Author: Patrick Reid

Opinion: Consumer driven or market driven?

As we march towards the end of financial year the impact of a consumer driven market is starting to shape the sector as never before. Introduction of fund holding by clients and the easing of portability of Home Care Packages started on 27 February 2017 and as we suggested in the December 2016 Aged Care Financial Performance Survey report the ‘market’ is evolving in front of our eyes. The Department of Health has approved 76 new providers to enter the market in addition to the 504 providers already in the market, while over 14,000 home care packages were released in March 2017,  the majority going to consumers who had never previously held a home care package. The release also assigned packages to consumers who were currently in care but were awaiting a package at their approved level. When considering the implications of these changes it is easier to say an organisation wants to be consumer driven than it is to actually turn that approach into action. The evolution from being a market maker or driver, where the provider decided the future (pre-reform), to a market taker where the consumer decides the future (post-reform), is a transformational change that is difficult but exciting. Given the transition of aged care to a retail environment it is useful to consider some timeless advice about what the consumer means to a business. The...

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Gap doubles between basic living costs and daily care fee

In 2007 the gap between a client’s daily living expenses and the income received from the basic daily care fee was $16.10 per day. Some 10 years later that gap has doubled to $32.12 per day further highlighting that an increasing proportion of ACFI income is going towards meeting these costs rather than the “direct care” costs. We often talk about the cost of care and compare that to the level of ACFI income being received as though all of that income should be spent on the direct care of residents – predominantly their health care. However a significant proportion of that ACFI subsidy also contributes to the cost of everyday living expenses including administration and support services costs. The gap between these costs and the other major source of income, the resident basic daily fee, has been growing for some time which means that an increasing proportion of ACFI income is going towards meeting these costs rather than the “direct care” costs”. A basic daily fee is used to contribute towards the day-to-day living costs of an aged care resident such as meals, cleaning, laundry, heating and cooling. The maximum basic daily fee is 85% of the single person rate of the basic Age Pension and is indexed twice a year in March and September. The current basic daily care fee is $48.44 per day. We are entering...

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