Providers need to keep up as consumers have more bargaining powers than ever before!
As the population ages, modernised and targeted reform is being introduced, and the consumer has more bargaining power now than ever before.
The $3.7 billion “Living Longer Living Better” package rollout, which took 5 years, ended on 30 June 2017. The package introduced a number of reforms in the aged care sectors. Given that the aim of the reforms were to give consumers choice, aged care providers have found themselves in a consumer-driven market and therefore they have had to re-evaluate their strategic direction.
No longer the is idea to bring our elderly into aged care homes when a certain age is met, but to instead keep them in their homes and keep them as independent as is possible, for as long as possible. The aged care sector is expected to accommodate this, while also providing modern facilities that maintain the comforting feel of home to those that must move into full-time care.
What are the reforms?
Under the program, reforms have included:
- Home Care Packages with Consumer Direct Care (CDC) – Designed to give greater choice and control to consumers.
- Introduction of Refundable Accommodation Deposits (RADs) & Daily Accommodation Payments (DAPs) – an upfront refundable bond or rental style payments, or a combination.
- Establishment of the Aged Care Financing Authority (ACFA)
- Conversion of Home and Community Care (HACC) to the Commonwealth Home Support Program (CHSP) – assisting older people stay independent and in their homes for longer.
- Possible deregulation of Aged Care licensing – creating a customer-centric sector, opening the sector to more competition.
These reforms are designed to improve the provision of residential aged care, in the buildings and new facilities, improving care for the elderly with diverse needs such as dementia and disability, and strengthening the aged care workforce. Aged care providers need to understand this and update their processes and policies to be able to not just compete in the market and stand out, but to keep up. As the industry grows, the consumer has the buying power, and those providers who aren’t up to scratch will soon be undone.
How should providers respond?
Not-for-profit providers will need to consider adopting a market-based mind set and approach towards their operations ensuring that a commercially viable business model is in place. In a consumer-driven market, providers need to build reserves for continuous capital improvements to ensure their facilities and services are competitive and comparable to industry benchmarks.
What are the consequences of reform?
The aged care reforms have led to a number of mergers and takeovers both in the for-profit and not-for-profit sectors. Since the first reforms were introduced, takeovers have increased with organisations that don’t specialise in aged care choosing to sell their facilities to other providers. This trend is expected to continue as consumer-driven aged care will require specialised and committed providers in order to compete in the market.
The Government’s aim is to transform the aged care industry into a sustainable market based industry. Our Audit Specialists can assist you to keep your business sustainable and thriving. Contact us today on 03 9835 8200 or alternatively complete your details below and we’ll be in touch.