development and support for organisational culture and practice consistent with the new Act.

Obligation to train staff

This recommendation was made by Commissioner Briggs alone:

As a condition of accreditation, governing bodies should be required to adopt and implement a plan to manage and support staff training, professional development and continuous learning, staff feedback and engagement, and team building.

Obligation to act in the best interests of the care provider

A provider’s constitution must not authorise a member of the governing body to act other than in the best interests of the provider.

This recommendation aims to ensure that members of the governing body act in the best interests of the organisation that is providing direct care to residents, and not in the best interests of any parent organisation.

Feedback and complaints

There should be a new Governance Standard that requires every approved provider to:

• allocate resources and implement mechanisms to support regular feedback from, and engagement with, people receiving aged care, their representatives, and staff
• have a system for receiving and dealing with complaints, including regular reports to the governing body about complaints, and containing, among other things, an analysis of the patterns of, and underlying reasons for, complaints.

Risk management

There should be a new Governance Standard that requires every approved provider to have effective risk management practices covering care risks as well as financial and other enterprise risks, and give particular consideration to ensuring continuity of care in the event of default by contractors or subcontractors.

Reporting obligations

The law should be changed to require approved providers to:

• report any changes to key personnel to the Quality Regulator within 10 business days of the change
• provide an annual report to the Secretary of the Australian Department of Health containing information to be made publicly available through My Aged Care.

The annual report should include at least the following information:

• the names and positions of all key personnel
• an attestation of quality care (see below)
• information on staffing levels, qualifications, hours worked, employment status, and staff turnover.

Obligation to attest to quality care

There should be a new Governance Standard that requires every approved provider to have a nominated member of the governing body who can attest to the quality of care.

The nominated person must attest annually on behalf of the members of the governing body that they have satisfied themselves that the provider has in place the structures, systems and processes to deliver safe and high quality care.

If such attestation cannot be given, the nominated person must explain the inability to do so and how it will be remedied.

Transparency

Amend Freedom of Information laws to make it harder for providers to unjustifiably withhold information.

The Commissioner’s believe that current Freedom of Information laws allow aged care providers to unjustifiably refuse to share some information. “For instance, when a complaint is made to the Aged Care Quality and Safety Commission about an approved provider, the complaint is given to the provider but the provider’s response is not given to the complainant” because the response is considered “protected information” [468]. They recommend amending the Freedom of Information Act 1982 (Cth) to fix this imbalance and make it harder for providers to unjustifiably withhold information.

Am I legally obliged to follow the recommendations?

Not yet. As at 9 March 2021, the government had not officially responded to the Final Report’s recommendations, and the recommendations had not become law.

If the government adopts the Final Report’s recommended timeline, they will commence an urgent review of the governance Standard by 1 July 2021. It will then be several months before the review is complete and a new Standard is adopted. For some other recommendations, such as those regarding reporting obligations and the independence of board members, the Final Report specified a deadline of 1 January 2022.

Overall, our best guess is that most recommendations won’t become law until early 2022.

What can I do now?

A useful step you can take right now is to audit your governance systems against the recommendations in the Final Report. This will help you identify the areas you need to work on. This checklist can get you started: