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in 2014 reported that unspent funds in Level 2 packages averaged
12 per cent of gross revenue for those reporting unspent funds.
However, there was a significant number of services where unspent
funds were between 15 and 25 per cent of gross revenue.
Heath Shonhan, business advisory partner with Bentleys, says
providers will need to refine their systems to ensure they can track
unspent funds and manage their balance sheet appropriately.
"For a lot of providers that will be the new piece -- introducing
systems and processes to track these unspent funds and their
He says the new arrangements for unspent subsidies in home
care reflect longstanding government practice in other human
services such as disability services and primary healthcare.
"Practically, what it means to aged care providers is they have to
start recording these unspent funds as a liability and be prepared to
refund them back. And, importantly, make sure they don't spend the
money that the liability relates to."
Historically, unspent funds have been retained by the provider
and for many mission-based operators were used to invest in
infrastructure, service innovation and to support high needs clients.
"Innovation doen't need to be something the government pays
for, innovation can come from a whole range of different sources.
For example, some organisations have introduced business
improvement programs where they actually pay staff for ideas
around how new processes can be implemented," Shonhan says.
Louise Greene, director of business improvement with The Ideal
Consultancy, says given that packages will be allocated to those
most in need under a national approach to priority access from
2017, it is expected the vast bulk of package funds will be spent.
"Providers can describe their processes for funds expenditure
and the issue of unspent funds when presenting their value
proposition to prospective consumers."
CHANGING CONSUMER BEHAVIOUR
Adding to the issue is the trend being reported by many home care
providers that under CDC, a consumer mindset of saving for the future is
contributing to the significant accumulation of home care package funds.
"We're already starting to see home care package clients with
significant assessed needs who choose to build up their budgets at
the expense of their unmet care needs," HammondCare chief executive
Dr Stephen Judd told the Quality in Aged Care conference in March.
"Now I've got nothing against being thrifty and putting things
aside for a rainy day, but if you are on Level 4 care at home, it
already is a rainy day."
He said if this practice continued, he predicted a rise in premature
entry into residential aged care. "We all -- providers and clients alike --
need to remember that control over budgets exists to empower clients
and increase their choices, not to funnel people down the path of
perverse unintended consequences." n
tips for providers
Louise Greene from The Ideal
Consultancy shares her advice
for getting ready for the broader
changes coming in February 2017.
1. Understand what will happen to your current customer
base under the national allocation model and identify
your potential market. For example, the self-funded retiree
living with his 'healthy' wife may be assessed as requiring
a home care package but would be less of a priority than
a socially disadvantaged pensioner with no immediate
family and minimal other supports. In metropolitan areas,
and throughout the country there are many areas of
significant disadvantage with large numbers waitlisted for
a package. We would expect to see packages redistributed
from areas of advantage to areas that are less advantaged.
2. Look at how to offer the best dollar value, as consumers
will shop around. Astute providers have streamlined their
business and service model to provide better value. For
example, we are seeing providers transition from skill and
cost heavy resources such as RNs doing home visits for
expenditure reviews to maximising the use of technology
and support teams for service scheduling.
3. Describe your value proposition. Stating the number
of hours of direct care provided is one measure but
the broader resources and additional supports that
are offered by some not-for-profit organisations can
significantly supplement the package offering. These
supports can include socialisation programs, pastoral
care, assistance from volunteer programs, housing
assistance, material aid and access to a vast array of
highly specialised support and advocacy programs.
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