Part 2: How rest homes are certified and monitored

Effectiveness of arrangements to check the standard of services provided by rest homes.

2.1
In this Part, we describe the arrangements that are designed to promote and encourage the safe provision of the services that rest homes provide for their residents. We discuss:

at a high level, how certification works and the legislation that governs it;
the Ministry's role in designating agencies to audit rest homes;
how those agencies audit rest homes against the Standards;
how the Ministry uses the audit reports and other information to certify rest homes; and
how DHBs monitor compliance with the national contract they each have with rest home operators.

2.2
When the Ministry has certified a rest home that has residents who receive a subsidy, the rest home enters into a contract with their local DHB. Through that contract, the rest home receives funding from the DHB to provide residential care services for older people. We describe how DHBs monitor a rest home's compliance with that contract.

Overview of how certification works

2.3
To provide residential care services for older people, rest homes must be certified by the Director-General of Health under the Act. To remain certified, a rest home is required to meet the Standards when it is audited against them.

2.4
Rest homes are audited by DAAs. DAAs audit more than just rest homes – they carry out certification audits throughout the health and disability sector. For example, they may also audit hospitals. There are eight DAAs, and rest homes can choose which one to use. Audit fees are paid by the rest home. DAAs are limited companies, and all except one are privately owned (one is a subsidiary of a Crown entity). To become a DAA, agencies must apply to the Ministry for designation. Agencies are designated for up to three years.

Audit reports

2.5
The audits of rest homes need to be carried out consistently, and the resulting audit reports need to be reliable, so that the Ministry can make informed decisions about whether and for how long a rest home should be certified.

2.6
Rest homes that provide services that meet the Standards can be certified for up to five years, which means five years before the operator of the rest home has to pay for another certification audit. The DAA is expected to carry out two surveillance audits, which are shorter and less expensive than a certification audit, before the end of the five-year certification period (see paragraph 2.18).

2.7
Each standard is made up of a number of criteria (rest homes are checked against at least 206 criteria, depending on the type of services that they provide). Rest homes that receive "partially attained" ratings for some of the criteria, but still meet the Standards overall, can face more frequent audits because their certification periods can be shorter.

2.8
Audits for certification are arranged between the rest home and the DAA. This means that the rest home knows when the audit is going to take place and has time to prepare for it.

The Health and Disability Services (Safety) Act 2001

2.9
The Act establishes the arrangements for certifying rest homes. It does not prescribe how the Ministry should carry out its role. For example, the Act gives the Ministry the power to designate auditing agencies but does not prescribe how the Ministry should do this. The Act states that the Ministry must satisfy itself that the person (the auditor or audit agency) has the necessary technical expertise and appropriate management and administrative systems in place to audit health services. The Act gives the Ministry the power to place conditions on a designation, but it does not prescribe what the conditions should be.

Designating agencies to audit rest homes

2.10
Section 33(b) of the Act states that the Director-General must designate someone to audit health care services of a certain kind if – and only if – the Director-General is satisfied that the person:

(i) has the technical expertise to audit the provision of services of that kind; and

(ii) has in place effective systems for auditing the provision of services of that kind; and

(iii) has in place effective arrangements to avoid or manage any conflicts of interest that may arise in auditing the provision of services of that kind; and

(iv) will administer those systems and arrangements properly and competently, and in compliance with any conditions subject to which the designation is given; and

(v) will comply with this Act.

Conditions of designation

2.11
Under Section 32 of the Act, the Director-General also publishes conditions of designation in the New Zealand Gazette. The conditions of designation change from time to time and are currently under review. The current conditions were published in May 2009 and include:

compliance with the requirements of the Designated Auditing Agency Handbook (the DAA Handbook) issued by the Ministry;
providing information that the Ministry requests about health care services;
allowing the Ministry to conduct audits and reviews of the DAA;
submitting internal audit reports to the Ministry;
notifying the Ministry of changes in ownership and management personnel; and
providing information that the Ministry requests about auditor competency.

Cancelling a designation

2.12
The Director-General of Health may cancel the designation of a DAA if the Director-General is no longer satisfied that the DAA meets the criteria under section 33(b) of the Act, if the DAA fails or refuses to comply with a provision of the Act or a condition of designation, or if the DAA asks for the designation to be cancelled.

Auditing against the Health and Disability Services Standards

2.13
The Standards are approved by the Minister of Health under section 13 of the Act, and set the minimum standard expected in health and disability services. The Standards, last revised in 2008, include a general standard, core standards, a restraint minimisation standard, and infection prevention and control standards. The core and general standards include consumer rights, organisational management, continuum of service delivery, and providing a safe and appropriate environment. Each individual standard is made up of one or several criteria.

2.14
The Standards apply to the whole of the health and disability sector, so auditors have to interpret how each of the standards would apply to rest homes.

2.15
DAAs carry out three types of rest home audit. These are:

provisional audits of new rest homes (or when rest homes have changed ownership);
certification audits; and
surveillance audits.

2.16
Provisional audits of new rest homes check that there are appropriate policies and procedures in place to meet the Standards, and that the rest home has a building warrant of fitness. Provisional audits involve a site visit to make sure that the rest home will provide a safe and appropriate environment.

2.17
Certification audits check all criteria in the Standards (there are at least 206 that apply to rest homes). Typically, two auditors will carry out a certification audit and they are usually at the rest home for only two days. Before DAAs visit a rest home, the Ministry expects them to review the rest home's policies and procedures.

2.18
Surveillance audits check rest homes at the mid-point of their certification period. These are shorter audits that focus on known risk factors for the rest home, including those that required attention after the previous certification audit. They also cover some core standards. Typically, a surveillance audit is carried out by one auditor during the course of one day. (There is a pilot project under way to replace surveillance audits with unannounced "spot audits". We discuss this further in Part 5).

Certification audits against the Standards

2.19
Rest homes choose which DAA they will use. Certification audits – including the timing and the price that the rest home will pay – are arranged between the rest home and the DAA.

2.20
Auditors rate the services provided by each rest home against each criterion in the Standards, to decide whether the Standards are being met and what actions need to be taken to improve the care provided to residents of the rest home. The ratings are:

continuous improvement;
fully attained;
partially attained; and
unattained.

2.21
Figure 1 provides examples of what auditors check under each standard during a certification audit.

Figure 1
Examples of what the auditors check during a certification audit

Standard	Example of what the auditors check
Consumer rights	Auditing against this standard includes checking that residents in rest homes are well informed of their rights, that their personal privacy is protected, and that they do not suffer from any discrimination. Auditors will normally check the policies of the rest home to see whether the policies support the criteria under this standard. Auditors will interview the manager, staff, and residents to check whether the policies are being implemented.
Organisational management	This standard includes that there are enough staff with the necessary qualifications on duty at the rest home. This will vary according to the type of care the rest home is certified to provide. For example, if the rest home provides care for people with dementia or people who need hospital-level care, then a registered nurse should be available all the time. To check this, auditors will look at staff rosters and interview the manager and staff of the rest home. This standard also includes criteria on Human Resource Management. Auditors will check staff files and speak to staff to make sure that they received adequate orientation when they first started working at the rest home, and that they have adequate qualifications and training. Auditors will also check that rest homes have systems in place to manage risks and that the rest home regularly monitors its service, including asking residents and their families for feedback.
Continuum of service delivery	This standard is intended to make sure that residents receive care that is safe and appropriate to their needs. It includes making sure that, when residents move into a rest home, their needs are assessed and they are involved in preparing personal care plans. The standard also includes making sure that residents receive their medication in a safe way. Auditors will examine records and may observe medication being given to residents.
Safe and appropriate environment	Auditors check whether the rest home has a current building warrant of fitness and an evacuation plan approved by the New Zealand Fire Service. They will also check that the building is well kept, clean, and safe. This will normally include visiting the rooms of residents, the kitchen, bathrooms, and the laundry.
Infection control	Auditors check the policies of the rest home to see whether there are adequate procedures in place to prevent infections spreading between residents and staff. Auditors will also check staff files to see whether staff have received training in controlling infection. Auditors will examine records to see if there have been any outbreaks of infection and, if so, what the rest home did in response.
Managing restraint safely	Sometimes residents in rest homes have to be restrained to prevent them from harming themselves or others. This can mean providing belts on chairs and placing rails on beds to prevent falls. This standard is aimed at reducing the use of restraints so they are used only when absolutely necessary. Auditors will check the policies of the rest home, check staff files for evidence of relevant training, and may interview staff and residents to check that the policies are implemented properly.

Using audit reports and other information to certify rest homes

2.22
DAAs send audit reports to HealthCERT, which is the Ministry team responsible for certification. The reports are reviewed by HealthCERT staff, who review the evidence supplied for each criterion and check that the rating given by the auditor matches the evidence. They consider the findings of the audit report, and may also consider other information they might have about the rest home (such as complaints and information from DHBs or the Health and Disability Commissioner).

2.23
In 2008, the Ministry introduced a decision-making matrix for determining the period of certification. The matrix was revised in 2009 and, as a consequence, more information from other agencies is used to determine periods of certification. Senior advisors in the Ministry use the matrix to assess the level of risk associated with each rest home. After they have considered other information (such as complaints, a provider's past performance, and information that DHBs might have), they recommend to the manager of HealthCERT the length of certification for the rest home. Most rest homes (80%) are certified for three years.

2.24
For surveillance audits, the Ministry decides whether to add more conditions to the certification. For example, if an audit report shows that a rest home has not been rated as fully attaining one of the criteria in the Standards, the Ministry can add a condition that a written progress report be submitted to the Ministry on the actions the rest home has taken to address the problem. The DAA collects this information from the rest home and submits the report directly to the Ministry.

2.25
If the Ministry has particular concerns about the standard of care provided by a rest home, it can send its staff to carry out an inspection. These inspections can be either announced or unannounced, and will assess the rest home against the Standards that the rest home is suspected of failing to meet. Between 2007 and 2009, the Ministry carried out 44 inspections of rest homes.

Monitoring by district health boards

2.26
Most rest homes have a contract with their local DHB – the Age Related Residential Care Services Agreement (the age-related care contract). To help people pay for their care in rest homes, DHBs provide subsidies to those older people who are entitled to one. Most people in rest homes receive some level of subsidy to help pay for their care. All rest homes that care for people in receipt of a DHB subsidy must sign the age-related care contract with their local DHB. Section 23 of the New Zealand Public Health and Disability Act 2000 requires DHBs to "monitor the delivery and performance of services" by rest homes they hold contracts with.

2.27
The age-related care contract is the same in all DHBs but the way DHBs monitor the contract varies. Monitoring includes a wide range of activities, including:

using information from other DHB functions, such as Needs Assessment and Service Co-ordination services⁶ and hospital admissions of rest home residents;
communicating with community services groups that work with rest home residents;
providing clinical advice to rest homes;
considering the content and number of complaints;
establishing and strengthening relationships with rest home management; and
considering the content of performance monitoring reports.

2.28
Fourteen DHBs carry out routine contract audits of rest homes, which are usually completed by an SSA on behalf of the DHB. The routine contract audits check that the rest home is complying with the requirements of the age-related care contract. The number and frequency of routine contract audits by DHBs varies. Some DHBs have a three-yearly cycle of audits. Other DHBs prioritise their routine contract audits according to factors that include:

information they have about a rest home from complaints or other sources;
when the rest home was last audited and what that audit found; and
variations that have been made to the contract.

2.29
These routine contract audits cover very similar matters to the certification audits carried out by DAAs.

2.30
Six DHBs in the North Island pay DAAs to extend the certification audits so that the audits cover the DHBs' contract requirements as well as the Standards. This means that DHBs can use certification audits as one way of monitoring rest homes, and it reduces the need for them to carry out their own auditing. Using certification audits in this way is significantly cheaper. Routine contract audits cost from $3,500 to $7,500 each. Paying DAAs to extend their certification audits costs around $450.

2.31
If a DHB has evidence that a rest home is failing to provide care that meets the requirements of the age-related care contract, it can commission an unannounced audit. These are called issues-based audits, and are usually carried out by SSAs. DHBs used SSAs to carry out nine issues-based audits in 2008. Issues-based audits look in detail at the aspects of care thought to be most at risk.

6: Needs Assessment and Service Co-ordination services are organisations contracted to DHBs. Needs Assessment and Service Co-ordination services work with older people to identify their needs and outline the support services that are available. Older people have to be assessed by a Needs Assessment and Service Co-ordination service before they can receive a subsidy for rest home care from their DHB.

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