Pricing your way to a financially successful home care future

Whilst it is healthy that more providers are giving consumers a greater diversity of choice over services, rapid growth also brings challenges.

To many new providers, the industry is either new territory or their prior experience has been limited to non-business, non-management involvement. A significant number may therefore have a limited understanding of how the aged care sector is funded, managed and controlled by the bureaucracy.

The recent decision by the government to unilaterally alter the provider-determined percentage/flat fee arrangement for administration and case management in home care to the more restrictive model of a department-determined criteria for care and package management is an example. Under this regime, full operating costs, overheads recovery and profitability rely upon the provider including those amounts in the hourly staff charge-out rate.

This single change has introduced another element of risk, one which most providers may not fully understand. If all the available hours of service are not delivered and charged, the provider will fail to achieve full operating cost and overhead recovery, or deliver the budgeted profitability.

Funding arrangements in aged care are tight, but at least with the percentage/flat payment for administration and care management providers could recover operating/overhead costs and profit from the funding model 1and remain viable, irrespective of “unspent funds”.

Written by David Powis, Managing Director of e-Tools Software. The above is an excerpt of David's article on Australian Ageing Agenda.

Continue reading David's full article here on Australian Ageing Agenda, and have a say!

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