Regional aged care growth requires one eye on the future

As regional aged care operators find it harder to make ends meet, one organisation has seemingly bucked the trend by exclusively expanding into regional Australia.

Challenges faced by regional aged care

• Aged care operators outside of metropolitan areas have struggled over the past 12 months due to financial instability and pressure from increased reforms
• Some facilities have closed due to the need to redevelop for compliance
• Others have cited workforce shortages and competing costs of compliance as too much to overcome
• 24/7 Registered Nursing mandates have also pushed some providers to the brink as recruitment proves unsuccessful

With a population of under 7000 people, Cooma is arguably the last place an organisation might look for a new home. But when the Sir William Hudson Memorial Centre (SWHMC) hit the market, it was an appealing addition for Respect Chief Executive Officer (CEO) Jason Binder.

“We’ve always been successful both in the care we deliver and financially, regardless of operating in regional areas, so for us we have designed the organisation to work with homes that are far apart and we’ve developed solutions to regional problems,” Mr Binder explained.

“SWHMC fitted with that regional and community model, and we want to develop solutions for the older people of Cooma and the community because the aged care services are a bit patchy in Cooma at the moment. There’s a lot of potential and I know we’ll develop something special that the community will be proud of.”

A not-for-profit aged care organisation, Respect is not planning on making sweeping changes to SWHMC. Mr Binder said there is a responsibility to continue making a significant contribution to the local community by utilising local staffing resources and providing additional training and support to upskill them for the benefit of the whole community.

“We’ve created a regional model that works. For example, just one of the challenges in regional areas is finding the necessary skills to operate aged care in what is now a very complex environment,” Mr Binder explained.

“It’s unreasonable to expect a local CEO to be an expert at legal interpretation, quality, finance, human resources, clinical care, catering, marketing and sales, information technology, and everything else. 

“But you must be an expert in all of that to succeed, so we have local managers but they have all of the support from a highly capable team of people who are individually specialised in all the different areas. The local manager can focus on what they do best and the home performs really well.”

Despite that, Mr Binder acknowledged that all residential aged care operators are facing a sense of uncertainty. Government changes are impacting income and cost structures, while there are additional costs to implement reforms such as 24/7 Registered Nurses, mandatory care minutes and new technologies. 

“That means no one really knows what profitability is going to be, and that creates uncertainty,” he said.

“I think that’s going to be ongoing for the next three years, because the Government isn’t going to throw money at the sector so operators can cream it, which means the Government is going to have to play it by ear over the next three years and make adjustments like the rest of us.”

A sense of caution is needed as Government funding is likely to be lean and providers may have to look at the way funds are allocated.

One such example is the change to in-home care services where the new Support at Home Program will fund clients directly rather than the service providers. This has already led to a large number of councils ditching their aged care services as they will no longer be able to afford them due to the loss of upfront funding from the Government.

Meanwhile, the Independent Health and Aged Care Pricing Authority (IHACPA) will provide new transparent and detailed price signals and benchmarks for aged care services from next year. Mr Binder said this is critical for sustainable aged care.

“We all need to work together for better outcomes for older people, and I think one of the biggest things to happen in the history of aged care is the IHACPA where pricing efficiency will be determined fairly, independently, and through a proper methodology,” he explained.

“It will be the first time care will have been costed rather than using the historical and rudimentary method of applying the COPE efficiency dividend to the industry and then looking at the provider’s profit and loss information to try and determine efficient pricing. 

“That method is severely flawed, and in my view has significantly reduced value to older people, while at the same time fracturing the relationship between the Government and the sector. I think we need to recognise when a tool is broken and stop hitting it.”

Providers can be confident that the Government is intent on change, but the next 12-18 months are set to be another crucial period for all involved.

Mr Binder said if the Government is serious about improving the sector, they must acknowledge and implement beneficial IHACPA recommendations next year, and not ignore them. Otherwise, the sector could again be left on its own without the necessary tools it needs to achieve desired results.