There are few certainties in life: death, taxes and aged care funding reform.
The Federal Government’s decision to delay major changes to the Commonwealth Home Support Program (CHSP) has given providers something they haven’t had much of over the past year: breathing room.
For many organisations, the reprieve means one less immediate reform to prepare for while the future of home care funding continues to evolve.
Whatever logo, acronym or funding formula arrives next, providers will still have to answer exactly the same question: how is each part of the business actually performing? Because while governments are free to redesign funding models, providers still have to wake up on Monday morning and run a business.
Look inward before looking ahead
The organisations that are spending time interpreting their government policy crystal ball will most likely fare worse off than those that actually understand their own businesses well enough to adapt when policy changes.
That’s why Audit Partner at StewartBrown, Siobhain Simpson, believes leaders are asking the wrong question. Rather than wondering which financial metrics deserve the most attention, she argues organisations should first ask whether their financial reporting is structured well enough to reveal what’s really happening beneath the surface.
No amount of analysis can assist if you have services all mixed in together and not appropriately ring-fenced to allow you to really see how a service is performing.
Only then, Simpson argues, do traditional metrics such as staff utilisation, payroll costs and corporate overhead begin to tell leaders something useful.
Simpson has been making a version of this argument for months as providers prepared for changing funding arrangements. Whether discussing cash flow, workforce productivity or pricing, her message has remained consistent: leaders don’t need more reports, they need reports that actually reveal what’s happening.
Financial analysis only becomes useful once the underlying structure is sound. Otherwise, organisations risk making confident decisions based on incomplete – or even wrong – information.
Financial resilience isn’t built on forecasting government policy
It’s understandable to think that the next funding model is a problem to solve, when in reality, it’s only the next environment providers will have to operate within.
With enough visibility on internal operations to respond confidently when the rules change, each service is understood on its own merits – and failings.
If transport, allied health, domestic assistance and social support are all blended together, leaders may know whether the organisation is financially healthy overall, but not why. When every service is thrown into the same financial bucket, the good performers spend their lives quietly carrying the passengers.
Everything looks fine… until it doesn’t: operational challenges can disappear inside organisational averages, and strategic decisions become educated guesses in a sector with a very low tolerance, and financial margin, for error.
Financially divide, and then conquer
Separating services into meaningful cost centres doesn’t simply improve reporting. It gives executives and boards a clearer understanding of what’s driving performance, where resources are creating value, and where change is needed.
Funding reform will continue, that’s the elephant everyone can see. The bigger risk is assuming your organisation understands itself when the numbers aren’t structured to tell the full story.
Organisations that know exactly where they create value, where they’re losing money, and why won’t need to predict the next reform. Because the funding model was never their biggest financial problem in the first place.
