What is the real cost of attracting new clients?

Home care providers should be measuring the time and costs involved in on-boarding new clients and consider charging entry fees that can be waived after a set period of time, financial analysts are suggesting.

While a lot of attention has been given to exit fees, the new process of attracting clients and setting them up to receive services will add extra administrative burdens that have not been widely acknowledged.

“One issue not commonly broached is that of an entry fee to cover the fixed and variable costs of on-boarding a consumer package in exchange for some period of certainty that the provider will be able to recover those expenses through service provision,” said Patrick Reid, Director of Aged Care, Community and Disability at StewartBrown.

Under the new process providers need to lodge an aged care entry record, develop a care plan, enter into home care agreement and take the time to explain a persons’ rights and responsibilities to them.

In addition to this, providers will need to develop an individual budget under the home care framework and provide ongoing financial reporting.

Providers will only have access to a new client’s comprehensive assessment after accepting the referral.

“We have always encouraged clients to collect information about productivity, engagement time and revenue utilisation including the direct care percentage but now it’s going to be critical to know this information,” Mr Reid said.

To do so you need have systems in place to gather it from more than one level of your business.”

Other approaches to client retention and service provision security to are to include an agreed notice period for contract termination in new home care agreements.

With regards to exit fees, it has emerged that some providers are charging up to $1,000 while others are charging nothing as a competitive strategy but consumers aren’t focusing on this.

“There remains uncertainty as to the cost of a client exiting the package for whatever reason but at this point an exit fee is not seen as being a deal breaker,” Mr Reid said, adding that the average exit fees are around $500-$750.

However, providers do need to be able to justify the fee, which Benetas General Manager, Jeremy McAuliffe says could be difficult.

“You could form the view that because of the changes impacting us, we as a provider are financially worse off. We can’t retain surplus funds which will cost us. Through the changes we are losing income but not expenditure,” Mr McAuliffe said.

“The rate of return on home care program will be worse from now on. We can either think of ways to improve rate of return, or we can increase fees.”

“Intelligence from consumers who are shopping around are that for some it’s not the fee that’s an issue but a question of will I get some value for the fee? The more discerning consumer will look at value proposition and ask what am I getting from you?”

“The emerging want [of consumers] is value. It’s about being involved, engaged and being an active participant in your own care.”

Given that providers are unable to charge exit fees on packages where the funds have been spent or would put consumers into debt, what fees you set is almost a moot point.

“Really, providers should be concerned with delivering services and reducing unspent funds such that the consumer is receiving all of the services and benefits they can,” Mr Reid said.

“This is going to be the best outcome for all involved.”


  1. Interesting article. You could form the view that providers have been relying on accumulating a client’s unspent funds and then retaining them when the client leaves care….let’s hope the initial focus on revenue utilisation and restrictive agreements shifts to delivering quality care to meet client needs in a more competitive market.

  2. Apologies, it would appear that my use of the nomenclature ‘entry fee’ was unintentionally confusing. Providers of course should check with their legal adviser as to the application of the Act and its subordinate instruments in relation to this area. StewartBrown is currently seeking further clarity on this issue which, if suitably clear, we will share with the industry as soon as possible.


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