More choice for consumers, new challenges for providers

Operators have to adapt their business models quickly to meet the next round of reform in community care but the changes will not automatically mean less red tape for providers or more choice for consumers, especially in a rationed system, providers say.

Operators will need to adapt their business models quickly to meet the next round of reform in community care but the changes will not automatically mean less red tape or more choice for consumers, especially in a rationed system or areas of market failure.

These are among the views of aged care providers canvassed by Community Care Review following the latest changes to community aged care as outlined in last week’s Federal Budget.

Under the changes, from February 2017 the Aged Care Approvals Round for home care packages will be abolished and funding allocated directly to consumers, who will then engage their preferred approved provider to administer the package.

It is another step toward a market-based and consumer-driven aged care system aimed at providing the customer more choice and control and driving quality and innovation in service delivery.

While this direction was expected and largely welcomed by the sector, restrictions on supply will remain attached to the current planning ratios adding to challenges for providers who must adapt their business models to operating after ACAR and the loss of income security.

For rural and regional providers, Assistant Minister for Social Services said that “liberating home care packages from the Aged Care Approvals Round” would make it easier.

However, Alyson Jarrett, general manager community care, at The Whiddon Group said the impact of this change on these providers should not be any different to the impact on metropolitan providers.

Alyson Jarrett
Alyson Jarrett

“In the event that planning ratios remain, supply limits, particularly for clients requiring high level care in rural communities, will also continue,” Ms Jarrett told CCR.

“In the absence of the ACAR process there needs to be comprehensive consultation with key stakeholders to ensure older Australians living in rural and regional areas have equitable access to the level of care they require.”

She said there also needed to be careful planning and consultation to ensure the process that replaced ACAR did not result in a different manifestation of red tape.

Ms Jarrett said Whiddon had already been reviewing its business model over the last few years in preparation for the transition to consumer directed care and an increasingly competitive market.

“The direct allocation of home care packages to the consumer is the next logical step in the aged care reform process and providers now need to adapt their business models to maintain financial viability in this less-regulated market place,” she said.

While welcoming changes that increased the choice and flexibility of services for older Australians, Ms Jarrett called for the regulation to be adapted to protect consumers and measures to educate them on how to identify quality and safety indicators of providers.

Supply restrictions

Richard Hearn
Richard Hearn

Also highlighting supply restrictions, Richard Hearn, CEO of Resthaven, said the associated challenges of service rationing were well-documented in the system.

“With good quality control and processes in place, Resthaven’s general position has been to advocate for deregulation of supply in home care – rather than deregulation of suppliers in a rationed system,” Mr Hearn told CCR.

“Increased flexibility and availability of funding to provide home care packages is preferable to having more providers available to offer the same number and type of packages,” he said.

While noting it was premature to give an informed response on these changes due to insufficient detail, Mr Hearn said it was important to ensure those with limited means and special needs were protected and that the service system was sustainable to ensure better outcomes for consumers.

“We would not want to see changes to the system that could lead to the market becoming a monopoly or duopoly,” Mr Hearn said.

Opinions on the timeline

Ray Glickman lowres
Ray Glickman

Raising concerns about the timeframe, CEO of WA provider Amana Living, Ray Glickman, said moving to a consumer-led model was both positive and expected but that the speed of this change turned the current model on its head.

He said it would be problematic for some providers, such as with staffing, and could lead to a reduction in choice for some consumers.

“Even those who survive the transition will face ongoing issues as a result of the new approach,” Mr Glickman told CCR.

He said not-for-profits and operators in areas of low financial return offered a commitment to people and values rather than investment and profit and government should help those providers remain viable rather than shift to a solely market-driven model. Mr Glickman said:

“The greatest challenge for all home care providers is around staffing. To get good staff you need good rosters. With security around funding, you can have that. Insecurity means the risk of losing good staff and consistency of care becomes a major issue. In our experience, this consistency is a top priority for clients once services are in place.”

He said big organisations able to move quickly and adapt to change in their business models over a relatively short time would do best and those with the most effective business models would end up with a greater share of the market.

“The result is likely to be more competition among fewer, larger providers, and more for-profits vying for attention. In reality, this could mean less choice for consumers, with services being profit-driven,” Mr Glickman said.

He said consumers who bring the lowest financial return were most at risk of losing out. “Small, niche operators, such as those serving the non-English-speaking population or those in regional, rural and remote areas are especially vulnerable. If we lose those, then for some customers, choice is diminished not increased.”

Responding to change

Jason Howie Kincare 2014
Jason Howie

The CEO of multi-state provider KinCare, Jason Howie, said consumers would gain greater choice and flexibility but it would take time and was dependent on how quickly organisations could respond to demand.

The investment budgets were stretched thin at present for many organisations currently overwhelmed with changes to home care and home support purchasing models and may therefore be slower to respond to consumers than they would like, he said.

While the change would certainly cause individual businesses to change their forecasting models and capital structures, it was not particularly revolutionary in the context of the challenges most businesses outside this sector faced, Mr Howie said.

“Most industries aren’t blessed with perpetual fixed contracts with Government and deal with these challenges every day. Aged Care organisations will need to ensure that they hire in the appropriate skill sets to address these changes,” Mr Howie told CCR.

He said the end of the ACAR represented the transition from Government choosing service providers on behalf of clients to consumers taking responsibility for their own purchasing and whether it had a positive or negative impact on providers depended on how each responded to the changes.

“It will certainly be a positive for a rural or regional home care provider if they are loved by their consumers. Many geographically based providers have a niche position in their local communities which should be easy for them to defend if they are focused on delivering great services to their customers,” he said.

“The question for each service provider will be whether they know their customers love them, or merely think they do. If the latter, they may find that once their customers have a choice their love of their provider is not as strong as was assumed,” Mr Howie said.

Meeting regional demand

Andrew Mann
Andrew Mann

Liberating home care packages from the ACAR process could help regional providers with better meeting clients’ needs, said Andrew Mann, general manager of Sue Mann Nursing and Community Care.

“Whilst the changes will continue with regional planning ratios to manage supply and control fiscal spend, it is hoped the less regulated environment will better meet the regional demand for the right level of packages.” Mr Mann told CCR.

“I know in the regions of the Central Coast and Hunter where Sue Mann currently delivers 300 Home Care Packages (HCP), we have significant unmet demand of Level 3 and 4 packages to meet the increasing high care needs of our ageing population.”

Overall, he said he welcomed the Budget measures and the certainty it provided around the timetable toward a market-driven and deregulated environment, which would reward home care providers that have great brands and marketing strategies, exceptional customer service and cost-efficient service delivery models.

“The rewards to these providers will be strong customer demand and loyalty delivering business growth at the expense of mediocre and sub-par providers.”

Whilst deregulation will attract new players to the market, it presented anopportunity for well-positioned providers to capture additional market share by meeting the unmet demand of consumers seeking a package that responded to their individual needs and preferences, he said.

“The challenge will be for both traditional HCP providers and new providers to develop service offerings that deliver what the individual client wants whilst achieving an efficient and customer-centric backend delivering both value and quality.”

He said that would require new business models and approaches to engaging both clients and care provider staff as well as education for future consumers to enable them to make informed decisions about selecting the right provider for their needs and quality of care and value.

Don’t miss an issue of Community Care Review, Australia’s new publication covering home care and support, respite and reablement. To subscribe to CCR please visit

Tags: acar, Alyson-Jarrett, amana-living, andrew-mann, home-care, jason-howie, kincare, ray-glickman, resthaven, richard-heard, sue-mann-nursing-and-community-care, the-whiddon-group,

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