The objective of the audit was to assess DoHA's administration of building certification of residential aged care homes. The ANAO examined DoHA's arrangements to: plan for, and report on, the certification program; manage the delivery of certification services; and manage stakeholder relations.

The audit did not seek to validate assessments made under the program by DoHA's contracted assessor and, therefore, does not form an opinion on whether residential aged care homes should or should not have been certified.

Summary

Introduction

Ageing and aged care in Australia

Australia, like other OECD1 countries, is experiencing an ageing of its population, driven by declining fertility and mortality rates. In coming decades, the proportion of the Australian population that is over 85 years of age is expected to triple, while the proportion in the working age range of 15 to 64 years is expected to fall.

As a result of the ageing of Australia's population, there will be increasing demand for quality aged care services and, consequently, an expansion in building new aged care accommodation, re-furbishing existing accommodation and upgrading of residential aged care homes to meet this demand.

Residential aged care

As at January 2008, there were nearly 3000 residential aged care homes in Australia providing over 210 000 aged care places. Residential aged care is predominantly financed by the Australian Government and is mostly provided by the non-government sector (by both religious, charitable and private sector providers). State and local governments, with funding from the Australian Government, also operate a small number of aged care homes.

The Australian Government's total expenditure on aged care in 2005–06 was $7.3 billion.2 The aged care sector is continuing to invest significant funds in new buildings, re-furbishing existing accommodation and upgrading of homes. DoHA estimates that $1.133 billion was spent across the aged care sector on new building works in 2006-2007, representing 15 per cent of all aged care homes.3

Building Certification

The Aged Care Act 1997 introduced a national quality assurance framework for residential aged care, combining accreditation, building certification, complaints handling and supporting users' rights. The objects of Aged Care Act 1997 include:

  • to promote a high quality of care and accommodation for the recipients of aged care services that meets the needs of individuals.4

In 1999, a 10 Year Forward Plan for building certification was agreed with the aged care sector. The objective of the certification plan is to encourage improvement to the safety and amenity of aged care buildings beyond the legislated requirements of State, Territory and local governments.

A purpose of the plan was to provide minimum standards to inform the planning and implementation of improvements in accommodation by Approved Providers.5 The plan incorporated a December 2003 target for fire safety. This target was extended, with 80 per cent of homes compliant by the revised target of December 2005.6 There is also a 2008 target, addressing privacy and space requirements.

Regulatory environment

The certification process is intended to complement other regulatory requirements and does not remove or change an aged care Approved Provider's mandatory obligations to comply with all State, Territory and local government laws relating to aged care homes.

Certification is based on the Building Code of Australia (BCA), although it does not replicate the BCA. In some cases, the required building standards for certification exceed State, Territory and local government requirements and regulations, for example in areas of fire and safety.

To achieve certification, an aged care facility is inspected, assessed and scored using a 1999 Certification Assessment Instrument to determine if it meets certain minimum building standards: fire safety; hazards; privacy; access; heating and cooling; lighting and ventilation; and security.

Certification allows Approved Providers access to additional funding sources, including accommodation bonds provided by residents and supplements (in the form of Australian Government subsidy payments) for concessional residents who are unable to make accommodation payments.

Building certification is not mandatory, however, only those residential aged care homes that are certified can charge accommodation bonds and have access to additional streams of recurrent government funding. Because compliance with building standards is a precondition for aged care service providers receiving other government benefits, the certification program is regarded as an example of ‘quasi–regulation'.7

DoHA's role

The Department of Health and Ageing (DoHA) is responsible for ensuring that Approved Providers meet their obligations under the Aged Care Act 1997. The oversight function and policy formulation aspects of the certification program are managed from DoHA's Central Office within the Ageing and Aged Care Division (AACD), with day-to-day administration undertaken by the department's State/Territory Offices (STOs).

DoHA provides inspection services for certification through a contracted arrangement with a private sector firm (contracted assessor) with expertise in the building industry. The contracted assessor uses the Certification Assessment Instrument to assess aged care homes during certification inspections.

Audit objective and scope

The objective of the audit was to assess DoHA's administration of building certification of residential aged care homes. The ANAO examined DoHA's arrangements to: plan for, and report on, the certification program; manage the delivery of certification services; and manage stakeholder relations.

The audit did not seek to validate assessments made under the program by DoHA's contracted assessor and, therefore, does not form an opinion on whether residential aged care homes should or should not have been certified.

Overall audit conclusion

The certification of residential aged care homes was introduced in 1997 as a component of the Aged Care Act 1997. The objects of this Act include the promotion of a high quality of care and accommodation for the recipients of aged care services that meets the needs of individuals.

To implement and administer the certification program DoHA has: successfully developed a 10 Year Forward Plan, setting out a framework of minimum standards and target dates for residential aged care homes; established and monitored procedural arrangements to promote compliance with key legislative requirements for the application, assessment, notification and review of certification services; and in recent years, appropriately targeted its resources and communication towards the minority of aged care homes that are yet to meet certification requirements.

The certification program has been in operation since 1997 and is expected to be reviewed in 2008. As such, it is timely for DoHA to consider the lessons learned during the past ten years and the extent to which the certification program has met its objectives. Based on this audit, areas that could be strengthened include:

  • a more effective performance information framework to assist internal decision making and provide more comprehensive information on program outcomes; and
  • a more formal, structured communication strategy that better allows DoHA to engage with key industry stakeholders to identify emerging certification issues.

The objective of DoHA's 10 Year Forward Plan is to encourage improvement to the safety and amenity of aged care buildings beyond the legislated requirements of State, Territory and local governments. The target deadlines of the 10 Year Forward Plan provided DoHA with a clear timeline to benchmark and guide the certification program. The indicator used by DoHA to track the results of the certification program is the extent of residential aged care services that meet the required minimum building standards. In its 2006-07 Annual Report, DoHA reported that, at June 2007, 96.3 per cent of residential aged care services met the required minimum building standards.

DoHA's performance indicator for the certification program is a single aggregated measure of the number of residential aged care facilities that have been certified. While DoHA's current performance indicator provides sufficient information to assess the extent to which certification has achieved pre-determined targets, measurement of the impact of the certification program could be enhanced to better capture its contribution to the objects of the Aged Care Act 1997, that is, the delivery of high quality of care and accommodation for the recipients of aged care services that meets the needs of individuals.

DoHA would be better informed in its program management if it were to supplement its single performance measure relating to the number of homes certified with additional information, differentiated appropriately to address critical areas of high quality accommodation and amenity, such as fire safety, and privacy and space. Balanced sets of performance information aid program management as they provide more comprehensive information for decision makers, and enable the investigation of the interactions and inter-relationships between factors that influence outcomes.

The focus on building certification has created a specialised and professional industry for the design, building and management of aged care facilities that did not exist prior to the program. The certification program was developed and implemented by DoHA with wide ranging and active involvement of all sectors of the aged care industry. Overall, these industry stakeholders supported the certification program and considered that it had been both needed and successful in achieving improvements to the building stock of aged care facilities.

However, to meet its obligations under the Aged Care Act 1997, DoHA is required to effectively monitor Approved Providers against building certification standards. In this regard stakeholders have identified ongoing issues that would benefit from greater engagement between DoHA, Approved Providers and the wider industry to improve the effectiveness of certification. These included addressing varying interpretations of the Certification Assessment Instrument and potential conflict between the Instrument and the Building Code of Australia.

DoHA's management of industry feedback requires continued engagement with Approved Providers and the wider industry. A more formal, structured communication strategy, including regular feedback mechanisms, would allow DoHA to better engage with key industry stakeholders, identify emerging certification issues, and promote the communication of consistent messages over time.

Key findings by chapter

Planning and reporting on the certification program (Chapter Two)

In examining DoHA's strategic and operational planning and reporting of the certification program, the ANAO reviewed the department's:

  • approach to risk management;
  • certification plans; and
  • performance information and reporting.

Approach to risk management

DoHA has departmental and divisional Risk Management Frameworks. However, it does not have a risk plan specific to building certification that would enable the department to formally identify, assess, treat, and monitor the risks associated with this program.

Risks such as homes not meeting the established deadlines, home closures due to failing certification requirements, and potential stakeholder dissatisfaction were not identified and documented in a risk management plan. Instead, DoHA addressed major risks as they materialised over the life of its 10 Year Forward Plan for building certification. For example, DoHA has: offered voluntary assessments to homes; undertaken a process to identify and actively manage those homes assessed as high risk in terms of meeting the 2003 fire safety deadline; and conducted a series of educational seminars aimed at industry professionals involved in designing, building and certifying aged care facilities.

The ANAO suggests that, in progressing arrangements for any future certification program, DoHA documents its approach to managing the risks including the identification, assessment, ranking, treatment, monitoring and review of these risks.

Certification plans

The objective of the certification program is to encourage improvement to the safety and amenity of aged care buildings beyond the legislated requirements of State, Territory and local governments.

In 1999, DoHA implemented a 10 Year Forward Plan designed to give effect to the aims identified for the program. The 10 Year Forward Plan provided direction for DoHA, industry and Approved Providers with the goal of meeting set targets by nominated calendar deadlines. The plan incorporated:

  • a December 2003 target date for meeting fire safety standards (these relate to the way Approved Providers and staff respond to fire emergencies, and safely and successfully remove residents from harm); and
  • a December 2008 target date for meeting privacy and space standards (these relate to the number of residents per room, and access to toilets and showers).

All certified Approved Providers were required to meet new fire safety standards by the end of 2003. Following recognition by DoHA of industry concerns that this target was unachievable, owing to considerable building work and aged care industry renovation and construction delays, the deadline for compliance was revised to December 2005.

The 10 Year Forward Plan also established further building improvements relating to privacy and space to be met by the end of 2008. Approved Providers have been aware of these privacy and space requirements and the 2008 deadline since the 10 Year Forward Plan was developed. Approximately 300 homes indicated to DoHA, through the 2006 Annual Fire Safety Declaration,8 that they may not comply with the privacy and space requirements by the end of 2008. The industry has advised DoHA that the ability of these homes to meet the December 2008 privacy and space deadline is also contingent upon the volume of construction work, renovation and building delays. There has been ongoing engagement between DoHA's State and Territory offices and its Central Office to confirm the list of potentially non-compliant homes and agree on activities to work with Approved Providers who have indicated they may be non-compliant.

Performance information and reporting

The two key accountability documents for each government portfolio are Portfolio Budget Statements (PBS) and Annual Reports. There is no performance information specific to building certification listed in DoHA's Portfolio Budget Statements 2007–08. Certification is briefly mentioned in DoHA's 2006-07 Annual Report. The indicator reported is that, at June 2007, 96.3 per cent of residential aged care services met the required minimum building standards.

The certification program sits within a hierarchy of objectives. The objects of Aged Care Act 1997 include: to promote a high quality of care and accommodation for the recipients of aged care services that meets the needs of individuals. The objective of DoHA's 10 Year Forward Plan is to encourage improvement to the safety and amenity of aged care buildings beyond the legislated requirements of State, Territory and local governments.

The key indicator for success for the certification program is found in DoHA's 10 Year Forward Plan and focuses primarily on the numbers of residential aged care facilities certified by the documented timeframes. That is, the number of residential aged care homes that meet recognised fire, safety and privacy standards.

DoHA's current performance measure is both a quantity indicator and a high-level quality indicator. The indicator provides sufficient information to assess the extent to which certification has achieved pre-determined targets. It is also an aggregated measure of quality, specifically the extent to which certification embodies recognised building standards.

Internally, DoHA maintains data on the number of residential aged care facilities certified against calendar deadlines and quantitative statistics such as the number of inspections conducted. For example, the number of homes declaring non-compliance with State, Territory and local government fire and safety regulations.

DoHA's measurement of the impact of the certification program could be enhanced to better capture its contribution the objects of the Aged Care Act 1997. DoHA would be better informed in its program management if it were to supplement its single performance measure relating to the number of homes certified with additional information, differentiated appropriately to address critical areas of high quality accommodation and amenity, such as fire safety, and privacy and space. For example, surveys of Approved Providers could establish the contribution of certification on resident safety through the capability of service providers and staff to respond to fire emergencies, and safely remove residents from harm.

Customer satisfaction, although less tangible, can also be used to assess the quality of a service. DoHA could, for example, collect feedback via surveys from residents (who pay the accommodation bond) on their experience of the privacy and space standards. Recording and reporting trends in the feedback from residents of their experience of the privacy standards would be an enhanced measure of quality.

In order to enhance internal program management and stakeholder understanding of the effectiveness of the certification program, there would be benefits in DoHA developing a more effective performance information framework. Monitoring trends over time against enhanced effectiveness measures would assist internal decision making and provide more comprehensive information on program outcomes.

Managing the delivery of certification services (Chapter Three)

The certification process has a sound legislative base. To assess if DoHA's administration of the certification program met its legislative obligations under the Aged Care Act 1997, the ANAO reviewed key stages in the certification process including:

  • the assessment form used to determine whether an aged care facility meets specified building standards and the method of evaluation;
  • following evaluation, notifications by the Secretary of DoHA of certification determinations; and
  • reviews undertaken by DoHA to determine the certification status of previously certified facilities.

The certification assessment form and method of evaluation

The certification of aged care homes is required to be undertaken by an independent person or body using an assessment tool approved by the Secretary of DoHA.

The 1997 Certification Assessment Instrument was developed by DoHA in consultation with industry and used for the initial certification inspections. By the end of 1997, all Approved Providers who chose to seek certification were certified. In line with the 10 Year Forward Plan and the objective of continuous improvement, the 1997 Instrument was revised in a 1999 Instrument. The 1999 Instrument was last revised in 2002.

Since 1997, DoHA has delivered the inspection services of the program through a contracted arrangement with a private sector organisation with expertise in the building industry. Assessments authorities are contracted through an open tender process and, in the life of the program, there have been three companies contracted to provide certification assessment and technical support services for the certification program.

The contract with the current assessment authority expired on 31 December 2007. In recognition of the conclusion of the 10 Year Forward Plan for certification at the end of 2008, DoHA decided to re-engage the current assessment authority for one year only while the future of the certification program was decided. This direct sourcing approach by-passed open tendering and, during the audit, DoHA instituted a formal Request for Quotation process during the audit in line with the requirements of the Commonwealth Procurement Guidelines.

Notification of the Secretary's determination

Under the Aged Care Act 1997, DoHA has 90 days from receipt of an Approved Provider's application for certification, to notify an aged care home in writing, whether it has been certified. In the initial stages of certification in 1997, delays occurred in processing applications and the 90 day timeframe was exceeded on a number of occasions. This was in part owing to the number of applications to be processed but also because of changes in the direction of the program that delayed the proclamation of legislation. Since 1997, notification timeframes have been adhered to by DoHA.

Reviews of certification status

In order to manage the certification program, DoHA has produced a comprehensive range of guidance material for use by staff as well as stakeholders. An area of ongoing focus has been reviews.

Section 39-4 of the Aged Care Act 1997 provides for DoHA to review the certification status of a residential aged care facility. In the majority of cases reviews are conducted where homes have been extended or substantially refurbished, or have not met certification requirements, for example fire and safety. There were occasions of inconsistent application of review criteria by DoHA's State/Territory Offices (STOs) owing to a level of uncertainty about when to conduct a review. DoHA records show that Central Office (CO) has had ongoing concerns over the STOs management of the review process and to encourage a consistent approach has provided STOs with guidance on the triggers for a review under s39-4 of the Aged Care Act 1997. This should improve the consistency of decision-making across DoHA and enhance the confidence of Approved Providers in the application of the review criteria.

DoHA's management of stakeholder relations (Chapter Four)

The relationships that an agency has with service providers can make an important contribution to the effective administration of a program that has a heavy emphasis on compliance by those service providers. Monitoring compliance against codes or standards while adhering to good customer service principles requires an appropriate balance to be struck between using the powers and authority prescribed in relevant legislation and encouraging compliance through effective communications and relationship management. In examining how DoHA manages its relationship with stakeholders involved in certification, the ANAO assessed:

  • DoHA's communication strategy; and;
  • stakeholder support for certification and examples of critical feedback.

DoHA's communication strategy

While DoHA does not have a formal documented communication strategy for certification, it has focused considerable effort on communication with industry when deemed appropriate including:

  • formal consultative arrangements during the implementation phase;
  • informal and ad hoc forums; and
  • the provision of guidance material.

The certification program was developed and implemented in 1999 with wide ranging and active involvement of all sectors of the aged care industry. The ‘Committee for the Quality for Aged Care Accommodation' was particularly active in the development of matters relating to the direction of the program.

In 2006, DoHA, in consultation with the contracted assessor, supported industry with a seminar on the changes to the Building Code of Australia (BCA) in relation to the inclusion of aged care facilities into the new 9c building classification of the BCA (BCA 9c specifically relates to building standards in aged care facilities)9 and the impact on DoHA's certification process and Instrument.

DoHA has provided a wide and diverse range of products in a number of formats to advise and guide industry on the requirements of the certification program. The certification assessment instrument, accompanying guidelines, scoring matrix and the certification manual are all available to Approved Providers through the department's website. These documents are also available to Approved Providers in hard copy.

In recent years, because the majority of homes have met certification requirements, DoHA's resources to administer the program and its communication efforts have been targeted toward those homes that are yet to meet certification requirements and/or may be subject to review.

Stakeholder support for certification and examples of critical feedback

Stakeholders generally supported the program and considered it had been both needed by the industry and successful in achieving improvements to the building stock of aged care facilities. However, many stakeholders considered that certification may no longer be relevant owing to:

  • progressive yearly revision and update of the Building Code of Australia (BCA);
  • improved State, Territory and local government regulations on fire safety; and
  • the maturity of the industry.

Stakeholders identified ongoing issues that would benefit from greater engagement between DoHA, Approved Providers and the wider industry to improve the effectiveness of certification, including:

  • varying interpretations of the Certification Assessment Instrument by both the contracted assessor and amongst their peers, resulting in a potential lack of consistency of application; and
  • potential conflict between the Certification Assessment Instrument and the BCA.

DoHA acknowledges that there will be an element of judgement associated with any assessment and there will always be a risk of inconsistency. Accordingly the department has adopted a number of measures to reduce this risk including requiring that all assessors employed by the contracted assessor are qualified and licensed building surveyors who practice within the wider building industry.

However, Peak Bodies and Approved Providers have raised concerns regarding their perception of a lack of engagement and response to broader industry feedback. The ANAO notes that DoHA has not undertaken a formal stakeholder satisfaction assessment during the last 10 years. A more formal, structured communication strategy, including regular feedback mechanisms, would allow DoHA to better engage with key industry stakeholders, identify emerging certification issues, and promote the communication of consistent messages over time.

Summary of DoHA response

The Department is supportive of the audit report as a constructive and timely appraisal of the certification program that will inform our deliberations on continuing improvement of building quality in residential aged care. The Department agrees with the two recommendations.

Recommendations

The certification program is expected to be reviewed in 2008, and DoHA is considering the design of any future initiative to maintain and improve the physical standards of residential aged care buildings. Subject to the future design of the certification program beyond 2008, the ANAO made two recommendations that focus on a balanced set of effectiveness measures and communication with key industry stakeholders.

Footnotes

1 Organisation for Economic Co-operation and Development.

2 DoHA website: <http://www.health.gov.au/internet/budget/publishing.nsf/content/health-b... [accessed 16 October 2007].

3 DoHA estimate; this amount represents money invested by the aged care sector and the Australian Government.

4 This Act also provides for the Commonwealth to give financial support through payment of subsidies for the provision of aged care and through payment of grants for other matters connected with the provision of aged care. ComLaw website: <http://www.comlaw.gov.au/comlaw/Legislation/ActCompilation1.nsf/0/F927CE..., [accessed 3 March 2008].

5 An Approved Provider is an organisation which has been approved by the Secretary of the Department of Health and Ageing to provide Australian Government funded aged care under the Aged Care Act 1997.

6 DoHA advised that, as at February 2008, 60 of the nearly 3000 residential aged care homes have not yet met the higher certification program standards for fire and safety.

7 A discussion of the various forms of regulation, including examples, can be found in Office of Best Practice Regulation, Best Practice Regulation Handbook, Appendix A, Canberra, 2008.

8 Approved Providers are required to submit an Annual Fire Safety Declaration to DoHA which reports their status with regard to fire safety requirements under certification.

9 The Australian Building Codes Board (ABCB) develops the Building Code of Australia (BCA). CH Group website: CH Group Seminars, <http://chgroup.com.au/2006/07/06/national-9c-registration/> [accessed 8 October 2007].