If you receive home care, you had better start preparing for the possibility of shopping around for a new supplier.
By February 2017 the big structural changes being introduced by the government are expected to start biting the profitability of many organisations who provide home care services.
Smaller home care operators will be thinking about either closing down or retreating to the protection of a ‘big brother’ – merging their business and customers into a bigger, stronger organisation. And new operators are already appearing, that will offer you a different kind of home care service at a different price.
New government policy direction
Why is this happening? The government wants us all to stay at home longer rather than entering residential aged care and they want us to contribute more to the cost of our home care. They also believe competition will create new services, delivered into our homes at lower prices.
These new services and lower prices will make the government’s job easier – selling the fact that we will all have to pay more for home care, while the government pays less.
The cornerstone of this brave new world is the government’s policy of Consumer Directed Care. In simple terms the government is going to give us, the end customers, our own budget to buy care services. We will be able to decide which services we want, who we would like to deliver them and we can negotiate directly on what price we are prepared to pay.
This is different to the traditional home care system where the government gave the home care operators our budget and they informed us which services they could provide us and how much they would take from our budget for that service.
So small operators will merge with bigger operators. And big operators will win because they will have economies of scale and the breadth of services.
The challenge for smaller home care providers
But this new world does not work for many smaller home care operators. Many have only a limited number of services available, limited by the staff they employ and their skills. These operators now realise that we, the customer, may not be satisfied by their limited choices and we may take our business to a bigger operator that has a wider selection.
Smaller operators also realise that they have to market themselves to keep us liking them. This will cost money that they have not previously had to invest.
So small operators will merge with bigger operators. And big operators will win because they will have economies of scale and the breadth of services.
The jockeying for a big operator position has already started. Australian Unity has just purchased the entire home care business from the NSW government for $114 million. This includes 50,000 home care customers and 4,000 staff. (The NSW government figured out it could not change fast enough in this new competitive world).
Australian Unity figured out it was happy to pay for what is 70 per cent of all home care delivered into NSW. Buying this market today gives them 16 months to get ready for the major changes rolling through up to February 2018.
New entrants in the market
A typical new entrant is the web-based organisation, Bettercaring. It does not provide home care; it acts as a matchmaking middleman for independent aged care workers wanting to meet clients and vice versa. Just like Uber matches people wanting to be driven somewhere with a person who has a car and is prepared to drive.
Bettercaring (bettercaring.com.au) says this is a better deal for both the care worker and the client because we will have a ‘personal relationship’. The aged care worker will value us as clients and it will be cheaper because we are not paying the home care operator’s administration.
At the moment, carers earn as little as $23 per hour working for home care operators. Better Caring suggests we may want to pay more to reward and keep a carer working for us.
There is some truth in this; the administration fee is normally around 35 per cent and this means 35 per cent less government money is available to be delivered to us as care. Bettercaring.com.au says it will make the care available to us and instead of taking 35 per cent, they take approximately 15 per cent. They believe this will result in better care for us because the carer is likely to be paid more.
How does this work? At the moment, carers earn as little as $23 per hour working for home care operators. Better Caring suggests we may want to pay more to reward and keep a carer working for us. Many carers are charging more – up to $40 an hour – saying they believe they are worth it because they will in fact give a more personal level of care.
Overseas this is proving to be the case.
If you value your carer, then now is the time to start the discussion on where they will be in 16 months time; you might want to take the same journey with them.
The important thing is to ask questions now – not in 16 months time.
