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 The Royal Commission inquiry, released after the market close on
Thursday, called for a fundamental overhaul of Australia's aged care
system after an almost year-long investigation of the A$20 billion
($14 billion) industry.
"The neglect that we have found in this Royal Commission, to date,
is far from the best that can be done," commissioners Richard Tracey
and Lynelle Briggs said in the report. "Rather, it is a sad and
shocking system that diminishes Australia as a nation."
A previous Royal Commission into misconduct in Australia's financial
sector has had wide-ranging repercussions, including structural
changes to wealth management businesses and lawsuits brought against
institutions and individuals by regulators.
Shares in Regis Healthcare Ltd, the second-largest aged care
operator by market value, fell as much as 6% in early trade, but
recovering to close down 1.6%, while rival Japara Healthcare Ltd
fell 2% before bouncing back to close up 6.5%.
Shares of another operator, Estia Health Ltd, traded lower before
closing up 2.4%.
All four stocks were seen until early 2018 as attractive because of
their exposure to Australia's ageing population, but have been
sliding since media reports alleged widespread patient mistreatment.
The stocks are still below early 2018 levels.
Macquarie Group analysts said in a note that listed aged care
operators would see tough conditions until the inquiry ended in a
year, and "complex issues are being thoroughly examined to evolve
the industry into a sustainable sector".
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However, they added that in the short term the companies could
provide value by taking steps such as cutting debt and overheads and
refurbishing facilities, while there was also potential for
takeovers.
The report prompted the federal government to promise additional
funding for some parts of the sector, although it held off on saying
how it would respond to the inquiry until it delivered its final
report, due Nov. 12, 2020.
"We have seen abuses and we're seeing substandard care across all
fields," Prime Minister Scott Morrison told radio station 3AW.
Morrison said the government would unveil new funding for in-home
patient care by the end of the year.
The Council on the Ageing Australia said it welcomed the report's
recognition that older Australians are being neglected by the system
which supports around 1.3 million people each year.
(Reporting by Byron Kaye and Melanie Burton; editing by Jane Wardell
and Richard Pullin)
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