Home care providers may see reduction in revenue
Capping of the care management fee and the removal of the package management fee could see home care profitability impacted and unspent funds increase again, StewartBrown’s Grant Corderoy tells Community Care Review.
Unspent funds in home care have continued to rise from December 2023 – an area of concern according to financial benchmarking service StewartBrown whose latest report shows in excess of $4.2 billion of funds held by providers and government has not been utilised.
This translates to an average of $14,204 per client, up from $13,963 per client in December 2023.
StewartBrown senior partner Grant Corderoy told Community Care Review the new Support at Home program would hopefully change this, as there will be quarterly budgets and only $1,000 or 10 per cent can be carried over, but the ongoing increase in unspent funds signifies that it will still be difficult, even under the eight classifications of SaH.
“It’s still going to be a challenge to utilise all of the funding available, and so it’s not going to automatically just change under support at home,” he told CCR.
“We’re still going to have the same issues, and of course level eight under the proposal of late – which is about $13,000 more than the current level four – is going to be interesting to see how much of that package is actually used.”
Capping and removal of fees likely to impact home care operating margins
The December 2024 Aged Care Performance Survey Analysis Report covers the six-month period from 1 July to 31 December 2024. When looking at the results from 77,750 Home Care Package results, revenue increased 9.71 per cent from December 2023 – from $76.08 per client per day to $83.47 in December 2024.
Package management revenue utilisation increased 4.1 per cent to 86.8 per cent of funding received, and package management revenue as a proportion of total revenue was 13 per cent – only 0.1 per cent more than December 2023 (12.9 per cent).
The report noted the capping of the care management fee at 10 per cent could see home care providers lose an estimated $6.03 per client per day in care management revenue.
Meanwhile the removal of the package management fee will require providers to build the $10.87 per client per day into service pricing.
StewartBrown emphasised the important of this, as it means the increased pricing for each home care service that will be required is driven by the new funding model – not through providers merely seeking to increase their operating margins.
“So for both care management, when they’re charging say 18.5 per cent of their revenue, and say package management’s 30 per cent, that is, in a sense, a guaranteed revenue flow that providers have had today,” Mr Corderoy explained to CCR.
“Now when you incorporate not being able to charge into their pricing, you’ve got a reasonable amount and there might be consumer reaction, but it also means that if you’re not getting the full services, you’re not getting that same guaranteed revenue from it.
“So it could lead to a reduction in revenue, and certainly a reduction in profitability unless it’s managed properly.”
The full report can be read here.
Comment on the story below. Follow Community Care Review on Facebook and LinkedIn and sign up to our newsletter.
