As reported by The Saturday Paper, TriCare, a private aged-care company in Queensland, is separating its operations and spinning off as a non-profit entity called Elderly Care. The company, owned by the O’Shea family, with assets totalling $1.1 billion, claims that this restructuring will benefit its employees by providing them with a “charitable employer.” However, it has come to light that the same family controls the newly established charity.
According to TriCare’s managing director, Peter O’Shea, the decision to create Elderly Care was prompted by the recommendations of the Royal Commission into Aged Care Quality and Safety and subsequent legislative reforms. In a letter to staff, O’Shea stated that Elderly Care would provide aged-care services to TriCare-owned facilities, including nursing and personal care, environmental services, catering, management, and maintenance, starting from July 1, 2023.
Under the arrangement, Elderly Care will pay rent to TriCare or its related companies for using the physical nursing homes and properties where the aged-care services are provided. Essentially, TriCare will shift its operations into a charitable structure while still generating revenue through rent charged to the charity.
It should be noted that there is no suggestion of any illegal activity in this arrangement. The Royal Commission previously highlighted the lack of transparency in the aged-care sector due to complex corporate structures. The use of related party transactions and loans to bolster the business and move funds within the TriCare group has also been revealed.
Elderly Care has been established as a public benevolent institution, as stated in its constitution. While it has not yet registered with the Australian Charities and Not-for-profits Commission (ACNC), it may choose not to seek registration if it does not seek tax concessions. Australian tax law allows some non-profit companies to assess their own income tax exemption, but registration with the ACNC is required for full tax concessions.
TriCare’s decision to spin off as a non-profit comes at a time when the Australian government has introduced reforms in the aged-care sector, including increased reporting and prudential regulation. It remains to be seen how this restructuring will affect staff conditions and existing enterprise bargaining agreements at TriCare.
TriCare operates numerous retirement villages and aged-care facilities, including the new $30 million William Landing facility scheduled to open in Melbourne next year.
The Department of Health and Aged Care has stated that TriCare has provided assurances that there will be no disruptions in care for residents due to the restructuring.