A number of facilities are up for grabs with several state governments planning sell-offs. But such moves can be politically costly. Megan Stoyles reports.

The NSW government’s attempt to sell off 11 state-owned aged care facilities has stalled. The process, announced by then health minister John Della Bosca in March 2009, was meant to conclude by early 2010. It has now blown out to late 2010 – taking it closer to the state election in March 2011.

Political instability, ministerial changes in the health portfolio and strong local opposition – including from local state labor MPs – forced a back down in Wallsend, in the Hunter Valley and Murrumburrah Harden.

New health minister Carmel Tebbutt said on 21 December that the expressions of interest “did not meet the evaluation criteria necessary for privatisation”, without specifying which of the stated criteria – service delivery, special care, human resource and staffing, transfer management, financial or legal and commercial – could not be met.

The 2009 announcement led to local community and union pressure to amend or withdraw the plans and to guarantee Commonwealth-funded beds would stay in the region and not be bought by private interests and relocated elsewhere.

Expressions of interest closed in May and by July Della Bosca said that 13 aged care providers had been invited to submit detailed proposals which “may lead to the transfer of the remaining state-run nursing homes to non-government organisations” in Corowa, Holbrook, Leeton, Harden-Murrumburrah, Picton, Gloucester, Muswellbrook, Penrith, Waterfall and Wallsend.

The 13 providers included a major private group, Moran, as well as established state-wide non-profits Baptist Community Services NSW and ACT, Catholic Care and Illawarra Retirement Trust, as well as some local services.

Della Bosca justified the sell off, saying that only 1.4 per cent of NSW’s aged care facilities were state owned, and that the sale “completed NSW Health’s 1996 residential aged care reform program to transfer state government residential aged care facilities to the non-government sector”.

However, the political pain of the sell-off has, and will, come from the government’s emphasis – but not promise – on ensuring that aged care places stay in the local area, continued provision of quality care to residents, particularly high care, and supporting staff throughout and beyond the transfer process.

Some of the interested purchasers believe that bed licences can be relocated, once the transfer has been approved by the Commonwealth, and that the state government cannot place any caveats to keep the beds in situ.

Queensland and Victoria will be monitoring the NSW situation closely – they too have facilities which are a growing cost to their state budgets, through large wages bills, and substantial upgrading and operating costs.

The Victorian Government is a major provider of residential aged care services with 6400 places or 14 per cent of the state total. It commits $104 million in aged care funding and is the major provider of non-metropolitan residential aged care. State ownership comes at an extra cost where acute and residential services are co-located or serviced; the nursing staff are paid at hospital rates, some 25 per cent above the aged care industry rate.

The Victorian government does not agree with Della Bosca’s statement that “expertise in the provision of aged care services, both community-based and residential, lies in the non-government sector”. Its 2009 aged care policy document says: “Residential aged care services represent significant capital investment by industry, government and individuals and it is important that such investments are an effective use of resources for communities. Residential aged care service providers are also important employers and purchasers of goods and services, contributing to local economies.”

It could also have contributing votes as well. Rather than ceding expertise, and beds, to the non government sector, it has committed to continuing the upgrading and improvements in its residential aged care services.

In Victoria, state ownership has bipartisan support. While the previous Coalition government, under Jeff Kennett, privatised many state government services, it did not move on the aged care sector. This was due to the views of the national party and its own non-metropolitan MP s about the value of those country votes.

This attitude was confirmed recently with a brief stoush over the threatened closure of Sea Lake, a community-owned not-for-profit hospital and 28 bed aged care facility near Swan Hill. Its solvency was threatened when four of its high care beds became vacant. After media exposure – and with an eye to both state and federal elections – a $2.35 million rescue package was put together by both governments. However, industry observers claimed Sea Lake had been “rewarded for bad governance”.

Meanwhile, in Queensland, there are no official moves for the government to divest itself of its 1500 plus beds in 20 facilities in rural and regional areas. The latest state budget said that no further facilities would be constructed unless a special case is made for a remote area. It is understood, however, that Queensland Health will hand back beds over time as they move to a sub acute rehabilitation focus.

Commentators suggest state ownership may have influenced the federal Minister for Ageing’s response to quality and care issues. In June 2009, Justine Elliot seemed more sanguine about a mice plague, resulting in a resident’s death, in Karingal – a state owned facility in Dalby, Queensland – than she has been over compliance issues elsewhere.

While she expressed concern and ordered an investigation, which reported long-term problems which had not been addressed, she merely forwarded it to the state minister for his attention.

Queensland Health has a reasonably high number of sanctions and Aged Care Queensland is providing support to help them improve. Industry leaders have repeated expressed dismay that if any other operator had this problem it is unlikely the minister would have been so understanding.