Home' Community Care Review : CCR Jan Feb 2016 Contents DRYSDALE
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marketplace. It is interesting that in the
workshops I hold (on transitioning to
the new CDC market) nearly half of those
attending are not currently approved
providers and are from the above groups
looking at what they need to do to be part
of the future home care market.
In addition to enticing new players into the
industry, the reforms will have significant
implications for current providers. New
competitors will challenge the market and
changes will need to be made by existing
providers or they will face losing their home
To stay competitive in the future
providers will need to:
• Provide services to clients that meet their
needs and do so with a competitive level
of staffing (and therefore cost).
• Offer a competitive hourly charge-out
rate. The future will not include any
administration fees or advisory costs as
clients will be offered one hourly rate
for direct services. Quotes in terms of
hourly rates are standard for most other
purchases a client will make and will
become the norm in home care.
• Introduce systems that are integrated across
all parts of the service and allow flexibility
to change as the need arises. Many of
the current systems are unable to do this
and new entrants will bring sophisticated
systems that are planned and focused on
client services and cost recoveries.
The implications for current providers
are not difficult to see and a very quick
calculation will demonstrate this. The
average rate currently being charged to
CDC clients is around $39 to $45 per hour
for personal care/domestic services. On
top of this is an administration and case
management fee in the range of 20 to 40
per cent. The movement to an hourly rate
would convert the above charges to around
$62 per hour (give or take). This is based on
an hourly rate of $42 plus an administration
fee of 30 per cent on a Level 2 package with
an average of 5 hours of service per week.
Therefore, the rates that providers
currently charge are likely to sit between
$55 and $70 per hour for this type of service.
The new market is likely to produce a range
of rates in the order of $38 to $45 per hour.
The ability for new entrants to operate at
these rates can be demonstrated by the
current rates that agency staff are charged
to residential care of around $37 to $40 per
hour by the various labor hire companies.
They are paying their staff, covering their
overheads and making a margin.
In the future when a new client has to
choose between service providers and they are
quoted $62 per hour by one and $40 per hour
by another it doesn’t take much imagination
to work out which way the client will go.
Reputation will account for something, but
with new clients it will probably not amount to
a difference of $22 per hour.
To the client, who is now at the centre
of all of this, they will merely want the best
service at the best rate.
Existing providers must start preparing
for this future. There are three things
that providers will need to do in order to
compete in the new home care market:
• Have an understanding of their total
• Review their systems and implement
those that will assist to reduce costs,
add value to the service and be able to
monitor how the service is performing
from a client’s perspective as well as the
operation of their business.
• Be prepared to make the necessary
changes to current business models and
provider culture. This will involve some
difficult decisions and cultural changes
to their workforce, the way services are
delivered and how they operate their
Finally, the simple answer to a successful
future is to ask the hard questions to reveal
the relevant answers. Good systems make
great people. Get these two right and you
will have the key to success. Your prosperity
depends on it. n
Mark Sheldon-Stemm is principal of
Research Analytics and has worked in
the aged care sector as a senior manager
for 20 years.
“Reputation will account
for something, but
with new clients it will
probably not amount
to a difference of $22
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