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Home care reforms the ‘mother of all disruptions’


Government reforms to the home care sector to be introduced from February 2017 will create a more significant and larger scale disruption than the impact ridesharing application Uber is having on the taxi industry, the CEO of the sector’s largest private provider has said.

Jason Howie Kincare 2014

Jason Howie, KinCare CEO

Jason Howie, CEO of KinCare, described the end of the Aged Care Approvals Round and allocation of home care places direct to consumers as the “mother of all disruptions.”

He said the importance and impact of the changes on the industry could not be overstated, as services would now be made to compete for customers in an open marketplace.

“This is not just an incremental change that has been proposed by the Federal Government across the aged care system, this is a fundamental disruption. It is a paradigm shift and there is no part in an organisation that doesn’t need to be reconsidered in view of the next 10 and 15 years,” Mr Howie told the Getting Ready for Increased Consumer Control conference last week.

The reforms, first announced in the May budget, represented “the biggest opportunity and the biggest threat” facing community aged care providers and would require organisations to transform their culture and business models to succeed, he said.

“We can’t find a parallel for this anywhere in the world. This is an extraordinary change. This is the mother of all disruptions,” he told the Sydney audience. He said:

“We’re all familiar with the disruptive service models that have been arising – the poster boy for that at the moment is Uber…but what we’re facing here is not an Uber-type event. This is something much bigger.”

While Uber and Airbnb had significantly challenged their industries, they had not gained total market share and their influence on consumer purchasing behaviour was still building. However, the impact of the 2017 reforms in home care would reverberate throughout the entire industry, turning it on its head, Mr Howie said.

Organisations would move from competing for a small pot of annual growth funding allocated by the government to a market system where any eligible customer with an approved package was up for grabs.

A focus on compliance and contract outputs would shift towards customer experience and meeting consumer expectations, he said.

“While we weren’t penalised for delivering a bad experience in the past, we certainly will be in the future, in a big way, and I would not be surprised to see a significant migration of clients from one organisation to another in response to that.”

From February 2017, Mr Howie said organisations would no longer be protected in terms of the numbers of packages they held and over time only those services delivering a quality customer experience would thrive.

He predicted a very large percentage of current providers would disappear from the sector within 15 years due to market exits and amalgamations.

The reforms would also generate a “honey pot effect”, similar to what was seen in the vocational education and training (VET) sector, which needed to be monitored, he said.

Despite the scale of the change, Mr Howie said there was still an element of complacency within the sector and organisations needed to closely review the skill sets on their boards to ensure they had the right leadership to steer them into the future.

Community Care Review was the media partner to the Getting Ready For Increased Consumer Control conference.

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3 Responses to Home care reforms the ‘mother of all disruptions’

  1. Brian December 3, 2015 at 3:50 pm #

    Jason Howie is right on the mark. But it probably won’t take 10 to 15 years for dramatic effects to be felt among current providers. Beside the “honey pot” (VET sector) danger he mentions the other is a disconnect with the health system if consumer choice is largely based on “customer experience”.

  2. Michael December 4, 2015 at 11:44 pm #

    … home care has been operating within a largely not-for-profit community ethic, which recognises the lack of knowledge and vulnerability of seniors and their families. While structured as a marketplace, this less competitive environment has allowed the providers of home care the flexibility needed to meet the needs of the community. An adequate income could be generated to make this economically viable as well as a rewarding and fulfilling business. It did not attract those who were looking for an opportunity to make a killing.

    As Mr Howie indicates, our major political parties are both ideologically committed to turning all services into strongly competitive free markets and shifting more of the costs to the consumer. They argue that the greater the competition the better and cheaper the care will be.

    They are driving consolidation so that we will have a number of large highly competitive operators – operators who will compete to provide services on the international marketplace. Politicians have made no secret of the fact that they are looking to service industries to revive our flagging economy and keep us globally competitive by providing these services in Asia. Their free trade agreements are focused on this.

    In doing this, policy makers have ignored fundamental market principles. Almost every sector where there are vulnerable customers (or even employees) has exploited the weakness of those it serves and they have been harmed. Vocational education is only one example among many.

    In aged care there is now indisputable evidence that the more competitive the provider and the stronger the focus on profits, the poorer the care. While providing less actual care it usually costs everyone more. We can argue that, while it is probably unintentional, government is sacrificing the wellbeing of seniors who are no longer contributing to the economy in order to boost the nation’s coffers.

    In introducing CDC, everything we know about providing services to the community and everything we know about open government has been ignored. Self directed care is attractive and does have merit. It would improve the services provided, but it needs to go back to the drawing board. Health and aged care professionals, community and providers need to work together to rethink and redesign something that will work that they can take to policy makers.

  3. John Coxon December 8, 2015 at 9:16 pm #

    The combination of change within aged care. intro of NDIS plus signalled changes to mental health will shape key players for the next 10 years. That is likely to be nothing compared to the change that will occur as we move into a digital environment over the next 20 years. It’s an exciting time to be a millenial and part of the NFP sector in Australia.I don’t believe these changes should be feared, they will create numerous opportunities and offer our greatest opportunity for addressing systemic societal issues, than ever in the past. Emerging trends point to a networked, cross sector, partnership model. It may well be that ‘improving the lives of humanity’ becomes the single greatest achievement of the next generation.

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