Commonwealth Home Support Progam providers have been told that for some, quitting the sector might be the best option if they find themselves struggling to survive under the new home care regime.
An online forum on provider reform transition, hosted by LASA, heard some smaller providers won’t survive under the new home care system, which the government has undertaken to introduce as part of its sweeping aged care reforms.
The reforms will introduce a Support at Home system from July 2023 to replace the current CHSP and HCP structure.
A positive exit
“If you’re a small provider and you’re struggling … an alternative may be to exit,” Darrell Price, national head health and aged care at Grant Thornton said.
“It’s not for everybody but there are a number of organisations where exit is probably the best alternative, so a positive exit needs to be explored.”
Mr Price said a positive exit provided an opportunity to do other things, and could enable a business to convert into something viable that could also provide a reasonable lifestyle and income.
It was important to consider clients when taking this course, he said.
“If you are considering an exit as an option it would be appropriate to approach peers delivering similar services and potentially transfer those services to them as you exit.”
Speaking during a panel session, Shane Neaves, retired CEO of Peninsula Villages, said exiting would be a reality for some.
“Some smaller providers will survive and some will fail,” he said. “Boards have to be open to that because there are exit strategies that can be looked at.”
Alternative business models
Exiting wasn’t the only option, Mr Price said, but small providers who wanted to stay in the game might consider looking at alternative business models, including shared services, joint ventures, partnerships and collaborations.
Shared services have the benefits of centralising back-of-house operations, Mr Price said, especially transactional services including HR, finance and governance structures.
This model can streamline operations, make for more efficient use of technology and save costs.
However, he said it was important to understand the expectations of partners in such an arrangement. “Not everybody gets what they want when they want it or need it,” he said.
This model allows for – usually larger – providers to come together and rationalise their services, and is already occurring with retirement living and residential care.
Mr price said joint ventures offer an upfront way of attracting capital and expertise while reducing costs through consolidation. However the model could be “fraught with danger” he said.
“Joint venture investors will want to have a voice in how the money is used and dividends are realized and returned to them,” he said.
“Joint ventures who put capital in can be pretty ruthless about what they want as an outcome.”
Partnerships offer another joint-agreement model where different providers come together in a partnership arrangement where a number of entities consolidate without having a complete merger or the legal requirements of shared services.
In this sort of partnership, each entity retains is own status and position in the market place.
Mr Price said the pros of this model are its flexibility and the ability of partners maintain their own market and identity. However, its clear to ensure the terms of the partnership are clear to avoid problems down the line.
The Brisbane North Primary Health Network was a successful example of an organisation facilitating collaboration between providers in the form of a cohesive network, the forum heard.
Executive manager of aged and community care system improvement at Brisbane North PHN Sharon Sweeney said BNPHN led a consortium across Morton Bay and North Brisbane.
It transitioned 3,500 clients when it was established in 2013 and currently services 8,000 clients a day. The network includes 12 service providers as well as peak bodies, COTA, carer and advocacy groups.
“It’s really an arrangement where the PHN provides the backbone to the consortium. We don’t provide services ourselves so we avoid that conflict of interest by not competing with the service providers,” she said.
There were several PHNs around Australia that would like to support these kind of collaborations, Mr Price said.
Making it work
To make any alternative business model work it was important to leave egos behind and make sure the make sure all partners are comforatable working together, a panel discussion heard.
“You do need to do certain amount of due diligence, because there’s a certain reputational risk associated with getting involved with other organisatoins, as well as financial risk and governance risk,” lawyer Joanne O’Brien, a partner with health and aged care specialists HopgoodGanim said.
“You really need to know who it is that you’re thinking of coming together with and you need to be comfortable that they’re someone you’re prepared to associate your oransiations with.
Ms Sweeney said it was important think about benefits of any model to the community as well as organisation.
“If partnering and working with others gives us more of a chance to provide some services at scale that might be more possible than if we operate individually then that’s probably going to be a worthwhile discussion to explore,” she said.
This article first appeared on Community Care Review