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Survey shows drop in home care admin costs


Home care package administration fees are dropping, a survey of approved providers shows.

Care payment management company Capital Guardians this month surveyed 48 approved private and not-for-profit home care providers from across Australia.

Based on staff and executive estimates, the survey found most operators are charging an administration fee of between 10-20 per cent of income, with a median of 15 per cent.

This compared to an average of around 35 per cent in 2016, Capital Guardians co-founder Ross McDonald told Community Care Review.

The survey found the average total management fee charged to home care package recipients, including both administrative and case management charges, had fallen to 23 per cent compared to a figure of 27 per cent reported by KPMG at April 2015.

The median charge for case management was just over 11 per cent.

Impact of consumer directed care

McDonald says the figures reflect the impact of consumer directed care and the entry of new home care operators  with lower – and sometimes no fees – into the sector.

“Consumer directed care has definitely had a massive impact,” he says. “It’s transparent now and consumers can change providers. They’re going to have to publish their fees soon, and that’ll make it go even further south.”

He says the falling costs have mostly resulted from increased efficiencies although some providers had been using the administration fees to subsidise other areas of their operations.

“I wouldn’t call it ‘gouging’, they’re just reliant on it,” he said. “Where it’s very trained into their operations there are probably cross-subsidies going on so they’re ‘gouging’ home care to support other very worthy clients.”

He said while the reduction in administration fees was good news for consumers it also indicated providers were becoming more efficient.

“It’s good news for consumers but it’s also good news for providers because it sorts them out.

“Inefficiency does no one any favours, particularly home care providers. This isn’t about employing accountants, it’s about employing carers.

“Getting them to  start sharpening their pencils to be able to administrate and manage these things efficiently has got to be good.”

Cutting the administrative burden

One third of providers charged no fee for Level one packages while just under 20 per cent charged no fees for the remaining levels, the survey showed. The highest amount charged by those surveyed, across all levels, was 30 per cent.

Two years ago, McDonald says, fees were as high as 53 per cent, and he knew of one operator who was currently charging 40 per cent. However, that operation was exiting the market, he added.

Administrative tasks included marketing and managing leads and referrals;  making claims, subsiding reconciliation and account allocations; collecting and recording fees; receiving, recording and paying third parting  invoices; preparing and distributing statements and yearly reporting.

Recording and distributing statements (16 per cent) and receiving and recording third party invoices (16 per cent) made up the bulk of the administrative work for those surveyed.

Providers said they allocated 0.5 of a staff member, or one full time employee two weeks in every month, to look after administration.

Home care provider overheads at a glance

  • No relationships between size of organization and total fees
  • Administration charge generally consistent across different HCP levels
  • Average administration fee charged was 15 per cent
  • Average case management was 11.25 per cent
  • All home care providers need approximately 0.5 of a staff member on administration

(source: Capital Guardians Home care support costs survey, November 2018)

Read more: Govt weights cap on home care admin fees

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One Response to Survey shows drop in home care admin costs

  1. Debra Ward November 29, 2018 at 1:57 pm #

    Good article as highlights how fees are being driven down through competition which is making it really important for providers to keep their costs as lean as possible.

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