Aged Care Reform and the Role of Contemporary Governance

In recent years, Australia's aged care sector has experienced significant changes aimed at improving quality, safety, accountability, and governance. For Boards, Directors, Executives, and Subcommittees in aged care organisations, understanding these Reforms and their implications, as well as the role of leadership in contemporary governance, is essential for successfully navigating these transformations.  

Key subjects covered are: 

• Why Aged Care Reform? 
• What is the Aged Care Reform Focus? 
• Changes Expected in 2024 and 2025
• Why Contemporary Governance in Aged Care?
• The Six Contemporary Governance opportunities in Aged Care  
• Contemporary Governance Leadership for Reform Excellence in Aged Care  

Why Aged Care Reform? 

The need for aged care reform in Australia is driven by several key factors: 

1. Workforce Recruitment, Engagement, and Retention
   There have been issues with inadequate HR practices and ineffective DEI policies, impacting the recruitment and retention of a well-trained workforce engaged in delivering safe, high-quality, and dignified care. Many staff feel disillusioned due to perceived inconsistencies between the organisation’s stated values and their lived experiences, leading to disengagement and turnover. 
   
   
2. Quality, Safety, and Dignity of Care
   Reports of substandard care and abuse have exposed systemic problems within the aged care sector, underscoring the need for reform to ensure high standards of quality, safety, and dignity in care.
   
   
3. Changing Demographics:
   Australia's growing and increasingly diverse ageing population demands a responsive and sustainable aged care system capable of meeting a broad spectrum of care needs. 
   
   
4. Financial Sustainability:
   Ensuring the financial stability of aged care providers is crucial amidst rising costs and funding limitations.
    
5. Community and Stakeholder Expectations:
   There is an increasing demand for transparency, accountability, and person-centred care, reflecting broader community and stakeholder expectations for the aged care sector. 

What is the Aged Care Reform Focus? 

Changes Expected in 2024 and 2025 

Looking ahead, several key strategic imperatives should be in focus: 

1. Aged Care Quality Standards: Strengthened Quality Standards focusing on consumer rights, safety, and clinical care.
   
2. Funding Models: Transition to new funding approaches in residential and home-based care aimed at improving transparency, equity and financial sustainability. 
   
3. Workforce Development: Initiatives to enhance workforce capability, training, and support as well as engagement and retention  
4. Technology Integration: Increased use of technology to improve care delivery and operational efficiency. 

Why Contemporary Governance in Aged Care?  

Traditional skills in professional practice and corporate governance, while still important around the Boardroom table and within the Executive Team, are no longer sufficient for organisational sustainability. Today, stakeholders, the workforce, and the general public increasingly demand assurance that organisational leaders are aligned with their purpose, values, and culture. 

Governance therefore requires a broader focus on other areas such as; Workforce and Culture; Stakeholder & Community Engagement; Strategic Insight; Environmental and Social Governance (ESG); Leadership; Behavioural and learning styles, as well as ongoing Director and Executive transition.  The term Contemporary Governance has evolved to encapsulate all these focusses which are required for successful, sustainable, values-led (not just profit-led), organisations whether for-profit or not-for-profit.  

A compelling example of the importance of contemporary governance in aged care is the integration of ESG principles, which has now become essential for effective leadership. While risks, trends, and issues related to wellbeing, social justice, belonging, and sustainability have always existed, they are now recognized as key drivers. Organisations that genuinely embrace these principles, rather than adopting them a tokenistic approach, are seeing notable improvements, such as enhanced reputations through increased stakeholder trust, higher client satisfaction, and the ability to attract and retain a more diverse, engaged, and committed workforce, including Executives and Directors. 

The Six Contemporary Governance Opportunities in Aged Care  

GovernWith’s Dec 2023 White Paper ‘Top 6 Contemporary Governance Risks’, with over 2,000 Director contributions, many of whom were in Aged Care, highlighted the following key areas of opportunity for capability building: 

• For the organisation-wide implementation of Contemporary Governance opportunities, it is crucial for the Governance Leadership Team—comprising the Board, Directors, Executives, and Subcommittees—to work in harmony. 
  
  
• Equally important is the realisation that genuine success is significantly enhanced when the Governance Leadership Team mirrors the diversity of its stakeholders and possesses a broad range of skills, knowledge, attributes, and lived experiences. 

Contemporary Governance Leadership for Reform Excellence in Aged Care  

To successfully navigate reform, GovernWith recommends a focus on the following contemporary governance opportunities aligned with reform compliance: 

1.  Governance Leadership Team Capabilities: Ensure the governing team—comprising the Board, Directors, Executives, and Subcommittees—embodies the skills essential for implementing Contemporary Governance and Reform principles across the organisation. This includes a blend of expertise in aged care, professional expertise, ESG principles, contemporary practices, behavioural and learning styles, and lived experience. Emphasise a continuous Director and Executive transition program.  

2.  Governance Leadership Team Harmony: The Boards, Directors, Executives, and Subcommittees must work in harmony to embed Contemporary Governance and Reform principles throughout the organisation. This cohesive approach is crucial for leading aged care organisations effectively through these reforms. 

3.  Strategic Insight: The Governance Leadership Team should maintain a current understanding of trends, issues, and opportunities related to both aged care industry reform and contemporary governance. This includes integrating ESG principles to build trust and add value for the organisation and its stakeholders, ensuring strategic alignment. 

4.  Workforce and Culture: Embed ESG and reform principles to enhance workforce engagement and foster a culture of delivering safe, high-quality, and dignified care. Create an inclusive, safe, and positive learning environment that supports workforce development. This approach should inform future succession planning, recruitment, induction, and development, aligning with new Quality Standards and community expectations. 
 
5.  Compliance and Regulatory Risk: Boards, Directors, Executives, and Subcommittees must lead and oversee the strategic direction, financial management, and regulatory compliance. It is essential to implement contemporary frameworks and reporting structures to ensure adherence to the evolving requirements of the new Aged Care Act, Quality Standards, and other governance standards. 

6.  Financial: Managing costs and creating additional, or new revenue streams amidst changing funding models and economic pressures. Finance and quality are required to work together to ensure there is an ongoing balance between profit verses quality, purpose and values.  

7.  Cyber Security: Ensure robust data governance to support the increased use of technology solutions in aged care and maintain stakeholder confidence. 

8.  Stakeholder and Community Engagement: Building and maintaining stakeholder trust is crucial for a competitive reputation and overall success. Engage transparently with key stakeholders, including the workforce, clients, carers, community members, funders, and strategic partners. An example of this is reporting on Sustainable Environmental and Social Governance (ESG) practices to foster trust and accountability. 

NOTE: This blog serves as a guide and starting point for Directors to delve deeper into specific reforms and tailor strategies that align with their organisation's unique circumstances and goals. If you would like to know more about how to achieve Contemporary Governance Leadership for Reform Excellence in Aged Care, please contact us here or explore our Product offering here. We look forward to enhancing the contemporary governance capabilities of you and your organisation.  

To continue exploring the role of Contemporary Governance in Aged Care, watch our Achieve Reform Excellence webinar with Fi Mercer and Brendan Moore. In this dynamic conversation they discuss the key pillars of change within the Reform Agenda for Aged Care and how to ensure your organisation has the contemporary governance capabilities needed for Reform success.