Unspent home care funds are continuing to rise exponentially and the recent change to payment in arrears is unlikely make a dint in the upward trajectory, an aged care finance forum has been told.

Grant Corderoy

Unspent funds now represent almost $10,000 per client – or a total of $1.6 billion, StewartBrown senior partner Grant Corderoy revealed during the benchmarking firm’s 2021 Aged Care Finance Forum last week.

The forum shared key results of StewartBrown’s 2020-2021 Aged Care Financial Performance Survey ahead of the release of its report on Friday.

Unspent funds have increased to $9,855 in 2021 from $8,841 the previous year, and $4,255 in 2017.

The recent change to payments in arrears for services delivered will see the funds transfer back to government coffers over two years, but this won’t halt the growth in unspent funds, Mr Corderoy said.

Will the improved payment arrangements improve this trendline? The answer is probably no.

Grant Corderoy

“Will the improved payment arrangements improve this trendline? The answer is probably no,” he said.

“It just means Services Australia will retain the unspent funds going forward.

“This figure going up is not sustainable and it also means that funding which has been allocated from the budget isn’t being used for the purposes it’s required.”

The only way to address the problems is by changing the levels of funding for home care packages, from four levels to as many as ten, with smaller differences between levels, Mr Corderoy said.

Crunch time for providers

But while they mightn’t affect unspent funds, the payment reforms will have other consequences.

Mr Corderoy predicted that providers would see the cash flow-impact of the changes over coming months as unspent funds go back to the government.

“The crunch is going to start to happen in the next six months,” he said.

“There a number of providers who have used the funds for working capital and that’s going to be eroded, so that’s going to have an impact on a number of providers.

“We need to make sure that we don’t see provider failure for the wrong reasons”.

Moderate increase in operating results

The survey found a a slight increase in revenue in the home care sector in the last year and a moderate 1.4 per cent increase in operating results, up from $3.59 per client per day in June 2020 to $6.05.

However, direct care costs were down by nearly 1 per cent and staff hours were “concerningly” down by 1.6 per cent.

Revenue utilisation was at about 87.3 per cent in June, up from 84 per cent the previous year, which was contributing to the growth in unspent funds.

The percentage of income spent on administration dropped to 22 per cent from 26 per cent in 2017.

Mr Corderoy said the low level of consumer contributions, $102 million in 2020, also needed to be considered going forward.

Growth of new providers plateaus

There were 920 approved home care providers at June 2020 compared to 922 in 2019.

Just over half of all providers are currently not-for-profit, down from 75 per cent in 2016.

“We can see that new providers coming in by a distinct majority have come from the for profit sector,” Mr Corderoy said.

However he said the lack of new  home care providers had implications for the future provision of services with the government committing to an additional 80,000 home care packages over the next two years.

Demand for home care grows

The survey also shows significant growth in people getting a HCP.

At December, 165,000 people were in a home care package, compared to 65,000 in June 2016. The government estimates the figure will hit 275,000 by June 2023.

Mr Corderoy said while the government’s figure is arguable, the growth in demand for home care is creating competing demands that will need to be addressed.

“One is we want everyone to be funded (but) will we have the capacity and staffing to meet the demand?” he said.

Comment on the story below. Follow Community Care Review on Facebook, Twitter and LinkedIn and sign up to our newsletter.

Join the Conversation

3 Comments

  1. Changing the levels to multiples Will not help those in need. Home care package funds would be utilised more if there was more flexibility in allowing the funds to be used at the consumers discretion and or more services allowed within the package.

    1. Gabrielle-I am interested to know what services are missing? The scope is pretty broad, as long as it is central to the persons care & health needs. Or do you mean more hours available per week, say for the existing services ? The concept of cumsumer directed care is that the funds are used at the consumers direction? As long as it fits within Department guidlines.

  2. Having 10 levels of HCP will not help.It would make the unmanagable system worse. The correction needs to go on at the start . So many are given approval for innapropriate levels of HCP. At the time their name gets to the top of the list they need a review of their needs to determine if they still need a HCP and what level they need at that time. So many are on a 3 when their service needs could easily be managed by a 2 or by CHSP. Many are given approval for a HCP and end up on one when they could easily be managed with the CHSP system. Most people can access more service via CHSP than a level 2 but take the HCP because there are no client contribution fees, where as CHSP costs. Many are pursuing and getting a HCP to use it as additional personal income for purchases/things rather than service support.

Leave a comment

Your email address will not be published. Required fields are marked *