Reducing dependence on government funding, scale, efficiency and brand are all essential to provider sustainability in the home care market, says financial consultant.
The forthcoming reforms in home care flipped traditional ways of attracting customers on their head and would impact the survival of some operators, according to Bruce Bailey, director of accountancy firm RSM Australia.
“Traditionally approved home care providers were a destination. If people wanted care, they had to go to a provider holding a package. Now providers have to attract clients to them and demonstrate the value of their services,” Mr Bailey told a home and community care seminar hosted by LASA Victoria on Monday.
While the government would continue to be the dominant funder in home care, providers should look to diversify their income streams and explore opportunities to add to their current service offering, he told the Melbourne audience.
“Whenever the government pays the biggest portion of the bill, the government is going to exert pressure [on funding] … As part of business strategies going forward, providers should find other revenue streams to diversify their dependence on income from government,” said Mr Bailey.
Marketing and market intelligence were also new costs for providers in a competitive environment that would have to be factored into organisational budgets, he said. For example, in the absence of the Aged Care Approvals Round, home care operators would need to build or source the capacity to analyse projected demand for services and future trends to inform the sustainability of their services.
Mr Bailey said the small size of many home care providers would create challenges for some organisations to be able invest in technology and new systems in order to compete.
In a cost constrained environment, scale will also be important, he said.
Existing providers shouldn’t be complacent as new players entered the market to take advantage of growth opportunities in the sector, he said.
Providers should also be preparing for future growth to retain their market share as the number of home care packages doubled to 140,000 by 2021-22.
Monitor unspent funds
Grant Corderoy, a partner with StewartBrown, told the forum home care providers would need to continue to monitor their level of unspent funds and introduce strategies to reduce them ahead of February 2017.
He said unspent funds in Level 3 and 4 packages were currently in excess of 11 per cent nationally. This compared with 5 and 7 per cent for the highest performing quartile of providers in the StewartBrown benchmarking surveys.
During the transition to 2017 and beyond, he said providers should be evaluating key performance indicators including package occupancy, revenue utilisation and employee productivity, and look to make use of technology to gain efficiencies.
Mr Corderoy said while February 2017 was significant, the big reform in home care would be in July 2018 when the Commonwealth Home Support Program and home care packages were integrated into a single program.
Judy Gregurke, national manager aged care reform with COTA Australia, told the forum a missing piece of the aged care reforms was a consumer support platform, which included opportunities for peer-to-peer education and advocacy.
Opportunities to find and share information on the experience of aged care services from other consumers was also important to older people, she said.
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