aged care home care reforms

HOME CARE REFORMS

Financial and

business impacts for home care

providers.

Accountants AdvisorsAuditors

Financial and Business Impacts?

Home Care providers with approved provider status will be able to market their services and attract clients through the My Aged Care Gateway. Providers currently offering residential care and flexible care will be able to ‘opt in’ to become Home Care providers through a simplified process.However the key impact of these reforms will likely be a squeeze on financial sustainability of Home Care services. The challenges ahead for providers include:

Intensified competition for funding across the sectorReconfiguration of staffing modelsIncreased importance of treasury management


Think Ahead NowConsider your position in the market place

Are your services tailored to suit the needs of current and future consumers? Do you need to increase your marketing efforts to improve your profile in the industry?

Review your price competitivenessThe economic principle of an increase in supply typically leads to discounting. How robust is your pricing model? Do you know the cost drivers of your service?


Think Ahead NowStrengthen your policies

Have a clear process around consumers leaving packages or changing their service requirements. Will you implement administration charges to process funding transfers? Where will you stand on minimum contract periods and required notice periods to offer your services at your price points?

Review your business modelIdentify the impacts that fluctuating demand for Home Care services may have on your bottom line (e.g. staff costs) Explore your options.


Think Ahead NowStress test your financial forecasts

Undertake “what-if” analysis to assess how resilient your business is to a drop in demand for Home Care packages. Find out what reductions to your pricing will do to your financial position. Model what your cash flow will look like if you have to transfer funds for a leaving client.

Plan for the futureIdentify potential risks (such as increase in bad debtors) associated with proposed funding shifts in July 2018. Take the time to review your debtor collection procedures now and be prepared.


Discussion

Margins are already tight! Techniques to deal with funding changes are consistent amongst both services

The focus is around utilising technology, adopting activity based costing to understand your costs and design a better service, marketing and getting the staffing mix and rostering right.


Activity Based CostingRequirement for individual budgets, can no longer ‘cross subsidise’ loss making clients with profitable clients2 Key questions – ‘Have I priced my service provision correctly?’ and ‘What is the best way to recover my overheads?’ Determine costs for those activities for which you plan to bill forHave a thorough job costing accounting system in place / assign a job code to every possible expense that makes up a service. Use timesheets to measure payroll cost for each service.Allocate overhead costs. Use % of staff working in that service line, or % of labour hoursConduct scenario analysis


Activity Based Costing

Source: 2015 Bentleys National Aged Care Survey

Income Home Care Costs$0

$10

$20

$30

$40

$50

$60

$70

$63.23

$49.13

Income (excl subsidies & means tested care fees) Home Care Costs

Difference$14.10prpd


Example Menu of ServicesGST and out of pocket outlays (eg ticket costs) extra

Care Massage $45 / half hour Enriching Christenings, weddings, births, deaths $75 / hr $500 / (Non Osteopathy $45 / half hour Rainforest retreat $75 / hr $500 / Assessed Bedding upgrades POA Holy place visit $75 / hr $500 / need) Aromatherapy $75 / session Sky diving $75 / hr $500 /

Hydrotherapy $65 / session Cruise $75 / hr $500 / Counsell ing and support $85 / hour Seaside holiday $75 / hr $500 / One on one personal assistant $45 / hourNon prescription drugs, vitamins etc $20 / order Entertainment Cinema $75 / hr $500 / Case management $125 / hour Concert, music festival (eg Bluesfest) $75 / hr $500 / Care program development $1650 / program Theatre $75 / hr $500 / Australian Spring water supplement $10 / litre Casino $75 / hr $500 / Australian oxygen supplement From $10 Sporting event attendance $75 / hr $500 / Australian Organic food supplement $15 / meal Other $75 / hr $500 / Palliative care program $1250 / dayReablement program management $145 / session Personal Repairs and maintenance of personal items $350 / day

Shopping $75 / hr $500 / Room service $5 per meal Funeral services $3,500

Services Non emergency patient transport $4.50 / km Trustee services $250 / hrIn home care mhealth technology bundle $25 / month Real estate agency 2% commission mhealth monitoring $10 / day Reverse mortgage brokering NILTelecoms and data $5 / day Informal carer support services $25 /houriPad rental $20 / day Custom activities planning $50 / eventTechnology support services $100 / 2 hr bundle Function catering $35 / hr wait staff

New service menu CDC v2.0 (EXAMPLE ONLY)

EXAMPLE ONLY


Staffing Profiles


2005

2015

27.37; 71%

11.44; 29%

39.80, 75%

13.46, 25%


Thinking AheadKey activity drivers

Actively manage residents for revenue

Understand your costs / Activity Based Costing

Effectively manage staffing costs and rostering.
