The underutilisation of home care package funding is affecting the profitability of home care providers, a webinar on the future provision of aged care has heard.
This third seminar in the Macquarie Aged Care Policy Forum series looked at issues that remained ‘unfinished business’ in the home and community sector from the Aged Care Royal Commission and the Australian Government’s response.
Stuart Hutcheon, Managing Partner at Stewart Brown Chartered Accountants, said at the webinar that the underutilisation of home care package funding is a problem for providers.
“This is directly impacting on their profitability, and of course, their sustainability,” he said.
“And one of the concerns is that some of these unspent funds are sitting on balance sheets as a liability.”
Due to the high level of unspent funds per care recipient, some providers are reluctant to charge clients a basic daily fee.
“Providers are reluctant to charge a consumer contribution or a client contribution at a basic fee to consumers because it’s really adding to those unspent funds money,” Mr Hutcheon said.
He believes that utilising these funds will make a big difference.
“If we’re able to utilise those unspent funds, providers themselves would…get some profit margin of around 35 to 40 per cent on those unspent funds,” Mr Hutcheon said.
“Their fixed overheads and costs and things have already been absorbed by the amounts that are being utilised.
“If they’ve got an opportunity to utilise these funds, it’s certainly going to help providers stay viable and sustainable in the future.”
Gaps in package levels
A paper from Stewart Brown looked at the structural problems of home care packages.
The subsidy funding of HCP at the four package levels means that there is a lack of alignment between funding and individual care needs, according to the paper.
This has resulted in unspent funds that are not utilised by recipients.
The aggregate unspent funds have increased from $539 million at 30 June 2018 to $1.3 billion at 30 June 2020, the paper said.
Mr Hutcheon said more funding package levels could be a solution to make better use of the funding for actual services required by care recipients.
“[It’s] moving to having at least eight levels of funding [and] therefore bringing the levels of funding closer together,” he said.
“With this growing number of package levels, we’ll be able to closely align the funding for individual care recipients.”
The current assessment process and lack of a reassessment is also contributing to funds being underutilised, according to the paper.
Stewart Brown hopes that the new HCP reforms will include an assessment process that takes into consideration the changing care needs of the recipient and a greater number of package levels that closely align the funding amount to the care needs of the recipient.
“We’re hoping to see that, over time, the changing needs of consumers will be able to be reassessed as part of the package,” Mr Hutcheon said.
Effective use of funding will be a benefit to both the provider and the consumer, he said.
“It’s in [the provider’s] best interest to be able to use these funds available to the consumer; it’s in the consumers best interest to use their package as well.
“But, certainly, from a provider point of view, for future sustainability, being able to utilise the package and get a return on that package is all about what’s required in the business.”