$600m in unspent funds undermining sustainability of providers
The amount of unspent home care funds being held in provider bank accounts has hit almost $600 milllion.
Australia’s home care providers are holding close to $7,000 in unspent funds for each client, a key aged care financial report reveals.
The latest StewartBrown Aged Care Financial Performance Survey, analysing data from 26,386 home care packages for the nine months ending in March, shows the amount of unspent funds is continuing to balloon over each quarter with almost $600 million now sitting in providers’ bank accounts around the country.
According to an ACFA report released a year ago, providers were holding just over half that amount, or $329 million in unspent funds and $4,600 per client, at July 2018.
Biggest issue for home care
StewartBrown identifies unspent funds as “the single biggest issue in relation to Home Care Packages” and says it “views with concern” the prospect of the pile of unspent cash continuing to accumulate.
Unspent funds affect both the profitability and sustainability of providers and also discourage consumer co-contribution, the report says.
“Due to the high level of unspent funds per client, there is a reluctance by some providers to levy (and consumers to be charged) a client contribution (basic daily care fee), as it would effectively only add to the quantum of unspent funds,” it says.
“In some cases there have been instances where the means-tested fee also has not been levied for the same reason.”
The report says it is also concerning that unspent funds may be being used for the short-term benefit of capital-related expenditure by care recipients, when the money would be better used to fund more packages and cut national waiting lists.
The report says results show the existing funding models for aged care are in need of “considerable adjustment”.
It says given that overall home care funding is not being fully utilised, it would be preferable to broaden funding and make it available to more people rather than increasing aggregate subsidies.
Deteriorating financial performance
The report also finds an ongoing deterioration in the financial performance of home care providers, with the nine months to March 2019 showing a $0.91 decrease in the result from March 2018 to $3.48 per client per day.
“The financial performance of the aged care sector continues to experience significant challenges due to the systemic decline in profitability in both the residential care and home care segments,” the report says.
“The underlying year-on-year results for both residential care and home care indicate a declining financial performance, as does the comparison with the FY18 annual results.”
The analysis also finds a decline in the average direct hours of home care per client per week, partly due to lower available package revenue resulting from increasing unspent funds, as well a fall in admin and support staff hours.
However the report adds “we are not aware of any provider that has irresponsibly placed profit before residential/client care”.
Call for action from federal government
LASA Chief Executive Officer Sean Rooney said with the financial viability of so many providers at risk it was time for Prime Minister Scott Morrison to put his money where his mouth was.
“This report highlights the need for urgent funding relief to address the increasing demand for services and acuity of residents, while the work on longer term sustainable funding arrangements is being undertaken,” Mr Rooney said.
“The Prime Minister said just the other day that aged care would be one of his government’s priority areas of focus – now he needs to demonstrate that by taking urgent and meaningful action to ensure providers of aged care adequately funded to meet the needs of frail and vulnerable older Australians.
“Aged care is an issue of national importance and older Australians deserve a sustainable and world class aged care system, and that means world class funding.”
Financial performance of the home care sector at a glance:
- Revenue per client per day rose by $3.5 per cent, or $2.54 a day
- The surplus per client per day fell by 90 cents a day to $3.48
- Direct service costs rose by $3.20 per day
- Unspent funds improved marginally to 88.52 per cent
- Staff hours per client per week fell by almost half an hour to 6.6 hours a week
- 47 per cent of home care clients moved to residential care
- Average amount of unspent funds per client: $6,788
Given the appalling failures exposed by the Royal Commission, if I were the Minister I’d be more worried about the viability of our frail aged than that of self interested providers.
Funds are temporarily unspent because clients are saving up for a new wheelchair or an electric bed or other large capital items. Many aged persons with disabilities prefer to use HCP funds for capital items. The providers would prefer they spent it on lawn mowing so they can take a percentage each and every time. But that’s just lazy bad management.
The minister who abandons consumer directed care can expect a tsunami of complaints from people who have waited patiently in the HCP queue for years.
This viability furphy must not go unchallenged. Can anyone explain from an accounting point of view exactly how a provider who charges an ongoing monthly management fee could become non-viable because of unspent funds held in trust. Are they that bad at running a business that they need the government to bail them out by forcing consumers to use the crappy services they provide but which consumers do not need or want? This is a snow-job. Here’s some practical advice from a small business owner. Charge a bigger admin fee or sack a few staff. That’s what every business across Australia has to do to stay “viable”. Adapt or give it up. Just don’t make our frail disabled aged bear the burdens of your incompetence.
Providers have sowed the seeds for their own discontent. Would unspent funds accumulate if providers genuinely planned and delivered care and services valued by consumers? Stewart Brown should consider additional metrics including complaints and consumer dissatisfaction with home care pricing, services, quality and value. Gone are the days where providers keep unspent funds, their customer service models need “considerable readjustment!
Actually finding a service is difficult particularly if you need to utilise CHSP while waiting months/years even a level 2 package. In recent weeks I have tried to find a cleaner,home maintenance, personal care and transport—none available unless you “go private”..
I can understand people with packages wanting to put some funds away in a contingency fund for such things as respite. If this unspent moneyis sitting in aq service providers baqnk account-who is receiving the interest?
I am going to challenge this article.
I attended an APNS Conference in 2018 where StewartBrown presented and they made much comment about rising unspent funding growing under the new system thus reducing profit for Approved Providers. I made the point then and I will make it again: UNSPENT FUNDS HAVE ALWAYS EXISTED – it’s just that prior to CDC they were KEPT by the Approved Provider when the client died or moved into a Nursing Home – what a great windfall to the Approved Provider pre-CDC, also called profit. And that “profit” from unspent funds was not reported on….so now it looks like a “new problem”.
Yes, Approved Providers are not making a care / service profit margin on this unspent funds as care and services have NOT been provided. If the Approved Provider hasn’t incurred the cost and you have the money in the bank waiting for the goal to be reached – how are you making less profit – you have not incurred the costs?
What are the REAL REASONS for unspent funds rising? We have had clients transfer to us because their existing Approved Provider could not provide CARE STAFF to hoist the client out of bed, so the family carer has suffered burn out because they could not get what had been agreed in the care plan, therefore they transferred to us because they were not getting Consumer Directed Care.
We have had clients transfer to us because they had $6,000 unspent funds YET their Approved Provider told them they had to pay privately for legitimate services that their Government Funding should have paid for. That’s not fair…and it grows unspent funds.
We have unspent funds but are not complaining because there are legitimate reasons when looked at a client-by-client basis every month. This is Consumer Directed Care. Unspent funds fluctuate with the client’s goals and care needs.
I are not publishing our own name because this is not meant to be an advertisement for our own specific Home Care service. However, as the owner of a successful Home Care provider I am in total agreement with the comments made by Will Sullivan and E Robinson. Despite having lower Admin and Case Mgt fees than pretty much any other Provider, we are still able to offer more hours of Home Care service per week than the big Providers will offer – where a Client wants that. And if they prefer to accumulate funds for other care needs instead – that’s fine! We are financially very healthy, we are extremely viable, and most importantly we also have wonderful feedback from our Clients. The accumulation of unspent funds should in no way threaten the viability of a Provider if that Provider is managing their service competently. This is the essence of Consumer Directed Care – genuine Client choice over how care needs are met within the available budget. “Unspent Funds” are not a sign of a system in crisis – they are a sign of a system operating according to the directives of the Clients whom the system is intended to serve. Unspent Funds are not wasted. When a Client exits a Package the Government portion of their Unspent Funds is returned to the system and the Client, or their estate, is refunded the Client portion. None of the “unspent funds” are locked up forever or lost to the system.
LASA is controlled by large Providers with very high overheads who have a vested interest in returning to the previous system where the Provider made the choices and the Client was supposed to be grateful for what they received. As Will Sullivan says – the report is a “snow job.” As E Robinson says – Providers who can’t handle Client choice are the ones who need “considerable readjustment.”
Unspent funds did always exist pre CDC – but they were also used to cross subsidise clients – not to line the coffers of providers.
It is very difficult to decide from a one 45 minute discussion with someone whether they fit into a neat little category of needing between $8000 or up to $40000 annually towards their care. Multiple factors come into this including whether current carer arrangements are sustainable, rapid progression of some disorders, health and care needs changing with various illnesses and parts of life. Unless people are able to access the right service at the right time, without the need to wait for a package of money as such, I doubt that these issues can be modified.