The For-Profit Aged-Care Industry Has Led to Crisis

The epicenter of Melbourne’s COVID-19 outbreak is, predictably, aged-care homes, where years of marketization have led to an industry based on low wages, understaffing, and cost cutting. Amid the tragedy taking place in aged care, we need to call for an overhaul of the entire for-profit system.

Many aged-care facilities are overcrowded and underfunded, staffed by a precarious and undervalued workforce. (David Ramos / Getty Images)

According to data collected from twenty-six countries, residents of aged-care homes make up 47 percent of COVID-19 associated deaths so far. In Melbourne, which, despite its earlier lockdown, has been hit with a wave of runaway infections since early July, care homes have become one of the predictable flash points of the crisis. There are at least 1,000 active cases among staff and residents in aged care, linked to 103 aged-care homes across Victoria.

Viruses, such as influenza, have long been the scourge of care homes where large numbers of frail and immunocompromised people live in close proximity. COVID-19 is much more deadly and transmissible than a seasonal flu.

Yet the high rates of infection and death in aged care were not inevitable. Many aged-care facilities are overcrowded and underfunded. They are staffed by a precarious and undervalued workforce, often working at multiple homes on casual contracts that provide no sick leave.

When the pandemic broke out, many homes lacked the resources or space to practice social distancing — some even lacked personal protection equipment. Just as in Italy, the United States and the UK, decades of neoliberal reforms have subordinated the aged care sector to the market, often elevating profit over the health and wellbeing of residents and workers.

Although advocates warned of this danger, tragically, it took the coronavirus to fully expose the long-term crisis in Australian aged care — a crisis that more than two decades of neoliberalism has failed to address.

Aged Care for Sale

Poor quality care in aged-care homes has been a problem for decades. National quality and funding standards were first established by the Commonwealth in 1988 to address serious deficiencies in care. Since 1996, both Liberal and Labor governments have responded to continued calls for reform through marketization, while tweaking quality standards and monitoring.

This agenda was consolidated by the Aged Care Act 1997, passed by John Howard’s government, which entrenched a user pays approach. It rolled back regulation, introduced means testing, and allowed residents to pay greater private contributions. Spurred by powerful industry interests, the Howard government also proposed to replace Commonwealth regulation and accreditation with industry self-regulation — but this was abandoned after a public backlash.

Howard’s reforms sought to redefine aged care as a commodity rather than a universal right, and later the Turnbull government pushed this further, extending means testing and allowing aged-care providers to levy accommodation contributions from residents, further shifting aged-care expenses onto older people.

These reforms allowed an increasingly stratified system to flourish, with luxurious and better serviced aged care available for those who could afford it. They have also encouraged large corporations — like private health insurers — into the industry, attracted by the prospect of a future-proof, government subsidized and relatively risk-free investment. While non-profits continue to provide the largest proportion of aged-care beds, current funding arrangements put them at a disadvantage. They, too, are being pushed to restructure along corporate lines.

Defenders of market-based aged care predictably cite “customer choice” as justification for their model, claiming that consumers will reward quality and innovation while pushing bad actors out of the sector. Yet even before COVID-19, these arguments had been thoroughly debunked.

The supply of aged-care places is still determined primarily by government expenditure, not consumer demand. And even taken in its own terms, the claim that aged-care residents can vote with their feet is unrealistic. Many people enter residential aged care after hospitalization for a medical emergency. They generally don’t have the time, knowledge, or resources to make informed choices.

Older people often end up being funneled by government services into the first available place. People on low-incomes, who lack assets or who are experiencing dementia or disability can find it almost impossible to relocate if they are receiving substandard care. Families attempting to move an older relative to a better facility have even reported threats of reprisal from providers.

Despite two decades of market-based reform, frequent media exposés, government inquiries, and now an Aged Care Royal Commission still continue to uncover systematic neglect and abuse of older people in the sector.

Bare Bones

A consequence of marketization is that aged-care homes have grown larger; between 2002 and 2013, the number of homes with over sixty beds doubled. This shift is driven by economies of scale. As aged-care providers receive about $160 funding per day, per resident, both for-profit and non-profit providers have an incentive to increase the density of residents within single facilities, cutting staffing costs and reducing overheads.

Unsurprisingly, the COVID-19 outbreaks in Australia have been most devastating in larger homes where there are more opportunities for viral transmission: Newmarch House contains over 100 beds, St Basil’s had over 150 before it was evacuated.

At the same time, aged-care labor has been deskilled and aged-care workers’ conditions degraded. Marketization incentives lower staffing levels, in turn making it difficult for workers to provide quality care.

New South Wales legislation requires only one registered nurse on duty per high care facility, regardless of whether it contains twenty or a hundred residents. Federal legislation requires no registered nurses on duty at all. Consequently, from 2003 to 2016, the proportion of aged-care workers with nursing qualifications fell by 10 percent. Aged-care nurses are poorly paid compared to hospital nurses and much of their time is consumed with paperwork, making the job unattractive to those with clinical skills and experience.

The appalling conditions and precarity of aged-care work has directly contributed to the COVID-19 outbreak. The majority of care work is performed by personal care assistants, who are not provided mandatory training in infection control. Many of these workers are employed through agencies and work across multiple sites, creating potential vectors for spreading infection.

A recent industry survey found aged-care workers feel unprepared and are unsure about what to do in case of an outbreak. Some care homes are still reporting shortages of personal protective equipment. A lack of basic entitlements like sick leave has meant that many workers were unable to afford time off, even while symptomatic. Although the Federal government is now promising subsidies to those unable to work due to COVID-19, moves to restrict workers to one workplace may push those who depend on multiple jobs into poverty.

The aged-care industry already had a bad reputation for low pay, high workloads and poor career prospects. Workforce shortages were already endemic. COVID-19 has added to these incredible pressures on aged-care workers. They have already endured months of lockdown, dealing with the frustrations of isolated residents and their families. As the human consequences of the outbreak in aged care hit, government and the industry may pin blame on individual workers. But this should be resisted. This tragedy is the consequence of political decisions.­


Academics and policy makers never tire of repeating that the ageing population presents a “demographic time bomb.” As people live longer, there will be an increasing demand for health or social care — and with it, greater demands on informal caregivers. Coupled with this is the growing public relations problem for governments in managing the impact of neoliberalism and austerity on quality of care.

At the same time, neoliberalism reinforces the idea that once an older person requires long-term care, they are no longer contributing to the economy, either as producers or through avid post-retirement consumption. They are instead seen in terms of their cost to government.

Care homes already have a negative reputation as a “fate worse than death,” or as bleak places full of hopeless and unhappy people who are waiting to die. Such perceptions devalue aged care work, older people and impact on mental health. The majority of aged care residents have symptoms of depression.

Outside of aged care, there is also a lack of appropriate and affordable supported housing for low-income older people with insecure accommodation or unsuitable homes. This insecurity puts older people at risk of escalating health crises, often culminating in preventable admissions to hospital and care homes.

All this affects our ability to imagine doing things differently. Aged care becomes something we try not to think about; something that conjures feelings of dread and guilt.

The royal commission has already declared the need for a “fundamental overhaul of the design, objectives, regulation, and funding of aged care in Australia.” They recognize that more tinkering with accreditation and quality standards will not improve things. The Department of Health also proposes to split funding between residents’ needs and costs shared across a care home.

This is intended to make providers more accountable to government and could potentially force improvements in staffing levels and skills. But to work well, aged care would require more generous funding from government — something the Australian public broadly supports.

However, we must go further and imagine other ways of designing aged care. Aged care design — including spending — should incorporate input from the community and older people. And homes should incorporate democratic management structures which include the people living and working there, a model that is already being explored around the world.

Research shows that aged-care residents are happier and healthier living in smaller clustered units rather than large facilities. Smaller homes with individual rooms, less foot traffic, and clinical features such as washbasins would mean facilities are better prepared for viral outbreaks. There is also a clear need for higher pay, better training, and improved conditions for aged-care workers, as well as greater consistency of staff members within facilities.

Not only would the latter reduce the spread of infection between workplaces, it also means workers and residents become more familiar with each other. These relationships — not consumer choice — is a far better guarantee that aged-care workers are valued properly and that the care they deliver is sensitive to individual residents’ needs.

The views in this article are the author’s own and do not reflect the views of any organization he is affiliated with.

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Andrew Gilbert is a research fellow in social gerontology at the National Ageing Research Institute in Melbourne, Australia.

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