The lesson from aged care in Victoria? For-profit services drive standards down | Aged care (Australia)

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[Legalled OK]At the height of the coronavirus pandemic’s second wave, the Victorian premier, Daniel Andrews, caused a stir with the observation that, while deaths from Covid-19 were concentrated in aged care centres regulated by the commonwealth government, none had taken place in those operated by the state. Although the subsequent debate was confused, what emerged most clearly was the failure of the commonwealth regulator, the Aged Care Quality and Safety Commission, to ensure the safety of the residents it was created to protect.

We have seen this movie before. It’s played out with for-profit childcare centres, highlighted by the tragic death of Arianna Maragol.

The commonwealth’s childcare regulator, Australian Children’s Education & Care Quality Authority (ACECQA), has reported that 25% of for-profit operators were still “working towards” compliance with guidelines, about twice the rate for not-for-profit and government operated centres.

Even more striking was the fact that whereas 30 to 50% of public sector and non-profit childcare centres exceeded the minimum required standard, only 18% of for-profit providers did . This is exactly what economic theory would suggest: a for-profit firm will comply with regulation if it is threatened with penalties for failure, but will do so at the lowest possible cost. There is no market reward for over-achievement.

A few years ago there was the fiasco of vocational education and training (VET), where for-profit providers skimmed off billions of dollars of public money under the Fee-Help scheme while luring students into taking on massive debts for utterly useless training. Meanwhile, the public Technical and Further Education (Tafe) system was reduced to a shadow of its former self. The Morrison government finally clamped down on the worst abuses in 2016. Many of the big for-profit providers closed down, leaving students in the lurch.

But it has proved easier to shut down shonky operators than to repair the damage done to our educational system.

All of this traces back to a reform program which began under the Howard government and continued under its successors, centred on the ideas of competition and choice. In this model, for-profit, non-profit and public organisations compete (on a level playing field, of course) to provide publicly-funded services. The goal is to give customers (formerly known as patients, students and so on) a wide range of choice. Minimum quality standards are ensured by a “light-handed” regulatory authority, which focuses on ensuring compliance with processes rather than worrying about outcomes.

As late as 2016 the reform model was still in vogue. Undaunted by the early signs of disaster in vocational education, the Productivity Commission prepared a report proposing further opportunities for change.

The PC inquiry was bombarded with submissions arguing that for-profit provision of human services was driving standards down. Rather than investigate the evidence, its final report blandly asserted that maximising community welfare from the provision of human services does not depend on adopting one type of model or favouring one type of service provider.

And, while acknowledging the VET fiasco, the PC happily assumed that the problems could be solved by regulatory oversight, exactly the same approach that had failed in VET.

Even more fundamentally, the PC was committed to the idea that the goal of policy ought to be to promote competition and choice, rather than high-quality services.

There’s nothing inherently desirable about competition. If the alternative is collusion against the public interest, competition is a necessary evil. Far better, when it can be achieved, is cooperation to be the best we can at what we do. That’s the core value of the service professions, professions derided by market reformers as “producer interests”.

Much the same is true of choice. As far as flavours of ice cream are concerned, some people will like butterscotch, some will go for mango and some might even prefer Neapolitan. The more choices the better. But for the human services that matter most to us, it’s not a question of how many choices we have. What matters is the quality of the best choice. We want our doctors and nurses to keep us well, our teachers to educate and inspire us, and our carers to give us comfort and dignity.

Trying to achieve this with financial incentives will only benefit those who can game the incentive structure. What is needed is not the maximisation of shareholder value but an ethic of service.

Hafta Ichi
Source: The Guardian
Keyword: The lesson from aged care in Victoria? For-profit services drive standards down | Aged care (Australia)

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