Governing body determinations

What is an advisory body?

An advisory body is a group of individuals who provide insight and advice to the governing body on issues that may face an organisation. An advisory body can be known by many different names including advisory panel, advisory council, steering committee, think tanks and board of advice.

An advisory body is NOT a governing body and does not have the responsibilities of a governing body.

What is a governing body?

A governing body is a term used to identify the group of people assigned the responsibility to govern an organisation, company, or other similar entity.  A governing body is a legal requirement of a number of different forms of for-profit and non-profit organisations.

Your organisation’s governing body might be called a board of directors, board of trustees, committee, management committee, council, governing board or responsible entity, depending on your organisation’s legal form or constitution(s).  The individuals who serve on your governing body might be called board members, directors, committee members, non-executive directors or trustees.

What do you mean by the term ‘Independent non-executive governing body member’?

There is no definition of independent non-executive governing body member in the Aged Care Act 1997. The Commission encourages approved providers to consult the principles set out in the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations, specifically Principle 2.

What do you mean by the term ‘Clinical Care’?

Clinical care is health care that encompasses the prevention, treatment and management of illness or injury, as well as the maintenance of psychosocial, mental and physical wellbeing. It includes care provided by doctors, nurses, pharmacists, allied health professionals and other regulated health practitioners. Organisations providing clinical care are expected to ensure the care provided is best practice, meets the consumer’s needs, and optimises the consumer’s health and wellbeing.

What are the governing body membership requirements?

Providers need the right mix of people to drive the continuous improvement processes that deliver the high quality of care and services that older Australians deserve. Under the changes to the Aged Care Act and the Aged Care Quality and Safety Commission Act, providers must ensure their governing body meets two requirements:

• it has a majority of independent non-executive members
• at least one member with experience in providing clinical care.  

If you became an approved provider on or after 1 December 2022, you need to meet these requirements from the date you become approved.

If you are an existing approved provider, you have until 1 December 2023 to meet these requirements.

What about aged care providers approved on or after 1 December 2022?

If your organisation applied to become an approved provider on or after 1 December 2022 you must meet the governing body requirements from the date you are approved.

If you are an existing approved provider, these requirements do not apply to you until after 1 December 2023.

Do the governing body membership requirements apply to all approved providers?

No. You are not required to meet the governing body requirements if you meet the following criteria:

• You have fewer than 5 members on your governing body and fewer than 40 consumers receiving aged care services
• You are a state or territory approved provider, including state or territory authorities
• You are an approved Aboriginal Community Controlled Organisation (ACCO) provider. 

Our organisation is owned by another company that provides oversight of our operations.  They have board members who could also be a member of our governing body.  Is that ok?

This scenario is likely to give rise to, at least, an apparent conflict of interest for these board members, if not an actual conflict of interest.

The Aged Care Act 1997 places a responsibility on providers that are corporations to ensure that their constitution does not authorise an individual who is a director of both a parent company and its subsidiary company, to act in the best interests of the parent company.

However, that may not completely remove the potential for a conflict of interest to arise and a provider would need to carefully consider its own circumstances to be able to demonstrate that the individual’s role did not conflict with their obligation to bring an independent judgement to matters before the governing body.

Consistent or recurring significant conflicts would require you to consider their ongoing suitability for the role.

Do I need to meet the governing body membership requirements if I have 41 consumers receiving aged care?

Yes. We know that organisations change over time, including changes to the number of governing body members and consumers. Because of this, you should be prepared to respond to those changes. For example:

• If your organisation has fewer than five members in the governing body and you currently have 38 consumers receiving aged care services, you do not need to meet the two governing body membership requirements. However, since consumer numbers can change over time, if your number increase to 40 or more at any point, you will then need to meet the requirements or apply for a determination.
• If your organisation has fewer than five members in the governing body, but you have more than 40 consumers receiving aged care services, you will be required to meet the two governing body membership requirements. If you are unable to meet these requirements, you will need to submit an application for a determination.

We want to meet the governing body membership requirements, but my organisation is small, only one service, and we are located in a remote area. This makes it very difficult to find people locally. What other options do we have so that we can meet the requirement?

The Commission is aware that some providers may face challenges in meeting one or both of the governing body membership requirements and might need extra time to achieve compliance.

It can be more difficult for providers operating care services in a rural or remote area to attract and retain skilled staff with clinical care experience. It might also be costly or challenging to find suitable independent non-executive members.

Have you considered:

• how technology could be used to engage members from neighbouring towns or medical practices remotely?
• working with other approved providers who are facing the same circumstances. You might be able to work together to find a solution that is mutually beneficial?  

If you have explored and tested all options but are still unable to meet the governing body membership requirement you can apply for a determination.

What if I can’t meet the governing body membership responsibilities?

Providers can apply to the Commission for a determination decision. The Commission may determine that you are not required to meet the governing body membership responsibilities.

The Aged Care Act sets out how a determination can be requested, and the matters that the Commissioner must consider when deciding whether to approve a determination.

The determination matters are:

• the number of aged care services where you provide aged care
• the location of those services
• the annual turnover of your key personnel
• the membership of your governing body
• any arrangements that you have made, or will make, to assist:
  • the members of your governing body to act objectively and independently in the best interests of the provider; or
  • the governing body of the provider to seek, when necessary, advice from a person with experience in the provision of clinical care
• any other matter detailed in the Accountability Principles.

You can also read the determination provisions as outlined in section 63-1E of the Aged Care Act.

Determination decisions are made by the Commissioner or their delegate.

What is the difference between a Governing Body and a Board of Directors?

A governing body and a board of Directors are terms used to describe the top level of an organisational structure that has oversight of a company’s operations. If an approved provider is not incorporated under the Corporations Act 2001 (Cth), then its governing body is the group responsible for its executive decisions.

Whilst governance structures will be unique to each organisation, you need to understand and document:

• the identities and roles of key stakeholders (e.g. board of directors or governing body members, executive management). The role of an organisation’s board of directors and the extent of its involvement in day-to-day management may vary significantly, depending on the type of organisation and the size, nature and complexity of its business or activities.
• the powers granted to each stakeholder and the foundation of these powers (for example, do the powers arise from legislation, the constitution, or other authorising documents?)
• the reporting responsibilities of each stakeholder and who they report to (for example, the CEO reports to the board, the board reports to members)
• the extent of board members and executive management’s decision-making powers.

We are a small family run service, and our managers are people in our family. We pride ourselves on being family run and this is one of our strengths. We have concerns about other people becoming part of our board because we don’t want our organisation to change. Why do we have to have independent non-executive members?

Governing bodies have ultimate responsibility and influence over the care and services provided to consumers. The new requirements aim to strengthen leadership and culture of organisations and support the best interests of consumers.

The Royal Commission identified the importance of non-executive members. They bring independence and objectivity to a governing body, and can play a valuable role in challenging, monitoring and holding management to account.

Effective governance relies upon appropriate separation between the board and those key personnel managing the organisation on a day-to-day basis. In considering people to perform this role, reach out to like-minded people in the community who have a shared interest in improving aged care services and whose values align with yours. They should also have skills and knowledge to complement your other governing members.

Although an independent non-executive member will provide objective input into your decision making and should be open to hold management to account, it does not alter the ownership of a family run business.

Where can I find someone to join my governing body?

Consider board of director associations that advertise board vacancies for Aged Care Services. You may be able to find interested people, through these associations; noting there may be a membership fee to access this list.

You can also collaborate with other nearby approved providers, or health/medical centres to find independent members for your governing body.

Here are a few ideas that might help you in meeting these requirements:

• advertise your governing body role in other localities. There is no barrier to engaging someone on your governing body who is not local and can attend meetings and provide input and advice virtually
• seek assistance from your aged care industry peak body or industry association if you are a member
• speak with another local approved provider and ask what they have implemented
• seek advice from an aged care consultant

If you have explored these or other options without success, or they are not available to you, please tell us in specific detail when you apply for a determination. Make sure you outline everything you have done to date to try to meet these requirements.

What if we are a home care provider that doesn’t deliver clinical care? Why do we need to have a clinical care representative on our governing body?

The requirement to have a member of a governing body with experience in the provision of clinical care applies to providers of home care, residential care, transition care and multi-purpose services.

If you deliver social support services as an approved provider of home care, the requirement will apply. However, if you are a Commonwealth Home Support Programme provider, this requirement does not apply.

While having a governing board member with clinical experience is a requirement, the nature of the clinical experience is not prescribed. This allows each governing body to appoint a member with experience most relevant to the nature of the provider’s services.

We have found a person with clinical care experience who can be a member of our governing body. But they are not independent because they are a family member of one of our company directors. Is that ok?

In this instance, providers should consider what their governing body currently looks like.  For example, the governing body may consist of eight members.  Five of those are independent non-executive members and the family member with clinical care experience could be one of the remaining three. The question of whether a family member of another member of a governing body can be ‘independent’ will depend on various circumstances.

You should also consider:

• Will the family member contribute to decisions without unfair influence or coercion?
• Are they also a staff member or manager of your organisation?
• Do they own any shares or receive an income from the approved provider such as under a family trust?
• Will they be objective, purposeful, and ensure that decisions made by your governing body deliver positive and meaningful outcomes for your consumers?
• What processes will you implement to identify and disclose any conflicts that may arise that could interfere or reasonably be seen to interfere with this person’s capacity to be objective?

I am an approved provider who is exempt from the governing body requirements. Do I need to apply for a determination?

No. If you meet the criteria that exempts you from the governing body requirements, it will be applied automatically, and you won’t need to apply or complete the form for a determination.

That criterion is:

• You have fewer than 5 members on your governing body and fewer than 40 consumers receiving aged care services
• You are a state or territory approved provider, including state or territory authorities.
• You are an approved Aboriginal Community Controlled Organisation (ACCO) provider. However, it’s important to note that all providers are still accountable for the broader responsibilities outlined in the Aged Care Quality Standards and other requirements of the Aged Care Act 1997.  

You will still be required to meet responsibilities relating to ensuring proper governance, having adequately skilled staff, and consumer and quality care advisory bodies.

Do the determination decisions apply to the provider or service?

Determination decisions will be issued to the provider and not the service.

I’m worried I won’t be able to meet the requirements and would like to apply for a determination. What is the process?

If you need to seek a determination from the Commission regarding one or both of the requirements, you can do this by completing the Governing Body Determination digital form on the Government Management Provider System (GPMS). 

There are a variety of matters that must be considered when assessing your application. To support your application, you will need to:

• provide appropriate evidence that demonstrates how the quality of care will be maintained without these governance requirements
• upload all necessary supporting documents to ensure you get a prompt decision
• ensure your supporting documentation clearly demonstrates how your organisation will maintain independence and objectivity in executive decision making
• demonstrate that your governing body possesses the relevant experience and expertise to interpret care delivery reports and identify potential risks or issues

During the processing of your request, additional supporting documentation may be requested if further information is needed. This may cause a delay in reaching a decision.  

Further information about the application process is available.

Is there anything in particular that you are looking for, or that you will consider when you are assessing my request for a determination?

The determination process is specified under Section 63-1E (4) of the Aged Care Act. It contains the matters that the Commissioner is required to consider during the assessment process.  

These determination matters are:  

• the number of aged care services through which the provider provides aged care
• the number of care recipients who are provided with aged care through those services  
• the location of those services  
• the annual turnover in the provider’s key personnel  
• the membership of the governing body of the provider  
• any arrangements that the provider has made, or proposes to make, to assist: the members of the governing body of the
• provider to act objectively and independently in the best interests of the provider; or  
• the governing body of the provider to seek, when it considers it necessary to do so, advice from a person with experience in the
• provision of clinical care.  
• any other matter specified in the Accountability Principles.
   

The Governing Body Determination form includes space for you to give us the information needed to address those matters.

The responsibility for having a governing body lies with the approved provider.

A determination decision will only be granted to an approved provider, not specifically to a particular service.

Can I get a determination decision for the advisory body requirements?

No. The Commission is not able to make a determination decision in relation a quality care advisory body or a consumer advisory body.

A determination decision under section 63-1D of the Aged Care Act only relates to membership of the governing body.

You will still be required to meet those requirements.

When will I be able to apply for a determination? 

If you applied to be approved after 1 December 2022 and you do not meet the exemption criteria, you can apply now.

If you are an existing approved provider, you do not need to comply with this requirement until 1 December 2023.

This means that if you apply for a determination decision prior to 1 December 2023, the determination period cannot commence before this date.

The Governing Body Determination digital form is available on the Government Provider Management System (GPMS), through the Manage Your Organisation tile.

We are an existing approved provider and have concerns about the time it will take for a determination to be made. How long will it take to get a decision, and will we get into trouble if an application we submit before 1 December 2023 is not decided before that date?  

If you are an existing approved provider and have a determination assessment in progress at the time the commencement date for existing approved providers, the Commission would not take compliance action.

In performing its regulatory function, the Commission applies a risk-based proportionate approach and uses a range of information before taking any action.

We will make every effort to provide you with a determination decision as soon as we can. Decisions will typically be made within 30-60 days.

During the process we will keep you informed about the progress of your request and if we experience any delays, or require further information from you, we will inform you as soon as possible.

If our determination is approved, how long will we have before we will need to meet the governing body membership responsibilities?  

Determinations are assessed on a case-by-case basis because the Commission recognises that not all approved providers are the same.

This means that a Determination decision will consider the individual circumstances of the approved provider and their reasons for seeking a determination.

As a guide, determination periods will be granted for a maximum length of 12 months.

Approved providers should be aware that if the Commission makes a determination decision about membership responsibilities, it may, on its own initiative, vary or revoke the determination decision if satisfied that it is appropriate to do so.

The Commission will not vary or revoke a determination decision without speaking with you.

What if I only need a determination decision for 3 months?

The Commission has established a maximum timeframe of 12 months, to give the provider sufficient time to meet the requirements.

You can use the application form to let us know if you would like a shorter period of time. Make sure you explain why so that we can make an informed decision.

What if I need more time than the Commissioner gives me to meet the requirements?

We will contact you approximately half-way through the determination decision period. This will allow you to discuss any unexpected issues or barriers that have prevented or hindered your ability to have a governing body in place at the end of the determination decision period.

You can contact us at any time during the determination decision period via email governingbodyapplications@agedcarequality.gov.au

Where can I find further information about the governing body responsibilities?

The Commission has published several guidance documents for approved providers and conducted several webinar sessions that cover the recent aged care reforms. 

These are:

• Provider responsibilities relating to governance– guidance for approved providers. It contains important information about how the changes affect an approved provider’s governance responsibilities.
• Strengthening provider governance – webinar, presentation slides and Q&As
• Provider governance quick reference– poster.
• Provider governance – provider responsibilities 1 December 2022– video
• Provider governance – provider responsibilities 1 December 2023– video
• Strengthening provider governance– eLearning module  

Further terms commonly used by the Commission are available here.  

Who can I contact if I have further questions?

Contact us on 1800 951 822 and ask to speak with someone in the Determinations team.

Alternatively, send us an email at governingbodyapplications@agedcarequality.gov.au

Your questions answered updates

These questions were removed 18 September 2023:

What do you mean by the term ‘Board of Directors’?

Does a member of the governing body need to be a director of the company?

Our organization is owned by another company that provides oversight of our operations. They have board members who could also be a member of our governing body. Is that ok?

I’m a small organisation. I’m worried I won’t be able to pay for someone to be on my governing body.

These questions were updated 18 September 2023:

What is a governing body?

What is the difference between a Governing Body and a Board of Directors?

Where can I find someone to join my governing body?