MEDICINE WEB SITE Disclaimer Introductory
page It documents the
intrusion of private for profit entities, of market
listed companies and of the banks and financial
institutions into the sector. It summarises the
impact of these changes on retirement villages,
nursing homes, home care, and the various sections
of health care. This is the
central page in the tree of pages addressing aged
care in Australia. There are links to pages which
explore these issues and the sectors of the aged
care industry in greater and greater
section Markets and
the Aging Bonanza
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.
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.
This web page examines the way in which the aging population, and particularly the potential of the baby boomers, to be exploited for profit has influenced the marketplace and government. It looks at the way the provision of care of the aged has been shifted by government policy from a community humanitarian service to an aggressive and competitive marketplace.
LINKS CORPORATE MEDICINE WEB SITE
It documents the intrusion of private for profit entities, of market listed companies and of the banks and financial institutions into the sector. It summarises the impact of these changes on retirement villages, nursing homes, home care, and the various sections of health care.
This is the central page in the tree of pages addressing aged care in Australia. There are links to pages which explore these issues and the sectors of the aged care industry in greater and greater depth.
Markets and the Aging Bonanza
Nursing homes once a poor investment:- Nursing home care is heavily dependent on government funding. Because of poor funding over the years it has not been very profitable. Efforts by government in 1997 to shift an increasing share of payment on to aged residents to make the market viable for marketplace operators without increasing taxes met a community backlash. Government backed away but did not abandon its policies.
The share market and the banks generally showed little interest at the time and I did not write web pages on aged care. Instead I wrote about nursing home companies in the USA. This was because Sun Healthcare, one of those companies, entered Australia in 1998. It planned to enter aged care but did not do so.
A dramatic change:- The situation has changed dramatically in the last 4-5 years. Market listed entities and banks are rushing to buy up and dominate this market. The reasons for this change are not clear but a good guess can be made.
The current conservative government now controls both houses of parliament and can now ram through legislation and limit debate and so community awareness and criticism as never before.
Quite recently a senior minister speaking to the right wing JR Nichols society of which our treasurer was a founding member did not know that his speech was being recorded and would become public. He disclosed that future government industrial relations policy would go far beyond the recent contentious and strongly opposed legislation.
He admitted that this path was strongly opposed by Australians and that this would make it more difficult for government. The Australian public had been totally unaware that anything like this was on the agenda. The Prime Minister went into denial and damage control. He hurriedly promised nothing of the sort and claimed what was said was a personal view. Unfortunately the electorate has a short memory in regard to previous promises.
It seems likely that government has similar long term aged care and nursing home agendas which the industry is aware of but which the public would strongly oppose.
I ignored this sector:- While I concentrated on the health system this gap in dissenting opinion has been filled by aged care advocacy groups who were far more aware of the problems in aged care than I was. Their focus was not primarily on the impact of corporatisation. They have concentrated on dysfunctional practices and pressed for increased regulatory control.
My intention when I took the blinkers off and realised what was happening was to write a few pages about nursing homes to support those on the excellent Aged Care Crisis web site (www.agedcarecrisis,com), one of the advocacy groups. I wanted to give emphasis to the role of marketplace thinking and to draw parallels with the USA to show the common patterns.
I found myself sifting through large amounts of material about the way business targets the aging population and the way marketplace and corporate thinking impacts on the perceptions and behaviour of those who have traditionally provided care to the needy as a social service rather than a profit driven business.
As I sorted it and picked out extracts I found myself with the making of a series of web pages, many of them related to retirement homes and to the different operators in the sector as well as to nursing homes. While some of the pages cover the nursing home area and there are overlaps in material I feel that the approach and structure of the site is sufficiently different to justify putting the pages up on the web. I hope that this will complement the Aged Care Crisis pages. I will try to provide links at appropriate points.
Exploring the web pages:- The pages are designed to be scanned and read selectively. There is a rough tree like structure set out on the site maps. The pages were written by taking the extracts I had marked as interesting, grouping them into pages, writing around them and then moving to central pages.
There are consequently progressively broader summaries the more central the pages. On more peripheral pages there are additional often brief overviews of small sections and comment in larger text. There is a one line heading comment for each press extract. The detail and most of the allegations made are in the extracts quoted. This structure allows more selective reading.
If the page is too long or detailed for your requirements then track back along the path using the links at the top of the page or the site map. The site maps (aged care section) are the best way to navigate the site.
Because the site is not read like a book and each page is often accessed separately by people searching the world wide web there is of necessity a lot of repetition particularly in the comments.
Finding what suits you:- The aged care section of the site is built around a large selection of extracts which are used to illustrate what is happening and underpin my understandings of the way the system is working. It is analytical and reflects a personal point of view that sees much of what is happening as a symptom of a deeper malaise in society. This malaise relates to ideological beliefs which have benefits but which are severely dysfunctional when applied indiscriminately as if they are unchallengeable universal truths.
But don't accept that uncritically. Look around and keep an open mind. There are other ways of exploring this area. Several of the pages are long as they bring together a large amount of material. Readers might be wiser to explore a site like the Aged Care Crisis Centre and then come back to this site. When you do so use the site maps which summarise each web page and look at those sections which interest you.
The best way to get an overview of the material is to go to the site map. If it's not for you try another.
Click Here to go to the section of the site map on this site covering Aged Care in Australia to see what's there.
Click Here to go to the Aged Care Crisis web site
On another web page I have written about the divide in perceptions between the corporate marketplace and those who have to deal with the citizens who receive the care. In a paper "Belief versus Reality in Reforming Health Care" (download pdf file). I contrasted the forces driving for profit services with those driving not for profit humanitarian care. I suggested mechanisms which enabled those involved to avoid confronting the conflicts.
The markets approach to aging illustrates both the divide between the different groups involved, the difference in their approach to the needs of the elderly, and the response of the other parties to the new dominance of the marketplace.
There is a confronting "Yuk" factor here, particularly when it comes to nursing homes. It is the very idea of one group of wealthy self interested citizens enthusiastically targeting the frail and vulnerable eighty and ninety year olds, many of them demented, simply to make profits for themselves and disinterested investors. This Yuk factor is well illustrated by a short piece written by a nurse aid with experience in commercially focussed nursing homes. The care of the frail elderly is compared to the profitable batch farming of animals - people farming. There is of course a grading of yukiness from none to plenty across the aging spectrum.
That the market and its advocates are largely impervious to this Yuk factor speaks for the divide in perceptions. A few writers indicate that they are uncomfortable reporting on the sector by referring to "wrinkle ranching".
Life expectancy has steadily increased during the 20th century and in Western countries much of the population can now expect to live into their 80s. The number of retirees has steadily increased with a proportional reduction in the tax paying work force.
This population redistribution is compounded by the baby boom after the second world war and the more recent fall in fertility and birth rates. There will soon be many more retirees and a much smaller working community to support those who have not provided for themselves. Many of the baby boomers have become wealthy and this is a source of excited anticipation for the banks and other investors.
The baby boomers that led to the sprawl of urban development in the 70's have now entered the latter half of their years and basically want to live forever, courtesy rapid advances in medical science. The aging of the population is a common trait for many industrialised and non industrialised countries. Fertility rates have been declining while life expectancy has increased thanks to improved living conditions and advancements in medical developments. Over the next 40 years the number of elderly will almost triple. Many questions arise on how governments will support the cost of an aging population. The demand for aged and health care facilities will substantially grow with the older population growing at twice the rate of the total population.
Jun 2005 The wave of baby boomer wrinklies is upon us.
AGED CARE SECTOR : The Ageing Time Bomb, Tick, Tick, Tick........Boom! Your Money Weekly June 9, 2005
After the second world war health and aging were accepted as a public good and a right for all. Socialist policies in the altruistic 1950s and 1960s led to governments across the world taking on the cost and in many cases the provision of health and aged care services for the community. A spectrum of systems ranged from the fully nationalised system in the United Kingdom, through a range of private, community and not-for-profit systems to the largely commercial system in the USA.
The Australian public initially supported the increased taxation required to provide these universally needed services and welcomed the security it provided.
Over the last 25 years a philosophy of small government and economic rationalism has led governments to increasingly shed their responsibilities to the aged, shifting it to the marketplace. Political parties now compete in reducing taxes and selling hip pocket benefits to the electorate while maintaining the myth of public services.
The Australian public still values their version of social welfare but no longer links it as directly to taxation levels. Governments pander to this but all too often do not have the resources to meet the needs without raising taxes - a political no no in an increasingly self centred world..
With a massive tax surplus in 2006 the government hardly targeted publicly provided health and instead gave large tax concessions. This really confirms that the restriction of public services and expansion of marketplace health and aged care is ideologically driven. It is not an inability to meet the expectations of the public. Market forces and small government remain central to policy.
The development of a corporatised marketplace in social services and the impact of this on the community and on those who traditionally provided services within different welfare contexts is examined on linked web pages.
Click Here to explore the history of these issues and the impact on those providing humanitarian services.
The aging of the population has become a very strong motivator for the marketplace. This enthusiasm extends into every activity indulged in by older citizens. The market targets those who have accumulated money to spend. This aged sector is spread across a broad range of consumer competency and vulnerability. In its rhetoric and in its business practices the market takes no accountof this increased vulnerability. There has been strong pressure to marketise every sector of the health system and of nursing home care - both vulnerable sectors. While individual operators might have some reservations about the application of business principles the pressures on them from shareholders, financiers and competition do not. As a consequence the more motivated operators may perform less well and be restructured or go under.
Business seeks to exploit the potential of each health care context for profit. That is why they are in the business. The financial pressures, the vulnerability of the aged, the complexity of the product, the number of personal acquaintances with experience of the products, and the time before exploitation of vulnerable people becomes evident, are all factors likely to influence the amount and nature of the exploitation which occurs.
Holiday packages, cruise ships, caravan makers are all rushing to make profits from this group. Older citizens buying in this market are usually able to exert judgement in their purchases of holidays, accommodation, and the toys for retirement. They have experienced friends and family with whom they discuss their purchases.
As in health and aged care financial planners sell complex financial products ill understood by their customers. Many retirees have large retirement packages and no experience in this area. They do not involve friends and families in the details of their finances as these are private.
Those companies offering dubious high risk investments offer large bonuses to those financial planners who can induce retirees to invest their savings in these high risk ventures. It is not surprising that long time salaried employees who have accumulated significant life savings have been repeatedly financially raped by planners. Many retirees have lost their life savings and have been left destitute.
The situation and the forces at work are little different to those underlying the massive Wall Street frauds perpetrated by Citigroup and other multinational financiers on trusting and inexperienced investors during the early 2000s.
CLICK HERE to explore the markets attitudes to the greying of Australia.
Behind the businessmen are the financial institutions and the banks. Australian investment institutions have supported the corporatisation of health care by investing in hospital, pathology, radiology and general practice corporations.
They are now investing heavily and more directly nationally and internationally in retirement villages and nursing homes. Typically these are structured as Private Equity enterprises working through closely linked groups and nominally independent management companies. A similar arrangemet is the formation of a property trust that works closely with a nursing home or retirement village operator to whom the properties are leased.
This means that the capital is invested in the physical facilities and the risks are carried by the operator whose shareholders carry the risk. If the operator goes under another can be contracted to supply the services. Residents are not ejected but the bonds they paid can be lost. The government is legislating to protect them.
Citigroup, Macquarie Bank, ING, Westpac, AMP, Babcock & Brown and a number of trusts such as APN Retirement Trust have entered this market. In addition to Australia they have targeted New Zealand, Canada and the USA.
The Senate Econmics Committee conducted an inquiry into the impact of private equity in Australia during 2007. Two submissions addressed the serious threat this posed to health and aged care. The committee's report discounted these concerns but within a month an investigation in the USA revealed serious problems in nursing homes after they were purchased by private equity.
Recent information suggests that few if any of these banks and trust buying other companies have been assessed by the responsible agency to see whether they can be considered "suitable organisations" to operate in the sector.
CLICK HERE to explore the financiers involvement in retirement villages and nursing homes and what happened at the senate inquiry (Update Oct 2007).
The retirement sector is a central part of the aged care bonanza. Once the province of not for profit community oriented operators it has been turned into a competitive corporate marketplace. Companies have increased their share and dominated the thinking.
Retirement Villages deal with a broad spectrum of aged citizens, in terms of wealth, cognitive ability, and experience. The for profit operators have successfully targeted the luxury end of the market. They have been much less successful in providing services to the less well off.
The packages that market based companies sell is accompanied by complex contracts which are difficult to understand. While the retirees effectively sell their houses to buy into the villages then pay management fees they do not get the interest from their investment. The refurbishment of the units and their sale when residents leave is in the hands of the operator and it is here they make their profit. Residents families can get less back than they expected. The operator can devote its efforts to selling new units more profitably while relatives of deceased residents continue to pay management fees. Those moving into nursing homes wait long periods for the badly needed capital to pay their new bonds.
Operators take their profit when the resident dies or leaves the village to enter a nursing home. There is therefore a long delay before the financial problems unfold. Relatives who had little to do with the original contract deal with the problems. It is not surprising that the sort of people who might raise eyebrows find their way into the business and build large companies.
Contracts are drawn up by those who build and run the retirement villages in order to make a profit. Many residents who sign these later feel they have been exploited. It is sad to see a number of octogenarians devoting their final years to drawn out court battles against wealthy corporations. These are the few who still have sufficient financial resources to do something about it. The judges have not been sympathetic to their cause when companies show that the terms of the contracts were fully disclosed.
Lawyers urge retirees to obtain legal advice before signing the complex retirement village contracts but it is likley that few realise the need for this.
Some companies have targeted the large number of government pensioners (the poor and needy) by providing budget retirement accommodation. They made much of the service they could provide. This backfired badly. The companies are quickly switching to target those who have enough money to pay for retirement accommodation. The needs of the needy have been forgotten but not the need for profit.
Click Here for an analysis of the retirement system and of some of the companies that build and manage them.
The nursing home sector is one where the residents are particularly vulnerable and where their relatives are more often emotionally stressed, ignorant and trusting.
Basic care is largely dependant on nursing. The main cost of running nursing homes is nursing salaries. Failures in quantity and quality of nursing staff result in a number of measurable adverse outcomes and in earlier deaths. Because of this the consequence of the introduction of market practices are more easily tracked than in other sectors.
It is a significant pointer to the pro-market focus of regulatory authorities that in such a vulnerable sector these measurable outcomes are not tracked and their incidence in specific nursing homes is not available to the "customers" choosing a nursing home. This illustrates the reality behind the claims of accountability about which the industry and its political supporters boast.
Nursing homes in Australia began as charitable, mostly religious homes for the frail elderly. As costs increased the government increasingly supported the sector. This increased until the bulk of funding came from government. Starting in the 1960s a number of private individuals ran nursing homes for profit and one at least built an empire and became a millionaire.
Until the 1990s the nursing home industry was dominated by not for profit organizations. It operated within a not for profit ethic. Homes were tightly controlled and their government funding was specifically directed to defined expenditures. Staff/patient ratios were regulated and the states monitored standards. The system was under funded and was not without problems in care and in the quality of the facilities. There was concern about the way the growing commercial for profit entities operated. The commercial sector found the financial and service accountability required under the regulations onerous and restrictive.
By the early 1990s the conservative coalition parties had gained power in the states. They adopted an economic rationalist policy of turning health care into a marketplace. Because aged care was controlled federally the corporatisation of nursing homes was limited to increased marketisation in Victoria. The private sector in Victoria was encouraged to buy and operate nursing homes and plans were developed to sell off government owned homes.
In 1996 this situation was reversed when the conservative coalition parties gained power federally and most states elected labour goveßrnments. The federal coalition government had promised their market supporters that they would liberalise the nursing home sector, and millionaire nursing home operator Doug Moran claims he was the architect of their policy.
Although 70% of the homes were still owned by not for profit organizations the sector was turned into a competitive marketplace. Not for profit groups were forced to change their mode of operation.
The restrictions on how government funding was used were lifted and companies could spend the money as they saw fit. All restrictions on staffing were lifted. Both were left to market forces. Companies were free to squeeze the services in order to generate profits in the name of efficiency and productivity.
State monitoring of care was replaced with a federal accreditation system which was primarily directed to supporting and assisting the market in running nursing homes. Its complaint handling, regulatory and penalising functions were secondary and the agency was poorly structured for this.
Not surprisingly these changes were followed by progressive demoralisation and apathy in the work force, by recurrent scandals in care, and by repeated failure of the accreditation agency.
As in the USA the response to each worsening scandal was to increase oversight, monitoring and legal requirements. The market forces and marketplace culture at the root of the deteriorating situation were ignored.
Demoralisation was such that in the latest scandal in 2006 there were allegations of aberrant carers tormenting the elderly and of management ignoring this. A number of 90 year old ladies were raped. Nurses responsible for their care did not bother to report this and a manager did not feel that it was her responsibility to do so.
A series of web pages tells the story of what has happened as government imposed their ideology and the new accreditation agency struggled with an impossible brief. The pages look at the way this new market system has affected the not for profit operators, the nurses and the residents.
Click Here to access the nursing home pages
Keeping people in their own homes by caring from them there costs less and is what most of them would want. It is the sensible way many countries have gone.
In the USA this has been a commercial for profit exercise and the consequences of this have been such extensive fraud and dysfunction that government clamped down on funding. This drove profit driven companies out of the sector.
In spite of this the Australian government has once again been persuaded that turning this sector from a humanitarian community activity into a competitive marketplace by giving the old and vulnerable more choice and by bringing in US based multinationals is the solution to Australias aged care problems.
The US based Home Instead Senior Care, the largest home care provider in the world was welcomed in Canberra. It pressured government to introduce a voucher system so that government funded seniors could choose home care competitively.
What was being done was challenged by lodging objections with authorities and making politicians aware of the issues. This has had little impact.
Click Here to explore the issues surrounding home care and Home Instead.
Although a majority of sick citizens were elderly health care corporatisation was not strongly driven by the aging boom until the middle of the 1990s. Since that time the aged care bulge and the baby boomers have been seen as a bonanza for the companies providing health care.
Health expenditure increases over the age of 65 and the bulk of this expenditure occurs in the last 2 years of life. Health care is consequently now seen as very much a part of the aged care bonanza.
Enthusiasm about the potential of the aging populations for profitable exploitation extends throughout the health system. Hospitals, diagnostic services, primary care corporations, the pharmaceutical industry, the makers of artificial joints, pacemakers, surgical instruments all see their profits rising as the aged demand more medical services to keep them alive and active.
This is a particularly vulnerable sector. Not only are the elderly more vulnerable when they are ill but they grew up in an era where medical services were provided by those they could trust. Fraud and overservicing at their expense are now rife in some parts of the world.
A selection of recent press cuttings on the linked page below describes the breadth of activity, and the enthusiasm far better than I can.
Click Here for a window into the corporatisation of health care.
Corporatisation of Hospitals
The corporatisation of the Australian health system started with hospitals in the late 1970s and was heavily influenced by US companies in the 1980s. During the 1990s the government saw the solution to Australian health problems in the importation of US multinationals. The conduct of these companies was so abhorrent that most were either forced to leave the country or to abandon their planned invasion of Australia. To the best of my knowledge The last hospital owned and operated by a multinational (HealthSouth) is now being sold. I played some part in exposing the practices of these US companies.
During the early part of this period the ethos of the sector was set by the majority not for profit sector. This has steadily changed. The for profit sector has grown in size. Government support of marketplace practices has given them increased credibility. Not for profit corporations have been forced to comply with market practices in order to survive.
The market has steadily consolidated and there are now only two major private competitors. Not for profit groups still retain about 50% of this marketplace. Their not for profit mission is compromised by the need to compete against for profit corporations that do not share their primary humanitarian mission.
Click Here for a full review of these developments in hospitals and the companies involved.
Privatisation of the public hospital sector
Government ideology during the 1990s sought to drive citizens into the private system and to outsource public services to corporate providers. Hospitals did not escape this. Two strategies were followed. The first was to contract the building of public hospitals and the care of public patients to corporate bidders over the strong objection of the public. The experiment proved disastrous for both parties and was abandoned.
The second was to collocate private hospitals on public hospital campuses and drive the public into the private hospitals. This only worked in wealthy suburbs and was largely abandoned.
These changes were ideologically driven and peripheral to the aged care agenda.
Click Here to explore the failure of these policies and the companies involved
Pathology more than radiology lends itself to centralisation, to mechanisation and to economies of size. Both benefit from the aging of the population.
Corporatisation proceeded rapidly in Australia and the local pathology and radiology markets are now largely corporatised. To meet the demands of the share market for growth these companies have become successful global predators.
Click Here to explore the diagnostic sector and the companies involved
During the last few years market involvement in the treatment of kidney failure by dialysis has grown rapidly. Labor state governments have enthusiastically entered into public private partnerships to provide these services to public patients. The companies that they have partnered with are multinationals who have been at the centre of multiple fraud scandals in the USA where this sector has been ruthlessly raped.
Click Here to examine what happened in the USA and Australia
General Practice Corporatisation
A small mnumber of medical entrepreneurs led by the controversial Dr Edelsten commercialised general practice in the 1970s and 1980s. This was frowned ion and only one survived. Attitudes to this changed dramtically during the late 1990s.
As in the USA there was great enthusiasm for the corporatisation of general practice - a sector dependant on time intensive services by individual doctors. This cannot be rationalised or rendered more efficient without compromising care. It was opposed by most doctors and an agreement was eventually hammered out with the Australian Medical Association to protect them and their patients. As in the USA this has not worked well for the marketplace and most of the profit from these ventures accrues to the shareholders of diagnostic companies whose close association with these companies snares their referrals.
Only one company continues to make large profits and is still growing. How it does this when others cant is not clear. It is critical of the Australian Medical Association and did not sign the agreement.
Click Here for the saga of general practice corporatisation.
Citizen Aged Care Groups
Aged Care Crisis web site ---- http://www.agedcarecrisis.com/acc/The Aged Care Crisis Centre is an excellent resource from an entirely independent group of people with real experience of the system. They tell it like it is. It provides a broad range of material where you can find additional information.
The home page provides links to key sections of the web site and to new or important articles. Information is provided about a large number of aged care issues. The site contains valuable forums where nurses residents, advocates and others discuss their experiences and views. There are links to pages on finding nursing homes, on detecting and preventing elder abuse and the many complications of poor care. There is a vast collection of media reports adressing every facet of aged care. You can search to find what you want. One section provides resources for residents and links to useful sites and another supplies information about advocacy groups.
If you are looking for additional information or full news articles you should sign up for the Aged Care Crisis eNews Bulletins which highlight issues and then link to supporting material. If you have a story to tell you can do so. Discussion forums provide access to stories and comments, related to key issues and experiences, by those who encounter the system as recipients and those who experience it as providers of care.
Elder Abuse Prevention Association ---- http://www.eapa.asn.au/
Council on the Aging (COTA) --- http://www.cota.org.auCOTA Victoria http://www.cotavic.org.au/
About Seniors -------- -- http://www.aboutseniors.com.au
Association of Independent Retirees --- http://www.independentretirees.com/
Aged Services Association (not for profit aged care industry body) http://www.agedservices.asn.au/
Aged and Community Services Australia --- http://www.agedcare.org.au/
Australian Consumers' Association's <http://www.choice.com.au/> 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
ACEBAC - Australian Centre for Evidence Based Aged Care http://www.latrobe.edu.au/acebac/
The Australian Aged Care Accreditation Agency http://www.accreditation.org.au
Australian Government Seniors web pages ------- http://www.seniors.gov.au/
Centrelink ---- http://www.centrelink.gov.au/
Links to government agencies --- http://www.australia.gov.au/3
Health Services Union of Australia --- http://www.hsuvic.asn.au/
Australian Nursing federation --- http://www.anf.org.au/
Large numbers of useful links can be found at
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This page created Sept 2006 by Michael Wynne
Update Oct 2007, Aug 2008