The problem of unspent funds is self-imposed by providers who are failing to operate the home care program properly, an industry expert says.

Aged care consultant and managing director at e-Tools Software David Powis spoke about what he termed “the scourge of unspent funds” during an online presentation at the Leading Age Services Australia (LASA) Congress last week.

He also warned that the recovery of  unspent funds by the government and the introduction of a new funding model would leave a significant number of providers financially damaged.

“Imagine if the department took back unspent funds, reduced future funds because of your history and insisted the full dollar value be provided to the consumer – potential disaster confronts you”.

Mr Powis said unspent funds, currently totalling more than $1 billion nationally, are the biggest threat facing the home care program.

“Ultimately the department will recover unspent funds and adjust the funding model  which will result in a significant number of providers being financially damaged,” he said.

However, much of the problem is self-imposed, Mr Powis believes.

David Powis speaking at the LASA Ten Days of Congress virtual event

Mr Powis says providers are contributing to the problem by failing to ensure proper pricing, training and reporting.

The biggest contributors to unspent funds, he says, include services not being delivered because of poor care planning,  consumers not taking up services, poor staff training, failure to reschedule cancelled services and failure to apply markups to third party services.

Many providers also don’t fully understand how home care funding works, and rely on anecdotal data rather than formalised pricing systems as well as failing to factor price increases into consumer agreements.

“Providers who are not operating the home care program correctly and as a result generating unspent funds are creating problems that will cause financial difficulty into the future,” he said.

While unspent funds contribute to a short term positive cashflow the benefit is illusiory.

Providers with unspent funds risk loss of government funding and consumer contributions, as well as paying tax on profit that doesn’t exist. Many providers will also find themselves under pressure not to charge full consumer contributions and income tested fees (ITF) – something Mr Powis warns can have severe long term ramifications for the provider.

“I have noticed recently a significant number of providers are deciding not to charge the full consumer contribution, if at all, and the full ITF if at all,” he said.

Unspent funds potentially represent a major loss of what Mr Powis estimates could be up to 50 per cent of a provider’s value.

He says it’s crucial for providers monitor unspent funds in real time and for care plans to make sure all funds are utilised.

Care also needs to be taken that on discharge, fees that aren’t actually unspent funds are not refunded Mr Powis said.

Mr Powis told Community Care Review that “naive and misguided” home care providers were their own worst enemy.

“They could clear the problem up before the government takes it back if they were smart.”

This story first ran on Community Care Review.

Comment below to have your say on this story. Subscribe to Australian Ageing Agenda magazine and sign up to the AAA newsletter

Join the Conversation

3 Comments

  1. I agree with all that this covers. My husband and I both have Aged Care Packages, we changed providers this year because we were told no money was available, strangely when the funds were eventually forwarded to our new provider, after the 70 day period, we had very large amounts in each package, due to covid restrictions the use this has been restricted too. Time for more accountability.

  2. I personally have worked for many years in the Community sector with the aged for many different Agencies including some leading Not For Profits, Private and Local government and some services associated with Public Hospitals. My background in nursing was considered to be an asset in the early days of Home and Community Care. In those days the clients diagnosed conditions, were used a a guide to the services that they may require to allow them to remain at home. The person had a holistic assessment of their current needs, by qualified Allied Health Professional. As the recommended funding was often allocated to the person in a shorter time, the Care plans were current and assessed needs were met in a more timely manner. Added to this the Case Mangers were more likely to have some medical background or have some formal qualification related to Case management . This would allow them to recommend services that met the clients desire to remain in their home. Over the years there was a change in how we were expected to support the clients, this was related to a new way of thinking about support giving the client more say by introducing “person centred care” which encouraged the client to self direct their services. I believe this model of service delivery has back fired, as the clients or their families believe this money is theirs and they can spend it however they want.
    We now have a situation where it is hard to get many clients to accept services other than cleaning, home maintenance services, gardening and requests for large household white good etc. Many Agencies are subjected to bulling by the clients and families who demand that the funds are spent large items such as double door fridges, central heating, major bathroom renovations change of floor coverings etc. This is one of the reason the Agencies are holding on to so many funds. There are many clients and carers who will not accept the type of support that the funds are meant to be used for. Such as personal care, Home support these clients are very aware of their balance and want to keep the funds so they can spend on the items they want. Most of the items are not related to their medical care needs.
    There are clients who do save their funds for some me expensive medical needs such as items assessed by OT’s, such as items like recliner chairs and hospital beds.
    The way the system works now, is the clients have the Agencies over a barrel as the clients will threaten the Case Manager by suggesting that they will move their funds, to another provider if they are not given what they want.
    They whole system needs to change starting from the initial assessments where the clients should be aware that the funds are to support them with relevant services not household items.
    There needs to be a system of review of the clients needs, as many clients are assessed at a certain time and their needs can change either up or down. Many clients do not require the level they are assessed at over time. There are people who recover from the original illness and do not require the original services. Like wise there are many who take a turn for the worse and they need more services.
    My conclusion here is that;
    There needs to be a complete overhaul of the system that will allow for a smoother running of the services in the future.
    More rules around the training for the people doing Case Management about the appropriate services to allow a person to remain in their home.
    The whole budget system needs review, this is currently done by Case Manger’s in most Agencies who have no training in accountancy.
    More direction and education from the funding bodies on what the money should be spent on.
    More Government oversight on what is purchased as there is a lot of double dipping and money spent on services that are already funded to mention a few eg. eyes, hearing, dental, etc.

  3. I totally agree with Jennifer,”person centred care ” ,if a person only wants personal care once a week that is what us workers bave to abide by.I have had 15 years experience in homecare work and believe that due to the clients and their family members having all the power in the care plan is the reason under employment is the reason so many really experienced workers are leaving the industry. No one can survive on 3hrs work a day with 2 and 3hr gaps in your roster.Care should be given first instead of power.I am all for empowerment ,dignity and respect,but this industry will not survive on a casual unskilled workforce.

Leave a comment

Your email address will not be published.