The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Any comments made are based on the belief that there is some substance at least to so many allegations.

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Markets & aging

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Hospital Corporatisation
Entry to Privatisation
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Aged Care
Story of corporatisation
 Nonprofit dilemma
Aging bonanza
Nursing homes
Home Care
Breadth health corporat.
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Nursing Homes
1985 to 1998
1998 to 2001
2002 to 2005
People farming
Residents & Relatives
The Companies
Not for profit homes

Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
CLICK HERE to open it in another tab or web page.

Content of this page
This page summarises the history of nursing home corporatisation in Australia and compares it with what happened in the USA. It gives an overview of the story of nursing home care in Australia as well as the role of government and the accreditation and complaints mechanism. It looks at the predicament of nurses, of residents and relatives, as well as the ambiguous position of not for profit charitable organisations in this marketplace. It examines the different sorts of operators in the for profit sector. Each sector links to pages which expand and amplify the sections on this page.

 Australian section   





Feb 2000 The trouble with current nursing home policy

- - - - - it has been a government policy of deregulation of nursing home administration, and a marked loosening of controls designed to protect residents, that the bureaucrats have been administering. A policy of relaxing controls has led to relaxed standards.
In some quarters, no doubt, government ministers might be boasting about how they have been cutting the regulation and red tape and getting government off the back of the small businessmen.

There can be merit in giving close scrutiny to the need for controls, and in seeing whether their desired effect can be achieved in other ways, but the nursing home marketplace is not to be regarded as an ordinary market in which the customer is sovereign and has choices, and where the best guarantee of high quality is a free market for such services.

First, the primary consumers are aged, by definition in poor health, often confused, and very vulnerable. There is a shortage of nursing home places. The funding of the places, which often involves significant upfront contributions by residents, means that in any event there can be great difficulty in their marching with their feet.

Relatives and others concerned for the welfare of residents are often in no great position to assess the quality of care being given. For all of these reasons, and the fact that it is a major funder of such care, government has a special position of trust both to residents and the wider community. It has a positive duty of care to such residents.
Hospices in crying need of standards.
The Canberra Times February 28, 2000

In choosing to introduce a competitive market system and to control it with industry friendly oversight processes the Australian government was in essence adopting and even exceeding the US system while claiming that it was not. That system had already failed and multiple attempts at reforming and patching the system over the years had resulted in no more than transitory improvements.

In the USA and in Australia true market believers attributed this failure to the fact that the system had not been made to perform strictly enough within market principles. On each occasion the solutions attempted to make it more market like and to increase the market pressures within the system (see Robert Kuttner’s comments).

Not surprisingly the situation became worse and the scandals more damaging. This is what you would expect if the point of view I have promoted is valid. This is that the market itself is the problem. The evidence amassed by Barlett et al, and by the Romanow Commission (pdf file) support this position.

We should therefore examine the Australian system in the light of the lessons from the USA because, while details may differ, exactly the same market forces have been introduced and the same recurrent failures in aged care are occurring. We need only look at the speech made by Graeme Samuel (NCC Chairman) to the World Bank in 2000 and at the comments by the aged care minister after the 2006 nursing home scandal to realise how difficult it is for market ideologists to confront the fact that it is the market itself that is a central problem.

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Lessons from the US system

In the USA, unlike Australia, the market system was driven by powerful entrepreneurs who made vast fortunes from nursing homes and hospitals. As successful commercial entities in a capitalist society they enjoyed strong political support and high levels of credibility. Contrary opinion from the professions was ignored. It was simply not credible to challenge the applicability and supposed benefits of market systems. Failures in the system were attributed to individuals rather than the social processes at work.

Powerful profit and growth forces within the system drove the money away from the care of residents and into the pockets of multiple layers of institutional and private investors, as well as the pockets of financiers.

Governments were repeatedly called on to introduce measures to control and penalise those who offended as they were seen to be the problem. These measures took a number of forms and were performed by multiple agencies.

Jan 1999 Nursing homes in the USA

MORE than 20 years ago, investigations of California nursing homes revealed a shameful tale of neglect and abuse. Stung into action, legislators passed laws reforming the industry and demanded that nursing homes treat residents properly.

Thirteen years ago, the Mercury News revisited the issue and found that a decade of reform efforts had failed to end conditions that made the last months of life undignified and miserable for thousands of patients. Despite some improvements, poor care and outright abuse still led to many deaths.

Then, last July, news stories showed that the suffering is still going on.

A report by the federal Government Accounting Office revealed that patients in California nursing homes are dying from malnutrition, dehydration, bed sores and other results of poor treatment.

A California nursing home inspector testified before the U.S. Senate's Special Committee on Aging that patient care has, if anything, gone downhill in recent years. She said nursing home operators hire too few staff members to provide adequate care, use political influence to avoid aggressive inspections, and fail to prevent staffers from abusing patients or demented patients from hurting each other.

Something is very wrong when the nursing home industry makes tidy profits while our parents and grandparents, our former teachers and retired engineers endure humiliation and pain in the final months or years of their lives.

There are laws in place which are intended to make nursing homes, their owners and staffs accountable. But many times, they are not enforced. Fines are waived or reduced. Abusive staffers escape punishment. Filth and carelessness are excused if operators promise to clean up their act before the next annual inspection. Some laws actually perpetuate poor conditions by giving the homes financial incentives to cut staffing and trim levels of care. And the staffs the homes do have are mostly poorly paid aides who lack adequate training.
Nursing homes: the final indignity EDITORIAL San Jose Mercury News January 11, 1999

It is now clear that this report could equally apply to Australia today. Australia is on the same path. I have dealt with the multiple failures and repeated attempts to reinvigorate the US nursing home system on other pages. They have struggled with this over a period of at least 20-30 years. I will summarise the reasons for failure. There are important lessons.

The first and overriding lesson from a study of the US system is that it is driven by a set of beliefs which are not appropriate for the health and aged care context.

The second lesson is that the pressures throughout the system are so strong and the processes of containment of necessity so weak that deviant practices and adverse outcomes have become increasingly the norm.

The third lesson is that these problems have been addressed by increasing oversight and penalties. At the same time market pressures have been increased in the belief that the market will correct the problems. This has failed repeatedly.

The fourth lesson is that the concerns of those at the coal face, patients, relatives, doctors, nurses are accurate in the vast majority of cases when they describe failings in the system. They are in a position to know.

The fifth lesson is that authorities develop a variety of strategies to deny and subvert complaints and the calls for action. Too often when under pressure they introduce token changes driven by political necessity and avoid fundamental changes.

The sixth lesson is that the establishment market, and the politicians that support it, have not, will not, or more probably are unable to confront the lack of logic, the dysfunctional processes and the real causes of what is happening. I argue that the baggage (existential force) of their lives lock them into the ideology on which the system is based. Too often the insights of those who complain are also limited by these belief patterns and lead them to call only for more regulatory vigour. They confuse this with real change.

As in Australia the pressures within the political system have strongly favoured the commercial operators. Politicians fall over backwards to help them. As in Australia governments in the USA deregulated the industry and no minimum staffing levels were set.

Multiple studies over the years have linked staffing levels and skills directly to the level of care. In the USA there has been convincing evidence that corporations deliberately under staff. Law suits demonstrating that this was deliberate have resulted in juries and judges awarding savage penalties.

The companies have pressed and lobbied politicians to cap the damages awarded. Nurses, the community and advocate groups have lobbied as strongly for legislation requiring minimum staff levels. In Australia staffing level requirements were abolished in 1997 and homes can staff as they please. It is clear that staffing problems are the major cause of problems in care in both countries. The next extract illustrates the tardiness in Florida.

Politicians, faced by scandals and pressures in both countries, have promised to fix the system. Does the extract below from the USA sound familiar and can you believe them?

Feb 2006 US responses to the same problems

This year, Florida lawmakers find themselves flush with money. They plan to fund a whole host of new initiatives, and give money back to taxpayers. Good. But what about the promise made to nursing-home residents?

While lawmakers enacted the lawsuit limits almost immediately, they enacted only the staffing increases in small steps. The incremental increases have had some positive impact on residents, but the promise to meet the minimum staffing level has been delayed for three years.

Meanwhile, advocates have had to fight attempts to water down the current inadequate standard and prevent nursing-home owners and their lobbyists from obtaining exceptions to the current minimum. Apparently, they only want to meet minimum standards when it's convenient. Convenience, by the way, for the owners, not for the residents.

Under what circumstances will lawmakers finally have enough money to keep their promise to those who are needlessly suffering harm?
Still waiting for nursing home staff increase Orlando Sentinel, FL February 10, 2006

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Differences and similarities in Australia

Jan 2004 How we treat the aged is a measure of the sort of people we are

IF our society is judged by how it treats its most vulnerable - including the elderly - we risk failing in our duty.
Nursing homes and aged hostels get taxpayer subsidies. Some are lucrative enterprises for business operators.
Opinion Herald Sun Editorial January 8, 2004

The argument is that underneath superficial differences the same processes and the same responses are occurring in Australia. Lessons can be learned and inferences can be drawn. This is well illustrated at a theoretical level in Graeme Samuel’s speech to the World bank in 2000, and at a more practical level in what has happened in Australian nursing homes over the last 20 years.

In Australia we too had our early health and aged care entrepreneurs including such people as, the infamous Dr Edelsten, Dr McGoldrick and Dr Wenkart, Wallace Cameron, Dr Bateman, Doug Moran and Paul Ramsay. They were viewed more negatively by the wider medical profession and did not have the credibility of their US peers. A more socialist government did not support them at this time. The market was hesitant. These companies were consequently less credible, more challenged and more criticised. This may be why they were more restrained in their activities than their US market peers.

The less palatable groups have failed but Bateman, Moran and Ramsay survived and went on to become millionaires. Unlike the USA the marketplace entrepreneurs have not yet gained control over the practices of doctors although they are gaining influence. The medical profession are still able to exert a strong influence in health care. In aged care they have much less control over the care given.

In Australia the dominance of the market and its increased credibility is to a far greater extent than the USA due to government. Strong government support started in the 1990s and accelerated after the economic rationalist coalition gained power in Canberra in 1996. They adopted the market formula for health and aged care. The government drove the process of marketisation and encouraged entrepreneurs and the share market into the sector.

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The Story in Australia

Three quarters of Australian nursing homes have been and still are owned and operated by not for profit community and government organizations. Only about 25% are for profit. This is an anachronism for market economists who see it as inefficient, unproductive and a problem to be addressed. Public opinion which supports this not for profit system is something to be managed.

Of about 3000 facilities which were approved providers of nursing homes in 2005 only about 50 were owned and operated by the market listed DCA. Moran holds the licence for and operates a similar number. That leaves about 600 homes owned by smaller private operators owning between one and 20 facilities. Many of them are small and of doubtful long term economic viability in the marketplace. Others are old and need capital to refurbish and meet modern standards.

The government has applied its global competition policy to aged care and structured the system to support and enhance the private for profit sector. Because the government’s policies encourage and favour commercial consolidation the not for profit organizations which dominate the sector have been forced to operate as if they were commercial enterprises. They must give economic considerations far greater weight in relationship to care than their mission of care should allow. To survive they must do so.

The for profit sector and in particular the small market listed sub-sector exert far greater influence than merited by their stake in the system. Those who make decisions see the market listed groups as the way of the future. They now drive the ethos, culture and management structure of the sector and have the ear of and support of the political establishment.

The vast bulk of both positive and negative newspaper coverage of nursing homes relates to the for profit sector. The big companies DCA and Moran feature prominently in business reports, the former because of the commercial opportunities for investors. The smaller for profit companies feature in the regional press as they acquire nursing homes, market them through advertorials and then are found, by the agency, to have neglected and misused their residents.

In contrast the less visible not for profit sector contains church based operators who own up to several hundred facilities across the country. The not for profit sector is already far more consolidated than the for profit sector and in a better position than the for profit operators to consolidate further to provide a properly integrated cooperative service. Consolidation and integration are corporate buzzords used to promote market solutions.

This idea that not for profits are better placed is a contradiction in terms for the competitive for profit sector. Their dominance of the debate is a major impediment to the sensible pursuit of an integrated service to meet the needs of an aging population. Behind the debate is a dominant ethos of greed. This is revealed by the ongoing rhetoric directed at capitalising on the self- indulgence of demanding and spoilt baby boomers with money. The real problem is the far larger number of people with more modest or very little in the kitty. As a caring community we need to focus on them. The market is not really interested.

Not only are the not for profits structured for cooperative services - to stretch resources for optimal benefit - but it is now well established that contrary to the clams of economists and politicians not for profit operators provide better care more economically. They are more efficient! This efficiency is compromised by the need to install additional layers of paperwork, management and public relations in order to operate successfully in a competitive marketplace.

Although there are problems in care in a number of not for profit homes this is much more of a problem in the for profit section - at this stage mainly among smaller operators. The US experience indicates that the market listed operators will also perform less well when the growth market settles down and the corporations must give investors an economic return on their investment.

The for profit sector includes public market listed and privately owned for profit homes. The not for profit sector comprises church and community private homes as well as public government owned and run facilities.

A 2001 review gives the approximate distribution of beds. Another in 2006 looking at the number of operators suggests that the balance between for profit and not for profit has not changed much. With the exception of the Salvation Army which has walked away from nursing homes, few of the large not for profits are selling to for profits. Within the for profit sector there has been more consolidation with the market listed DCA growing to dominate the sector and largely eclipsing privately owned Moran Healthcare which has been blighted by the failure of an international venture and a bitter feud in the family which owns it.

Mar 2000 Government owned homes in Victoria

The Victorian Government owns 197 nursing homes that are managed, by and large, within the public hospital system. The homes operate 7270 beds.
Nursing Homes Checked The Age March 25, 2000

Aug 2001 Distribution of services

Main nursing home providers in Australia Aged care homes provide 142,000 beds in Australia.

Charitable, religious and community-based providers are the biggest sector, with 63.6 per cent. Of those: Catholic Church 11.3 Uniting Church 9.7 Anglican Church 4.6 Other churches 10 The private sector provides 27 per cent of beds. Of those: Moran Health Care 2.1 Tricare 0.8 Amity Group (DCA) 0.5 Conform Health Group 0.4 Kenna Investments 0.4 State and Local governments provide 9.4 per cent of beds. Of those: Victoria 4.1 Queensland 1.2 NSW 1.1 South Australia 0.6.
Bedridden old lost in care limbo. The Australian August 27, 2001

Apr 2004 Bed distribution June 2003

Ownership of residential aged-care beds, June 30, 2003







Religious groups






Private sector


















State government






Local government










Source: department of health and ageing
Grey Expectations Business Review Weekly April 1, 2004

Apr 2006 Distribution of operators

There are less than 3000 operators running nursing homes in Australia - 64 per cent are not-for-profit groups, 24 per cent are private organisations and the rest are state governments.
Failing to protect our elders Canberra Times April 15, 2006

I have dealt with the impact, on the not for profit organisations, of the conversion of welfare provision from a service to a market on other pages.

Click Here to examine the impact of market "reform" on not for profit groups.

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The Role of Government

In Australia the agenda and the force for change in health care has come from government economists and from political policies and the ideology which underpins them.

The story of aged care in nursing homes over the last 20 years is best examined by examining the role of government and the consequences of their actions. I have used government policy and thinking as the central theme of the story and the other nursing home pages support this theme.

Prior to the election of the conservative economic rationalist coalition government in 1996 the labour government held power in the commonwealth and the commonwealth government regulated the nursing homes. At that time the coalition held power in the states and the states are responsible for hospital policy. These governments had a strong economic rationalist agenda. This was the era of hospital privatisation, the drive to contract public hospitals to private operators and attempts to bring giant hospital multinationals into the country (see pages on site map). Both were unsuccessful.

The Keating commonwealth government had introduced an economic reform agenda but this did not impact on nursing homes which were largely government funded and tightly regulated. Government money was allocated to be spent in specified ways and staffing levels were regulated. Homes had to account for the way they spent government payments. State governments monitored standards of care. For profit operators found all this onerous and it limited their profitability.

The coalition had close relations with the for profit aged care sector and had promised to deregulate the sector. Their policy was strongly influenced by millionaire nursing home owner Doug Moran who claimed to have written much of the policy. When the coalition were elected in 1996 they abolished state inspections and removed all controls over staffing and money, allowing market forces to control what happened. The sector was turned into a competitive arena subject only to market regulations and the competition watch dog.

Oversight was replaced with a market friendly and market operated accreditation system which was poorly structured and under resourced. The complaints system was nobbled by a requirement to mediate rather than investigate. Tragically politicians were persuaded that nursing skills were unnecessary in caring for the aged and that quickly trained aids (kindly middle aged women) could do the job. All control over staffing was removed. This was the sales pitch of Andrew Turner, the founder of the US nursing home company Sun Healthcare which had recently been brought into Australia.

The system was driven by ideology. It was set up to fail and it did so spectacularly in 2000. The tragedy was compounded by the ineptitude and lack of insight of the minister at the time.

Although the lessons were painfully clear ideology triumphed and only minor changes were made. The recipe was more of the same.

During the succeeding years there was a series of scandals and failures in the system. The situation deteriorated steadily with motivated staff leaving the sector and those that remained becoming apathetic and disinterested. People who cared were replaced by poorly trained people off the street who could not get work elsewhere. Many were totally unsuited to this work. Others had criminal histories. Elder abuse occurred and apathetic staff who might risk their jobs if they complained did nothing.

The true situation was revealed in 2006 when a number of 80 and 90 year old nursing home residents were raped or sexually abused in several homes around the country. Apathetic staff who were witnesses had nor reported this or called the police. At least one senior nurse did not see it as her responsibility to report the rape of one of her charges. Advocates who had been impotently complaining suddenly had the public ear.

The government was caught on the back foot and was forced into action. The new aged care minister proved to be adept and handled the response well for the government.

A large number of changes were made to tighten up the accreditation and complaints system and to do checks on staff criminal histories. Mandatory reporting was introduced.

The minister really had no choice and the industry has also had little choice but to support him even thought this will be onerous, push up costs and reduce profits.

The additional funding for all these costly processes will push up the costs of care. Some will come from taxes and the rest from residents fees. In a well functioning system regulations would rest lightly and be seldom needed so that these funds could go to caring for residents.

The measures introduced were directed to plugging the system and were almost entirely regulatory. The underlying problems and in particular the morale of the staff who were reluctantly "people farming" in some of these homes was not addressed.

There was a belated move to increase and improve staff training but unless the context within which nurses will work is changed it is unlikely to address the apathy and their new skills could be wasted.

Instead of learning the lessons the minister used the opportunity presented by his new credibility to promote the governments ideology through its nursing home policy - market based consolidation, competition, efficiency, productivity, and increased user payment. These are seen through a distorted economic prism. In their implementation they compromise intimacy, relationships and empathy. These are the essence of care as understood by professional carers and as experienced by the residents and their families.

The full story of nursing homes and of government is told in 5 web pages. There is an overview page which examines in broad terms four successive time periods of different lengths between 1985 and 2006. This links to pages which examine each time period in far more detail using extracts from reports at the time to illustrate the events and the arguments.

Click Here to explore the story and the role of government.

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The Accreditation and Complaint Processes

As indicated above the new system set up in 1997 was based on millionaire Doug Moran’s influence. The cornerstone of the regulatory mechanism was to be an industry friendly and controlled accreditation system. This was set up to monitor nursing home processes. When problems were found they were to assist and facilitate the homes in their efforts to improve. More independent and unfriendly state oversight was abolished.

The processes were based on the principle of continuous self improvement and on the assumption that the home would embrace the principles and the processes. There was a vast amount of paper work and, as the agency responded to deteriorating care in the homes and to its own failings, this became more onerous.

This was particularly so for those whose primary focus was profit. Staffing levels were the main costs and the majority of problems in the homes were due to staffing problems - both understaffing and deskilling in order to increase profitability. Staffing was unregulated and there was no requirement in regard to the number or skills of staff required.

Accreditation visits were infrequent and announced well in advance. Proprietors soon leaned to temporarily tart up the paperwork and bring in teams of trained staff to spruce up the homes for the accreditation visit. Larger groups were in a much better position to do so.

At the same time the accreditation agency was given the secondary role of policeman, detecting problems, repeating accreditation visits when serious complaints became public, sanctioning homes, and if they failed to perform putting them out of business. There was a conflict of interest between these policeman roles and the primary role of nursing home facilitator.

It is clear that the agency and its staff identified with its role in facilitating the industry and that its role as regulator was seen as unfriendly to this. Regulatory powers were seldom used and then with reluctance and under pressure from the public. Unannounced visits were avoided until a series of scandals forced the agency to do so. Only very chronic offenders were sanctioned in any way and forced closure of nursing homes was unusual.

The agency was constrained by the mindset of the government department and those whom the government appointed to run the agency. Although the agency was promoted as independent, appointments were made by the minister and some came from her department. There were complaints of interference.

The level of insight in the system is revealed by a press report of the minister’s claim that the only standard of training required in a nursing home was "middle-aged women providing tender, loving care". While this may have been applicable 100 years ago the nursing home population has changed dramatically since then. Only the sickest and most frail now qualify and they need intensive and skilled nursing care.

This myth may have been due to the influence of the now discredited US nursing home magnate, Andrew Turner. He had built his empire on similar myths. The government welcomed Turner and his company Sun Healthcare into Australia in 1997.

This approach no doubt shared by some in the industry led to deteriorating care in the homes, and to a failure to penalise homes for understaffing. Senior management or the minister’s department repeatedly over-ruled the recommendations made by the assessors who visited the homes.

There was little government insight into the amount of work, the number of staff needed, or the level of training required by the agency for consistent and accurate accreditation inspections. As a consequence the agency was under funded and understaffed. There was unacceptable variation in the finding of different inspections made of the same homes within short periods. There seem to have been no standards set or monitored for the accreditation process itself.

While there is an emphasis on documenting processes in nursing homes particularly improvement processes there is no attempt to force documentation, or to publish actual markers of care such as the incidence of pressure sores, contractures and weight loss across the residents in a home and between homes.

The agency and the complaints system were constrained by industry friendly regulations which prevented them from carrying out their regulatory functions. Complaints for example were dealt with by mediation and those dealing with the complaint were not permitted to go out to the homes and investigate.

It is clear that the task and expectations placed on the agency and its staff were not attainable. It is likely that this resulted in a loss of morale, apathy and a focus on getting the job done with a minimum of dispute rather than doing it properly. There are reports which suggest that this was so.

The minister and the government continued to maintain that the accreditation system was working in the face of mounting evidence that it was having little if any impact on the sector of the market which was problematic.

Instead of seeing the recurrent scandals as symptoms of a deep malaise rooted in the system itself they were claimed to be exceptions or isolated events and the blame was placed on individuals and companies. As a consequence the only changes made were to increase the regulatory pressures to deal with individuals and to detect poor practices.

Unfriendly unannounced spot checks were introduced in 2000 but infrequently used. Increased unannounced visits, criminal checks on employees, mandatory reporting of elder abuse and investigatory powers for those handling complaints were introduced in 2006. Whether an agency committed to supporting the industry and the market will ever use these effectively remains to be seen.

The failure of the accreditation and complaints mechanisms can be attributed to the industry friendly brief, to a legislative straight jacket, to ideological blinkers, to under funding, to conflicts of interest, to political interference, to role conflicts, to problems with staff morale, to a lack of transparency, to a lack of accountability for its own processes, and to an unwillingness to address fundamental flaws in the competitive market model for aged care. After 8 years of failure the minister was still promoting the market model as the future for aged care. These matters are analysed in depth on a separate page devoted to accreditation and complaints. While this page covers the same period, addresses some of the same issues and uses some of the same illustrative material as the government pages it is analytical rather than chronological - and also more speculative.

Click Here to explore the issue of accreditation and the handling of complaints.

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Nurses in the aged care system

Nurses, whether trained nurses or nurse aids are people who provide care and the quality of care depends directly on their number, their training, their altruism and their dedication. Altruism and dedication are not mathematically quantifiable so are ignored by market planners.

Major failures in nursing are readily identified by tracking the incidence of markers of poor nursing such as, weight loss, dehydration, pressure sores and contractures. We do not do this in Australia.

Staff costs comprise more than 50% of the costs of providing care and in an efficient system would comprise much more. Because funding for aged care is limited by government funding or the limited savings of retirees it is always tight. There is de facto rationing. Significant cost cutting and profit taking can only come by employing fewer or less qualified staff and this impacts directly on care.

It is a low paid job which depends on the dedication and altruism of staff. In a market system the focus on profits comes at the expense of dedication and altruism. It is hard to maintain motivation in a system where your dedication is exploited not for residents in need but to provide management with large bonuses and uninterested shareholders with large profits.

Politicians, who are motivated to cut funding, and the companies, who are driven by the need for profits, can only meet their objectives by reducing the costs of staffing.

The theoretical framework I have used indicates that they will do so and then adopt explanations and understandings which justify this. A government and market supported myth first generated in the USA claims that you don’t need expensive trained staff to care for the elderly. This has compounded the problems for nurses and for the care of the elderly.

Large numbers of qualified nurses and genuinely motivated staff have resigned in disgust and taken better paid and less onerous jobs outside nursing. Staff who readily adopt market thinking and do what is required are promoted. Their skills and attitudes may be poorly suited to care.

Trained staff have been replaced by unmotivated people from the dole queues - some with criminal records.

The combination of under funding, the focus on profitability and the erosion of altruism has resulted in inadequate staffing by people who are less skilled and often improperly trained. Morale has plummeted so that staff become apathetic, as well as immune to and unsympathetic to the suffering of those they care for.

There are reports of staff taunting residents while others look on. Other staff did nothing when they found someone raping the elderly ladies they cared for. A nurse manager did not think it was her role to report sexual abuse. Other nurse managers have bullied nurses who threatened to speak out.

Throughout this period the nursing unions have consistently represented their members, spoken up about the problems and motivated for change.

Against all the odds whistle blower nurses have continued to speak up to expose failures in the system. Their job prospects have suffered and they have received minimal legislative support or assistance.

We can ask how much worse it has to become before our apathetic community, our market moguls, and their political appointees are forced to confront the reality that the market is a key problem and that a truly caring system is almost impossible in a market context.

A radical restructuring is long overdue. Care and the community should be at the heart of any new system. The "farming of our seniors for profit" must be stopped by marginalizing the market in this sector.

It may be that we need new community structures to provide and manage the humanitarian services which we provide to citizens in need. Neither government, the market, nor dare I say it the churches always have the physical and mental welfare of less fortunate citizens as their primary objective. This may be a first step to developing a more balanced society and in escaping the all embracing ideologies which have tyrannised the 20th century and threaten the 21st.

There is much more about the aged care system and the role of nurses on the Aged Care Crisis web site Their submission to the senate inquiry into nursing homes and their response to an elder abuse consultation paper in Victoria in 2005 deserve attention and can be downloaded from the front page of their web site.

Click Here to explore the nursing issues further.

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The residents and their relatives

The residents are the animals farmed in the money making people farms described in a satirical piece by a nursing home worker who has seen it all.

How do these profit generating residents and their families experience this processing for profit and what powers do they have in this market system - a system where economic and political power are the driving forces?

I have no personal experience of aged care nor have I spoken at any length to those who have suffered from it. I am writing as an outsider looking in. For a far more insightful analysis you should explore the Aged Care Crisis web site. This Corporate Medicine web site concentrates on the important role of the market in health and aged care. The Aged Care Crisis web sight takes a broader view and gives much more attention to the other factors.

As the aged care system has moved from caring for the elderly to caring for profit the dynamics of the system have changed. The system can no longer be trusted. Residents have little power and there are many hurdles and difficulties in having their concerns and their complaints addressed. To protect the residents, families need to become well informed "customers" and exert what little power they have.

Residents and families need the knowledge to assess nursing homes independently of their marketing and their impressive foyers. They should become familiar with the telltale signs of poor nursing then visit frequently and at unexpected times. They should trust their judgement, document events and keep records. Persistence may be required and the system can be very resistant to pressure.

Click Here to explore the issues and the problems for residents’ families, the direction in which the system is taking them, and for some examples of the way those who took on the system were treated.

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The companies

The for profit nursing homes are run by the companies and this site is about the companies which provide care. It is about the way they operate and the way they think.

I have taken a rather random selection of companies and the nursing homes they own to explore this issue, selecting from each sector of the for profit marketplace. The selection reflects size, section in which they operate, scandal or dysfunction, amount of information available, and whether it illustrates how the for profit sector operates and gets it wrong. It is also a reflection of what I encountered as I searched. There may well be others that are more revealing.

There are no reliable comparison figures published by the accreditation agency and adverse reports are rapidly removed from their web site. The following comments are based on my assessment of the material I have. This includes many hundreds of press reports. It represents only a perception but some of that is convincing. It is well illustrated by extracts from press reports examining the situation.

There is one large for profit market listed operator, DCA and a few temporary or minor operators. DCA is still in the enthusiastic expansion phase, rich in capital and enthusiasm so not under much pressure. Some critics doubt that nursing home care can be made profitable for investors and investors are skittish. A recent adverse report about one of its homes, a drop in profitability, and the lobbying of government for increased payments in the midst of a scandal suggests that the honeymoon may be over and that DCA is now expected to produce returns from its homes and is struggling to do so. Share prices took a tumble in 2006. It may be crunch time. Time will tell whether it will follow the USA by cutting staff and care to fuel profits.

A new force in the sector are the banks. These have formed trusts, sometimes in cooperation with multinationals or local management companies. The trusts own the facilities but lease them to private for profit management companies such as Tricare who hold the licences and carry the risks.

The private for profit market has been dominated by Moran Health care since the 1960s. It is currently in decline after taking a hit in Ireland and the UK where a subsidiary went bankrupt. It has been trying to raise capital by selling off homes. Many of its homes were sold to a trust and leased back in order to raise capital so it cannot sell them. The Moran family has been embroiled in a tawdry family dispute.

Within this sector there are a number of well established family nursing home businesses that entered the marketplace during the 1960’s when a desire to serve motivated the founders. They seem to have maintained this ethic and some still perform well.

The bulk of the problem companies have been among the smaller for profit companies, some owning only a few homes or hostels, and the bulk of these are in Victoria.

Victoria has led the way in promoting the running of nursing homes as a business, perhaps due to the influence of past premier Jeff Kennett. Numbers of business oriented people with no experience and motivated only by potential profitability bought nursing homes. The sector has been poorly funded and they have been unable or unwilling to cope. There have been a succession of damaging scandals which have revealed the vulnerability of the regulatory system and the pressures to dysfunction.

It is too early for the sort of difference seen in the USA between market listed companies and the not for profit sector to appear. The private for profit companies do however follow the trend. Overall the care provided is inferior to that in the not for profit sector with many more problems. There is a wide spread within this subgroup. Some of the bigger groups are among the best performers. Many among the smaller companies are among the worst and particularly scandal prone.

The main nursing home company page expands on the comments above. It gives a short account of each company reviewed indicating the points of interest and then links to web pages documenting the story of each of the illustrating companies.

Click Here to explore the individual companies

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The not for profit operators

I have written elsewhere about the difficulties faced by not for profit charitable services when forced to operate within a marketplace context. I am a strong supporter of the not for profit ethic and believe that it is best suited to the provision of humanitarian services. It is not as at risk of the serious problems now facing aged care. This does not mean that I am unaware of failures in the not for profit system or that I want to go back to the under funded disorganised and fragmented system which once existed.

This web site is primarily about the failures of for profit systems but the bulk of nursing homes in Australia are owned by not for profit organizations. I have therefore included a page describing some facets of nor for profit operations in nursing homes with a few representative examples of failures.

Click Here for more about not for profit ownership of nursing homes.

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International Expansion

While our hospital and nursing home sectors have largely resisted the entry and growth of large multinationals, our own companies have been active in other countries. In aged care Moran Health Care has had international ambitions but was burnt in Ireland. DCA and the banks have both been very aggressive in their expansion in New Zealand. The banks have bought nursing homes in other countries including Canada. Click the links for details

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STOP PRESS -- International takeover September 2006

Development Corporation of Australia (DCA) has been growing very rapidly and is Australia's largest nursing home corporation. Its profits have been under pressure and it has accepted a takeover bid from two Citigroup subsidiaries. These are the same groups that purchased Mayne hospitals in 2003. Citigroup has a very poor track record for scandals, fraud, and misusing those who trust it. NSW Health carried out a detailed probity review and only granted hospital licences with restraining conditions. It will be interesting to see how authorities deal with this problem in the much more sensitive nursing home sector. Another page looks at this.

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More information

For Updates:- A good way to check for recent developments in aged care is to go to the aged care crisis group's search page and enter the name of the company, nursing home or key words relating to any other matter in the search box. Most significant press reports are flagged there. The aged care crisis web site has recently been restructured and some of the older links used from this site may not work.

Australian Consumers' Association's <> 2006 report on aged care facilities and nursing homes is a useful resource for those thinking about a nursing home for themselves or a relative. The full report can be downloaded as a pdf file

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Web Page History
This page created Sept 2006 by
Michael Wynne