Francis Lynch: My name’s Francis Lynch. Thanks for joining me on the comments and musings podcast. Today I speak to John Cleary, who has worked in leadership in the residential aged care sector and who now provides consulting services to organisations in the sector. As managing director of Blue Chip Consulting Group John has some insights into how the residential aged care sector has been adapting to COVID and also other observations on how the sector is going in light of the yet to be finalised royal Commission into aged care. Welcome, John. Thanks for joining me on the comments and musings podcast. I’m talking to people who know the community health and aged care sectors and how they’ve adapted to the impacts of COVID-19. In 2020. We’re recording this in September, so we’re a few months in now and there’s been lots of changes made to how we’re all working. Can you describe to me the type of work that you do, particularly with the residential aged care sector?

John Cleary: It actually started with me running hostels in the days that we had 

John Cleary: hostels many years ago and that was in Victoria. And of course I’ve worked across Australia now, but also involved in setting up and structuring a combined hostel nursing home so that work was done whilst I was a in a traditional employment role. But over that time I’ve consulted with aged care and residential aged care around strategy around policy, around operational reviews and around some business development. And I’ve done quite a bit of strategic planning with boards of aged care organisations.

Francis Lynch: And what organisational challenges do you commonly see in the residential aged care sector?

John Cleary: The governance one is a major challenge. The gap between the board, a number of whom have come to accept that their task is to occupy a seat number of times a month. The gap between the board and operations, particularly through the CEO or residential care manager. And the lack. Of understanding of the complexity of residential aged care, I mean it’s 24 hours a day, 365 days a year with a large number of residents who will get frailer each day because they come in frail and you have 3 shifts of a whole variety of staff, from nurses to carers to cleaners to kitchen staff, it’s incredibly complex business model. But I don’t know that we’ve supported the residential managers enough in growing into the role or managing that complexity.

Francis Lynch: Do I understand what you’re saying? Is, is that in many organisations or some organisations don’t really understand the complexity and the risk?

John Cleary: I think that’s that’s been absolutely demonstrated by COVID. You know, the suggestion is that overwhelmingly people said they were prepared for the pandemic. This is before it hit. And then we’ve seen the consequences. After it hit and they clearly weren’t. And it was new. It wasn’t foreseeable. But when you have only 40% of your rostered staff arrive for a shift and you’ve got the same number of frail aged residents who are under emotional stress and in lockdown. That’s that an extraordinarily difficult situation to manage and it gets back to the broader issues of the role of the CEO or residential residential manager, whatever you wanna call it, depending on the nature of the organisation. But it gets back to the whole complexity around workforce planning around digitalisation. I mean 100 barred residential care facility is going to be about a $10 million business 24 hours a day, 365 days. The year 3 rosters through the course of the 28 hours and enormous complexity of those that fill those rosters, and I don’t think until the pandemic that degree of complexity has been driven home near enough.

Francis Lynch: Is is that vulnerability to staffing something that was predictable?

John Cleary:  I don’t think pandemics create predictability. The issue of staff working across centres was known, but the risk of staff working across centres wasn’t known. The huge staff turnover at all levels in residential care was known but not managed or recognised, so I I think people have found themselves in the most stressful and complex of situations. Because it was a pandemic, and because the consequences of the pandemic weren’t foreseen. And. Some of the preparatory. Work that might have been done that. Might have helped. Hadn’t been done. Now there are some organisations that stand out that have done that very well, but in the main. The residential care is like the community service sector for us. You get everything from the small little Country Women’s Association in the local town, baking scones and organisations that are turning over $200 million a year at multiple sites providing multiple services. So when we talk about. Residential aged care. We’ve got that diversity of provider. Some are better placed than others and I would say that some that have the large bureaucratic structures actually haven’t performed any better than those that were the small standalone centres where the boards have at least come to attempted to come to grips with the challenges they face.

Francis Lynch: Do you have a view in terms of why that might be in terms of the, you know, some even some very large organisations as you say, I mean it’s been evident that they haven’t necessarily done better.

John Cleary: Francis, some years ago I proposed to one of the aged care organisations, a topic called did he really say that now they didn’t accept it because we don’t say those things around here? So when you say, do I have a view about that one of the challenges I think is the male pale and stale managers in lots of organisation. And I think the staff turnover and the recycling of staff in aged care hasn’t given it the window that it needs to the changing environment, the complexity of the environment and the management challenge. And so we’ve recycled and sometimes we’ve employed the faithful and the loyal. What we need is the qualified, the capable. And the caring.

Francis Lynch: Do you think? You know, when you when you make that sort of observation about pale male and stale? Does that just relate to the management or can that be about the the governance level as well?

John Cleary: I I I think it can be both. I mean in the larger organisations in particular, who should have been. Place I think that’s a significant problem in the larger organisations, particularly the church based organisations, one of the organisations I know that’s had a terrible trouble with COVID a a number of their staff went into quarantine and the only one that hasn’t come out is a older male whose health challenges were probably significant. Before COVID came along, having caught, COVID has struggled to recover. It does say something about the the nature of staff that are employed and particularly regenerating the staff so that you don’t simply have people that have been in the job for a long, long time and who have grown old as their as those they care for have grown old. Now I’m 60 years of age. I make no, no, no. No bones about the fact that. The world catches up with me too. But aged care needs fit capable people who invest in their own health, not those who don’t invest in their own health and hang on because that’s John Cleary: the job they’ve had for many years and no one does anything. About it.

Francis Lynch: Do you think that there are particular issues in aged care it might be in Community services as well around how attractive it is as an a field of employment?

John Cleary: I think that’s been a major industry failure. I’ve had this chat with HR managers and aged care for a long, long. Time when you think about it. Aged care is in the local area. You haven’t got to travel a long way to work. You get car parking at work. There’s a whole range of pluses, but unfortunately it hasn’t been attractive to people from outside the industry because in my view the management’s been too internally focused and I think you know it’s great to see initiatives where there are young people and aged carers groups and so on and so forth. But unless managers embrace that and unless boards embrace that, unless the board composition reflects that, unless the staffing structure reflects that, it’s just. Talk and the fact is, we do need to regenerate workforces. We do need to regenerate boards and I don’t think it’s happened enough.

Francis Lynch: Do you think there’s an issue around the funding model. You know how much money organisations have available to them to be able to to fund. Staff and and the awards and conditions that people are are on?

John Cleary: Francis, one of the things the pandemic has has identified very significantly is. In the community and the media, they talk about nursing homes. They believe nursing’s are very real component of residential care in the provider space in the government space, they talk about homes and have have actually reduced the level of qualified staffing. And they’ve taken a cost management approach across a range of their services. Forgetting that their objective X actually to provide quality care. So I do and this is the only really negative reflection of make is the industry has failed to show leadership in working with government to accept that if you have a gateway which is controlled by geriatricians, that’s looking at the. Future care needs of frail aged Australians. You can’t have a service delivery model that follows that that doesn’t provide nursing care or the level of care that those people have been assessed as as providing. So there’s a major disconnect between A.C.A.T.S aged care assessment teams staffed by geriatricians and residential aged care that’s increasingly. Staff by less qualified people buy less nurses and a community that’s left with an expectation of a level of service that a funding model doesn’t deliver. Now the major peak associations would say they’ve been working on this for some time. But the fact is, they’ve failed and. They’ve failed because people like you and. I who are. Voted have allowed pop up lolly shops at election time rather than dealing with significant issues like how are we going to care for our older Australians in their frailing years.

Francis Lynch: I Know there’s a a royal Commission at the moment looking into age care and you know, I’m sure there will be lots of, you know, political discussion around what needs to change or what stays the same. I do wonder, as an outside observer, whether there’s a model in the NDIS that might actually push some of those, you know, funding. Around individual needs and and whether that might influence the way that things go in. Aged care do. You do you have a view on that?

John Cleary: Look, I I think the Commission. Have in their interim report foreshadow that they will be talking about recommendations for major change and so there’s no doubt that the funding models across other areas, including NDIS, would be considered in all of that. But ultimately, if we want to care for frail aged, who are assessed by a geriatrician for their needs. We’ve gotta fund the model to deliver the quality of staffing that is required. And one of the real challenges is I’m an outsider. I no longer work for an aged care organisation. You’re an outsider. But one of the real challenges is really forcing the Commonwealth government to deal with the issues. Of the royal commission whatever comes out of the financial the the final report, because we’ve got a history. Of lots of reports, lots of inquiries over lots of times under lots of ministers and nothing has happened and I think now that we’ve got captured the minds of the broader community. Now that we’ve seen the consequences of the funding model. As it’s currently delivered. Now that we’ve seen the experience of stress on people trying to provide quality care and use their best endeavours but simply under resourced to do it. The model can’t continue. It does need to be better funded. My experience is that too many organisations have allowed their indirect costs to grow out of proportion to their direct costs. I think the funding model needs to be transparent and dollars need to. be applied to. To to direct delivery of care, not funding of an organisation and the other side of it is then the management have gotta look at how they reduce the proportion of indirect cost to direct costs and how they use high tech to provide high care by getting economies in back of house but investing in more staff front of house. Where it’s it’s one-on-one personal care services.

Francis Lynch: I Know that that’s an interest of yours for a long long time really in terms of, you know, helping organisations to look at those indirect costs and find, you know, more efficient ways of being able to do that. I mean, do you think that’s one of the major Challenges both for smaller and larger organisations in the residential aged care space?

John Cleary:  Whatever happens out of the royal commission in terms of the funding model funds will always be scarce. The challenge is to apply the better percentage of the funds to direct care and the challenges for managers in any industry is to get the best return on investment they can for the investment they make. I’ve seen organisations that have bought ERP’s. Sorry, enterprise resource planning systems paid big money for them. Pay big annual fees and they use them like they’re in Excel. Spreadsheet. I’ve seen organisations that are still manually doing rostering when there are a whole range of tools to be able to do rostering. I’ve seen organisations that I’ve got no idea what overtime there is or why that overtime occurred, because there is no interconnection between the payroll and its costs. So that’s part of my. Suggestion or my my view before about. We’ve gotta bring in some people into the management of aged care that can embrace a digital model and can be part of reducing the indirect costs to provide more money to to invest in the personal care rolls.

Francis Lynch: So at the governance and the leadership level for residential aged care providers, what do you think they need to focus on in the next next few years?

John Cleary: I think one is that they’ve, they’ve got to look at their communication and if there’s a gap between what they market as they sell and what they provide, they really need to start to address that. And and this is the community expectation. And that what it says on the plaque at the front of the building is it’s a nursing home. If it’s not, you’ve gotta communicate that and you’ve got a responsibility to accept that you don’t oversell to get your occupancy up and then undersell when someone’s in there and and. they can’t move. The complexity issue is a significant one. Workforce planning and looking at issues like people working at multiple sites as significant when an aged care resident died many years ago in Victoria, the coroner’s report recommend. That each organisation have a specific person for a point, for infection control, that’s gotta be one of our real learnings of the pandemic that you’ve gotta have someone with the skills to be able to do that and it can’t be something that’s thought of occasionally. It’s gotta be John Cleary:  front of mind because of the consequences to the organisation, but more importantly the consequences to people that suffer in the event of a lack of infection control and the question of financial sustainability’s gotta be an issue for board. If they’re single stand alone, they’re not going to get economies and and the question is whether the funding model’s going to allow. Them to be viable. And I’ve got a long history of some organisations that have been around for many, many years and have done wonderful work. But some of those might need to say it’s time to pass the baton. Because the complexity, the operating costs and the the nature of the industry has changed to the point that we may not be the best people to do that. But the other side of that is bigger isn’t better. This is an industry that’s failed to achieve economies of scale. Even some of the bigger providers that I’ve worked with just haven’t achieved economies John Cleary:  of scale. Now it’s a furphy to believe that you can get economies of scale in the delivery of personal. Care. But it’s not a furphy to believe you can get economies of scale in terms of your backroom operating costs. Yeah. And so if we see consolidation, then the consolidation’s got to drive home those economies of scale rather than perpetuate the past. The other challenge in all of this is the smart money that. Comes in with private capital. Well, that return on investment becomes the major performance indicator, not the quality of care. And so for those that are in the care space that are committed to the care space, their job is to be better than the private money. Their job is to provide a higher level of care and be financially sustainable. In doing that, and that’s their challenge. Quite frankly, do I want to go into a residential care facility that’s run for profit and I’ve got no problem with the profit model, but if it’s just run for a profit, John Cleary:  there’s one large for profit organisation which calls itself not-for-profit. That comes from overseas. And if you. Look at their level of sanction under the aged care quality website Simply, there’s no reason for them to be continuing to operate. But they’re very good at the politicking. They’re very good at the lobbying, and that’s my fear that coming out of the pandemic, the care sector doesn’t do its job. It doesn’t. It doesn’t prove itself to be effective managers and the smart money comes in and it’s simply a profit making enterprise funded by taxpayers. But not to the benefit of those. In need of residential care.

Francis Lynch: And and I suppose that’s the challenge, really, isn’t it? Over the next few years, is to see that the, you know, the space of regulation because it’s not. I can’t see any way forward where there’s not going to be a mix of not-for-profit and for profit. I mean that that’s been established for so long, but I can we actually provide that balance so that those organisations that are generating a surplus or. A profit can do that in a safe way and can do that in a way where the where the regulation environment actually does ensure good outcomes for people on the ground.

John Cleary:  Well, the tragedy of aged care. Is that in a regulated environment, a Royal Commission interim report describes the care as a neglect. So the regulatory environment hasn’t worked. It’s had a hands off approach. In the pandemic, it’s actually done less visitations. If you look at the number of people on their site that are simply able to continue because of the circumstances. So I’ve gotta get serious about regulation. There are two aspects of that. One is how the funding model relates to the quality of care, not to just dollars to an organisation. And the other is the financial disincentives for failing to meet your your qualitative requirements, because at the moment there is no penalty. The worst penalty you get is you’re named on the quality Commissions website, but in terms of operating what you do and how. You do it, you just can. In you on. And I guess the cynical view is that you continue on because distressed assets will become available and you become such a big player in the scheme of things that the Commonwealth won’t be able to touch you anyway. So you just treat the regulators with contempt and you treat the regulatory outcomes with contempt and we get back to the old stage of you’re lucky for what you get. And you’ve got no right to complain. And that would just be a tragedy given the level of investment in quality in residential care.

Francis Lynch: And let’s hope that that isn’t the future that we’re facing. It is a pivotal point right now in terms of, you know, the the pandemic which hasn’t finished the royal Commission, which is yet to finalise it. Report and you know the response of Parliament to the report and the way that that gets represented in the next election. Look, thank you so much for your time today. I appreciate that. I think it’s been very helpful just in terms of seeing some of what is going on in aged care and and how those issues are being played. So thank you, John. 

John Cleary:  Thanks Francis.