Government reforms to the home care sector to be introduced from February 2017 will create a more significant and larger scale disruption than the impact ridesharing application Uber is having on the taxi industry, the CEO of the sector’s largest private provider has said.
Jason Howie, CEO of KinCare, described the end of the Aged Care Approvals Round and allocation of home care places direct to consumers as the “mother of all disruptions.”
He said the importance and impact of the changes on the industry could not be overstated, as services would now be made to compete for customers in an open marketplace.
“This is not just an incremental change that has been proposed by the Federal Government across the aged care system, this is a fundamental disruption. It is a paradigm shift and there is no part in an organisation that doesn’t need to be reconsidered in view of the next 10 and 15 years,” Mr Howie told the Getting Ready for Increased Consumer Control conference last week.
The reforms, first announced in the May budget, represented “the biggest opportunity and the biggest threat” facing community aged care providers and would require organisations to transform their culture and business models to succeed, he said.
“We can’t find a parallel for this anywhere in the world. This is an extraordinary change. This is the mother of all disruptions,” he told the Sydney audience. He said:
“We’re all familiar with the disruptive service models that have been arising – the poster boy for that at the moment is Uber…but what we’re facing here is not an Uber-type event. This is something much bigger.”
While Uber and Airbnb had significantly challenged their industries, they had not gained total market share and their influence on consumer purchasing behaviour was still building. However, the impact of the 2017 reforms in home care would reverberate throughout the entire industry, turning it on its head, Mr Howie said.
Organisations would move from competing for a small pot of annual growth funding allocated by the government to a market system where any eligible customer with an approved package was up for grabs.
A focus on compliance and contract outputs would shift towards customer experience and meeting consumer expectations, he said.
“While we weren’t penalised for delivering a bad experience in the past, we certainly will be in the future, in a big way, and I would not be surprised to see a significant migration of clients from one organisation to another in response to that.”
From February 2017, Mr Howie said organisations would no longer be protected in terms of the numbers of packages they held and over time only those services delivering a quality customer experience would thrive.
He predicted a very large percentage of current providers would disappear from the sector within 15 years due to market exits and amalgamations.
The reforms would also generate a “honey pot effect”, similar to what was seen in the vocational education and training (VET) sector, which needed to be monitored, he said.
Despite the scale of the change, Mr Howie said there was still an element of complacency within the sector and organisations needed to closely review the skill sets on their boards to ensure they had the right leadership to steer them into the future.
Community Care Review was the media partner to the Getting Ready For Increased Consumer Control conference.
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