The home care sector is set to gain $116.5 million a year from the government’s commitment to release more than 110,000 additional home care packages, according to an economic analysis.
That includes the additional 80,000 home care packages announced in the federal budget and 33,000 released as part of the 2020 budget and MYEFO announcements.
“Providers will receive a margin on services provided under these packages and based on current settings this would add a total of $116.5 million to the overall bottom line of the home care sector each year,” StewartBrown says in its Federal Budget 2021 Aged care Sector Impact and Analysis report.
The estimate is based on the average margin for home care providers currently being at 6.4 per cent on revenue, with revenue utilisation running at 84 per cent.
Investing earnings in better services
Senior partner at StewartBrown, Grant Corderoy, said because current margins for home care operators are currently so small there’s not much room to provide more hours of care or incentives to attract, retain and upskill staff.
He said he would expect any extra money flowing from additional home care packages to go towards improving services.
“I think the money will be used not necessarily just for bottom line profit, but to provide a greater range of services to the care recipients,” Mr Corderoy told Government News.
Clearing the waiting list
The report predicts that if the number of people seeking a home care package doesn’t grow, the release of the extra 113 packages will see the home care queue cleared during 2023, with almost 20,000 to spare.
It says excluding the 36,400 people on the waiting list who are getting interim packages, the queue should be cleared by 2022 with a surplus of more than 52,500 by 2023.
Surplus subsidies should also go towards improving the system, Mr Corderoy says.
“If there is a surplus of packages, and therefore a surplus of money that was set aside to fund them, I’d like to see that money spend on putting more money into actual reform,” he said.
However Mr Corderoy acknowledges that making inroads on the waiting list will be contingent having the workforce to deliver them, a factor not helped by the budget’s failure to address better workforce entitlements, he says.
“It’s one thing we’re going to have extra packages but how are you going to service those packages?”
Unspent funds not addressed
Mr Corderoy says while the 80,000 new home care packages, valued at $6.5 billion over three years, are welcome, they don’t address underlying problems in the current model which mean funding is under-utilised by 15 per cent.
This is contributing to the growing problem of unspent funds.
The issue of unspent funds wasn’t given enough attention by the aged care royal commission, he says.
Mr Corderoy says while some budget measures will bring a degree of relief to providers, most of the $17.7 billion package announced by Treasurer Josh Frydenberg last week was targeted at reform rather than financial outcomes for providers.
No support for extra admin
It also notes that many of the budget measures relate to boosting reporting, compliance and governance, without matching them with funding to help providers pay for the additional regulation.
It says of the $10.8 million allocated in the budget to redesign the home care system, consideration should be given to better matching funding to needs to prevent unspent funds accumulating.
This should include introducing the ability to reassess care needs and adjust funding, StewartBrown says. The report also recommends have eight funding levels instead of four, with narrower gaps between subsidies.
What’s in the budget for home care:
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