Consumer choice to bring necessary revenue
Residential aged care providers should look at introducing additional services in order to cover the funding shortfalls in everyday living expenses and care, a leading consultant says.
Residential aged care providers should look at introducing additional services in order to cover the funding shortfalls in everyday living expenses and care, a leading consultant says.
The growing deficit between the basic daily fee and the cost of hotel and utilities combined with an effective reduction in the Aged Care Funding Instrument would heap further cost pressure on residential providers, said Grant Corderoy, senior partner at StewartBrown.
The gap between the basic daily fee and providers’ total hotel services, utilities and administration costs was $31.67 this year, which was up from $16.10 in 2007, based on StewartBrown’s bench marking, Mr Corderoy told the Increased Choice in Aged Care conference on Tuesday.
“If that continues to increase and ACFI, which is currently making up the difference, continues to decline that’s only going to erode profitability,” he said.
The Federal Government’s spending on ACFI will reduce in real terms, he said.
“The hit will be 2018 and 2019 because we have no inflationary increase on our subsidy but we know costs, such as wages, will go up two to three per cent,” Mr Corderoy told the event hosted by Council on the Ageing Australia and Criterion.
Facility operators needed to look to what additional services they could offer in order to increase the share of funding coming from residents, he said.
But he cautioned that providers need to clearly understand their costs and service delivery model, and have a thorough knowledge of their clients and what they wanted, before pricing additional services.
“At the moment in home care we’re seeing a bit of a race to the bottom, with providers saying they’ll match each other on price, but they have very different cost structures and service delivery, and that is leading to a decline in margins as a result,” he warned.
When consumer directed care comes to residential care, as it is likely to, many facilities will opt to package up additional services in a bundle, Mr Corderoy said.
“Aged care providers should not treat themselves differently from any other service provider; in any other area consumers will pay for the service as long as they’re getting it in the manner they want it.”
Mr Corderoy said that increasing competition, new entrants to the market and innovative business and service models would all transform the residential care sector during the next five years.
Don’t miss the next issue of Australian Ageing Agenda magazine for an in-depth report on consumer choice in residential care.
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This is spot on … Families and residents should be able to purchase things they want. In my own research in this area, residents told me they:
– “like a steak before I die!” (not often on the menu, if ever)
– I’d love a piece of torte … Why can’t people buy special foods from the catering firm if they woudl like too – some child care centres do this.
– Many relatives lives far away and a catalogue of services they could buy for their loved one – with the RACF taking a cut could be organised – flowers, food, nails, wine, someone to take my ‘mother’ for a walk a couple of times a week, someone to read to me, companion services etc etc
– Thinking about hotel services and a concierge who could organise these options for visitors – surely when we are talking about 200 bed facilities this might be possible
A hairdressing ‘salon’ just for residents is not enough. At one nursing home in Sydney the hairdressing salon is open to residents and their family memberss – you can have your hair and nails done together.
Let’s reward and encorage innovation in the field.
Dr Ralph Hampson
Senior Lecturer
The University of Melbourne
Yes, this will bring a lot of change with in the industry. However, I want to say that the clients accessing these services are often elderly and frail and without independent support and advice to make sure they get what they want and what they need it is of great concern that clients will be in an very vulnerable position.