Time is running out to remedy the provider funding problem

The aged care sector is all too aware that government funding for its range of care programs is not generous. Given bureaucratic frugality, providers should not make the situation worse by mishandling the meager resources provided, writes David Powis.

The government budgets its programs to deliver services based on modelling its funding to cover the provision of the required services, including covering staffing and other component costs to deliver the services. The first obvious thing that stands out is that the modelling does not incorporate an element for profit/surplus.

The next thing that is obvious is that the funding is accountable to the extent that if it is either not spent, or if spent inappropriately, according to the bureaucrats, the unspent or misspent portion is recoverable.

Whilst the analysis is simplistic, it highlights the importance of managing the funding effectively to deliver quality outcomes for clients and retain sufficient funds for providers to cover business costs and hopefully provide the opportunity for financial viability.

To operate a successful program and remain viable, providers must:

• deliver the required services
• meet the compliance expectations
• satisfy the stakeholders’ needs
• secure sufficient funds to remain viable
• be competitive in a tightly controlled operating environment.

Budgeting services in any of these programs becomes a challenge due to the external factors, such as regulations, geography, communication, and specialised cultural needs, as well as localised factors, which cause extra cost through inefficiency, staff availability etc.

To ensure providers meet the identified needs of clients, who are the primary purpose for which the program was designed, the government has devised a scheme where only through the delivery of services can a provider recover its cost of operating and a slim margin.

Failure to deliver all funded services puts providers’ viability and their future existence in jeopardy. This reflects clearly in the “unspent funds” each provider reports.

But there is still time. Action to redress this potentially damaging trend and reverse the process to bring funding, servicing, and provider viability back into a balanced state that will deliver the desired outcome for all stakeholders is still possible.

The necessary approach is for providers and senior management to change their current thinking, fully understand the funding model and its consequences, and impart that knowledge to staff, particularly at middle and care delivery levels.

For too long, from my experience, decision making related to managing funding has been delegated to managers and staff who lack understanding of the funding and how to deliver quality services, whilst meeting the viability goals of the organisation.

From the cases I have reviewed in my experience of over 45 years, senior management seem to assume that those they appoint will acquire the required knowledge either by osmosis or by self-education. This approach has been shown to be inadequate and leads to:

• ultimate financial hardship for providers
• frustrated middle management and support staff and staff churn
• increased cost to consult third parties to correct a convoluted situation
• clients receiving less services and/or services of a lesser quality
• the government increasing its compliance requirements.

The mismanagement that exists in providers is due to two phenomena. Firstly, unspent funds which creates a false impression that the program is financially viable as the cash flow situation appears healthy.

Secondly, staff who engage directly with clients have insufficient training on how to present the program and how services should be determined and managed. Instead, they often take the simplistic approach of relying on the client to tell them what they want.

In my view, this is a misunderstanding of the programs, given clients receive an independent assessment to determine their needs and those needs should be met by a comprehensive care plan prepared by the approved provider. The very reason for a provider’s existence is to bring a professional, accountable, and structured approach to the successful delivery of care via a care plan.

Corrective action is still possible, but the window of opportunity is closing rapidly and the consequences of not acting are both serious and long term. The government will eventually recover the excess funding and future funding will be impacted by its view of what “unspent funds” indicates.

Providers need to actively engage in protecting the interests of their clients and their own business wellbeing.

David Powis is an aged care management consultant and the managing director of e-Tools Software. For further information and support, contact David on dpowis@e-tools.com.au or visit www.e-tools.com.au