Navigating new director obligations around aged-care reforms

Boards should take a continuous improvement approach and enhance reporting and monitoring systems now to prepare for new legislation coming into effect from 1 July. 

Directors in relevant organisations should already be preparing for the complexity of change and the uptick in responsibility and requirements in aged-care governance.

Seasoned directors and experts joined the AICD for the Understanding the Aged Care Act 2024: A director’s guide to key reforms webinar. They emphasised the strategic challenges and opportunities to come from the once-in-a-generation aged care reforms passed by Parliament in November 2024. They include new duties applying to directors (responsible person duty) and a new duty applying to providers linked to the standard of care for older Australians (registered provider duty).

To support directors in navigating the new statutory obligations in the aged care sector, the AICD has updated its guidance, Governing for quality aged care: A director’s guide.

Sean Dondas MAICD, AICD Policy Adviser, Education & Policy Leadership, explained the guide outlines key steps for boards to take to meet the responsible person duty (applies to board directors, senior executives and managers), the registered provider duty (applies to providers), the Statement of Rights (applies to providers) and the Code of Conduct (board directors, providers and aged care workers, including volunteers).

Key principles for aged care boards to embrace in navigating these challenges include:

• Clarify the organisation’s purpose and the desired outcome for clients
• Actively engage clients to amplify their voices
• Place quality of care and desired client outcomes at the forefront of decision-making
• Rethink care and clinical governance
• Establish effective governance and board composition practices
• Promote a culture that attracts people with the required skills and a mindset for improvement.

The regulatory posture of the commission is changing, and new Aged Care Quality and Safety Commissioner Liz Hefren-Webb has acknowledged the significant transition process underway, said Jason Kara, CEO at Catholic Health Australia.

Kara added that the same applies to all areas of compliance. “Demonstrating a commitment to continuous improvement will always be the real touchstone, as well as having that communication with the commission.”

While the enforcement powers and penalties coming into effect might look concerning, Kara advised that “demonstrating such an approach and having boards enhancing their monitoring and reporting systems and supporting providers” would be essential going forward to mitigate the risk involved.

Rosina Hislop FAICD is chair of ECH, a South Australian retirement living and in-home care services provider. She noted boards need to understand their obligations and know their business. The revised legislation will require even more digital investment to streamline processes and boards should think about how this will enhance client-care outcomes. To gain information, consumer advisory boards offer another line of sight for directors.

“Along with the data, the due diligence and the reporting you do, using that body as well as  the chair of that body is another window into your organisation,” said Hislop.

Monitoring prevalent, high-impact outcomes and adverse events is important, however, boards should also look at indicators of wellbeing.

“How do we know if our clients are thriving under our watch?” asked Hislop. “We might know we’re delivering the care when we say we will turn up on time 99 per cent of the time. But how do we know whether all those services we’re providing are actually helping somebody truly reach their personal goals of how they want to live their life in later years?”

Survive and thrive

“Organisations that are very close to breaking even, which is where the average organisation is sitting at the moment, are likely to find this quite stressful,” said Jason Howie GAICD, a partner at Pride Aged Living. “That said, we’re seeing a lot of confidence returning to the industry. A lot of organisations are interested in acquisitions again and they’re pursuing those opportunities quite aggressively.”

Penelope Eden, a partner at MinterEllison, leader of its national aged care practice and a former registered nurse, acknowledged the sector is inherently complex.

“This is a very challenging new paradigm for providers,” she said. “A lot of the requirements are now very subjective, and it’s difficult to understand how to discharge the duties. Directors need to inform themselves and recognise that clinical governance is up there with corporate governance. They should understand the importance of engaging with our care recipients in the same way that we are designing and delivering services.”

A poll of webinar participants found financial sustainability was the top concern followed by workforce and wage challenges.

“Aged care boards are not for the faint hearted, nor the inexperienced director,” said Hislop. “These boards should be trying to attract people who understand the governance obligations and are committed to performing in that area. Probing, questioning, challenging in a constructive way, and having that strong trust based on verifying the information you’re receiving, will be critical to strengthen that governance and drive change.”

“We’re seeing a lot of confidence returning to the industry. A lot of organisations are interested in acquisitions again.”