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Improving aged care governance — is your board up to the task?

The Royal Commission into Aged Care Quality and Safety (Royal Commission) was established on 8 October 2018 following a series of incidents and media reports about poor quality care for older Australians within aged care facilities. The Royal Commission was tasked with exploring:

  • the quality of aged care services provided to Australians;
  • how best to deliver aged care services;
  • the future challenges and opportunities for delivering accessible, affordable and high-quality aged care services;
  • what can be done to strengthen the system of aged care services to ensure that the services provided are of high-quality and safe; and
  • how the system can be strengthened to ensure aged care services are delivered in a person-centred and sustainable way into the future.

As both the Royal Commission’s Interim1 and Final Reports2 have revealed, aged care providers have failed to provide appropriate levels of care to our elderly. The Royal Commission’s recommendations propose a new aged care system based on a person-centred, human rights approach that seeks to protect and enhance the quality of life of older people receiving aged care. With respect to provider governance, the reports highlighted systemic, organisation-wide failures that were a direct result of governance failures including poor risk management. 

There are three recommendations specifically addressing governance that require providers to have more independent, accountable and skilled boards to, among other things, monitor compliance and ensure effective risk management processes and procedures are in place.3

The Australian Government’s response to the Final Report includes a substantial investment and focus on governance in the aged care sector, which will see:

  • greater regulatory oversight;
  • more stringent quality and safety standards; and
  • increased accountability obligations, 

which will require changes to the governance of providers.4

The new Aged Care Quality Standards (Quality Standards) that are now in effect apply to all Australian Government-funded aged care services and may mean a significant change for some providers as they must bring their governance processes and procedures up to a much higher standard than has been acceptable in the past5, as 8(2) of Standard 8: Organisational governance makes the provider’s governing body “accountable for the delivery of safe and quality care and services”. 

Evidence that the board is fulfilling its responsibilities include having directors with the right experience to govern an organisation to ensure it is providing quality care and service to vulnerable consumers.6 To govern effectively, as well as considering areas such as its governance policies and procedures, an aged care provider must also consider whether the current board can meet the requirements of the Quality Standards. Building the right board requires an understanding of director competencies, which involves consideration of the directors’ experience, skills, attributes and capabilities to determine whether any change in membership is necessary for the delivery of safe and quality care. This will involve reviewing:

  • the present skills (which encompasses competencies and behaviours) on the board, its strengths and weaknesses;
  • the skills the aged care provider needs on its board:
  1. experience of the aged care sector and technical/professional disciplines, e.g., primary health care, legal, financial;
  2. knowledge and experience of corporate and clinical governance; and
  3. behavioural attributes/personal qualities;
  • the changing needs of the organisation based upon its strategic direction and external environment, e.g., legislative requirements; and
  • the expected pattern of retirements on the board.

A board can be no better than the collective skills and competencies of its directors, so a skills analysis that examines the competencies of directors is one way to reduce the risk to the organisation and to directors from poor oversight or decisions resulting from a lack of the right knowledge, experience and personalities on the board. 

From our experience in conducting skills assessments for a wide range of organisations including aged care providers, the outcomes of a well-implemented board skills assessment should be:

  • a board skills matrix to be regularly reviewed and updated; 
  • the identification of gaps in the current skills profile; and 
  • how a particular skill gap will be met into the future.7

There are several options of filling a gap, depending upon the skill category identified as required. For some skills, such as clinical risk, the answer will be to recruit a person with the particular skill at the required competency level. This of course will also require a determination as to whether additional directors are required for the board or whether a current director will need to be replaced, either at the completion of their current term or through a managed board renewal process. For some skill areas, such as governance skills, it may be possible for existing directors to undertake education and training programs to acquire the desired level of competency for the board. 

Please feel free to contact us should you require any further information on skills analysis or other governance advice regarding the enhanced governance regime for aged care providers. 


Footnotes

1 Royal Commission into Aged Care Quality and Safety, 2019, Interim Report: Neglect, 3 vols, https://agedcare.royalcommission.gov.au/publications/interim-report.

2 Royal Commission into Aged Care Quality and Safety, 2021, Final Report: Care, Dignity and Respect, 5 vols, https://agedcare.royalcommission.gov.au/publications/final-report. 

Royal Commission, 2021, Vol. 1, Recommendations 88, 89, 90, pp. 265–268.

4 Australian Government, 2021, ‘Governance (Pillar 5 of the Royal Commission response) – Strengthening provider governance’, Budget 2021–22 fact sheet, https://www.health.gov.au/resources/publications/governance-pillar-5-of-the-royal-commission-response-strengthening-provider-governance.

5Aged Care Quality and Safety Commission, 2021, Aged Care Quality Standards, https://www.agedcarequality.gov.au/providers/standards.

6 Aged Care Quality and Safety Commission, 2021, Guidance and Resources for Providers to support the Aged Care Quality Standards, www.agedcarequality.gov.au/sites/default/files/media/Guidance_%26_Resource_V14.pdf, p. 177.

7 Kiel, G., Nicholson, G., Tunny, J. & Beck, J. 2018. Reviewing Your Board: A Guide to Board and Director Evaluation. Sydney: Australian Institute of Company Directors.

Authors
Stephen Howell
Director and Principal Advisor
Stephen is the Principal Advisor for Effective Governance Pty Ltd, a corporate governance consultant, forensic accountant, company director and former company secretary, external auditor, corporate regulator and CFO with a focus on contributing to the...
Ian Doyle
Specialist Advisor – Culture and Conduct Risk
Ian Doyle is Human Resources Professional with over 25 years’ experience in HR roles in the Banking and Insurance Industries. Ian started his Human Resources career in Westpac ultimately having responsibility for Senior HR portfolios across the Qld...