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 below quote from Kenneth B. Elliott in 1941 (though some parts have also been attributed to Mahatmas Gandhi) is entirely relevant to all aged and community care providers today:

The customer is not dependent upon us – we are dependent upon him

The customer is not an interruption of our work – he is the purpose of it

The customer is not a rank outsider to our business – he is a part of it

The customer is not a statistic – he is a flesh-and-blood human being completely equipped with biases, prejudices, emotions, pulse, blood chemistry and possibly a deficiency of certain vitamins

The customer is not someone to argue with or match wits against – he is a person who brings us his wants. If we have sufficient imagination we will endeavour to handle them profitably to him and to ourselves

The debate about whether we are in a consumer or market driven environment is not black and white but more an amalgam of both consumer and market forces influencing the future.

To be wholly consumer driven is to have a strong internal focus on your consumers and to develop your competencies that foster greater responsiveness to those consumers. To be wholly market driven is to have a strong external focus on competitors and regulators to respond to changes quickly and in some cases shape the market.

Having a balance that encourages the organisation and its people to become adept at managing the features of both approaches to thrive in a contestable marketplace is what is important in merging these two ideas: to understand it is the consumer who decides what’s valuable and worth paying for – not the business, and focusing on delivering services or solutions that help consumers be successful in attaining their goals, the business results follow.

Monitoring competitors; new emerging technologies, social changes; and regulatory policy in order to generate market intelligence and act accordingly is also vital.

If done well this approach will not only meet the “market” expectation but may also help shape what the market looks like through new products and services.

The power of the consumer has risen dramatically in recent years, largely due to social media tools that make it easy to share experiences (good and bad) and influence others (positively or negatively). Aged care is at the start of consumer-generated requirements that will define the provider products of tomorrow and, as such, providers need to foster greater responsiveness to their consumers and competitors like never before.

 

Patrick Reid is the Director of Aged Care, Community and Disability at StewartBrown.