Trust is the real story for aged care providers – the class action comes next

For those of you who sat up last night to watch the 60 Minutes feature ‘Age of Greed’, it’s easy to get caught up in the allegations directed at a single operator – Arcare Aged Care. 

What happens next is important. Allegations are not findings, and every organisation is entitled to defend itself. 

But for the aged care sector, the story isn’t the operator. 

It’s what comes next. 

The class action

Class actions don’t disappear when the headlines do. 

Following intense scrutiny in 2017, the class action against Aveo hung over the retirement living sector for more than five years. 

When CEO Tony Randello finally resolved the matter, for Aveo and, in many respects, the wider sector, he described it as one of the most difficult periods of his 20-plus-year career. 

Since the Aged Care Royal Commission, providers, Governments and regulators have spent almost a decade rebuilding public confidence in aged care. 

Progress has been made. 

But confidence takes years to build and only moments to undermine. 

This story also arrives at an awkward time. The sector has rightly argued that aged care must become more investable. Australia needs billions of dollars in new capital, more providers willing to expand, and greater confidence from investors if it is to meet the growing demand for care. Ironically, Arcare has been one of the sector’s most prolific builders in recent years. 

Investability isn’t built on demographics alone. 

It’s built on confidence. 

The sector has spent the past two years telling Governments and investors that aged care is ready for more capital. Stories like this don’t stop investment overnight. But they do remind investors that reputation is part of the risk equation. 

Unlike retirement living where negative media attention cost the sector $3+ billion by our calculations, aged care is unlikely to see demand evaporate. The supply and demand equation is simply too strong. More Australians need care than there are beds available. 

Instead, the impact is likely to be felt somewhere else. 

Admissions.

Every conversation with families will come under greater scrutiny, from financial discussions and additional service agreements to explanations of what is included, what is optional and what residents are paying for. 

The lesson from this week isn’t simply about one provider. 

It’s that every provider is now operating in an environment where every admission, every fee and every consumer agreement will be viewed through the lens of trust. 

The legal process will determine the outcome of the class action. 

The sector, meanwhile, has its own challenge: communicating clearly with families about what they are paying for, why they are paying for it, and why they can continue to place their trust in aged care.