Is it too soon to prepare for Taskforce-inspired reforms?

Former KinCare Chief Executive Officer and current Partner at Pride Living Group, Jason Howie, believes the Aged Care Taskforce’s recommendations are supportive of increased consumer choice and provider stability. 

However, he added that there are elements to still be cautious about given they are just recommendations from a high-level viewpoint.

Key points

• The Aged Care Taskforce’s final report and recommendations were publicly released in March after the Government received it in late December
• Proposed consumer co-contributions for wealthier older Australians headlined the recommendations, while the Taskforce also called for an end to refundable accommodation deposits (RADs) and more effective funding mechanisms for home care
• No additional information or Government response has been published following the release of the final report

The focal point of the Taskforce’s job was looking at improving aged care’s sustainability and funding. As part of this, they proposed older people make a fair co-contribution to aged care services based on their means.

In addition, for greater equity in home care participant co-contributions, they called for a fee-for-service model that would ensure participants only pay for services received. Not only would this give consumers better value for money, but it would reduce the eye-watering $3.7 billion sum of unspent home care funds sitting in Government and provider balances. 

Mr Howie said that a co-contribution system that contains price signals based on the type of service accessed would mean the Government contribution would effectively provide a safety net of care-related services with consumers paying increasing contributions for additional services. 

“From a provider perspective, the co-contribution model is a mechanism for increased consumer choice in the services they buy. It allows us to shift from spending the Government subsidy to designing a package of services that consumers want, and then working out how this is funded,” he said.

“Another positive from this model is that if Government funding levels fail to keep pace with cost increases, the consumer has the option to increase their contribution to maintain services.”

“Because the Taskforce recommendations are high-level rather than policy, questions remain about how the co-contribution system will work, and whether any price points will be market-based.”

Given the Taskforce recommendations are only recommendations, it’s unclear as to whether home care providers need to start planning for changes just yet. However, Mr Howie highlighted three areas of consideration that executives and leadership teams can talk about to prepare.

1. What scale of operations will be best suited to any of the likely policies that address the key recommendations?

“To my mind, scale will be important, so I’d be looking to my leadership team to show me a growth plan. This could be organic, acquisitive or a combination of both,” he said.

2. Growth is costly, so I’d be seeking validated assurance that our profitability is above average and to gain an insight into the level of growth that it will support.

“No point in letting ambition get mistaken for ability, as this only ends in disaster.”

3. Organic growth can be through more clients or higher revenue per client.

“In my experience, higher revenue per client is often ignored and yet there is strong evidence that it’s easier to sell more to an existing customer than to sell to a new customer, particularly if the customer is a customer of another organisation.”

Following the recent delay to the introduction of a finalised new Aged Care Act, it’s easy to speculate that it will include some key elements of the Taskforce’s recommendations. Consumer co-contributions are one of those, especially as the exposure draft did not dig into fees and expenses. 

And if consumers are being asked to pay more for their aged care services in a market full of growing choices, it is never too early to ask yourself how you will meet the expectations of a modern-day consumer.