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Aged care: How to adapt to HACC funding changes

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Demand for services will continue to exponentially grow, presenting enormous opportunities, but businesses in the sector will need to remain agile to compete.

In addition, those operating in the not-for-profit (NFP) space have another set of considerations. All NFP boards involved in providing aged care and disability services need to be thinking strategically about the possible impact of the incoming changes to Home and Community Care (HACC) funding.

The funding reform, although announced in 2012, is being implemented in 2015; now is the time to revisit the changes and what they will mean for you.

What’s changing?

In essence the reform changes how a consumer will access government funding moving foward. The key change is that funding will now being managed and assessed at the commonwealth level with the exception of WA and VIC who are expected to transition over the next 2 years. The process to will become more rigorous, and will more closely resemble that of a competitive tendering process.

Funding will also become an individualised assessment process (for example CDC) as opposed to block funding so there will be upfront cost to the provider trying to secure funding for their consumer.

Delivery of services will involve the use of sophisticated technology platforms moving forward. Larger aged care providers are implementing Information and Communications Technology systems (“ICT”) to better deliver complex care needs of older Australians and more efficiently, particularly Dementia Care which continues to increase in demand.

In addition, there are a number of economic factors at play – the economic slow-down, coupled with the increase in national debt means tax collections will continue to decline and competition for government funding will become much tighter.

The future of the sector

In a sector already seeing mass consolidation of unprecedented levels, we are expecting to see much more. In context, the six major players – Regis, Japara, Estia, Opal, Bupa and Allity still control 29 per cent of the stock. It’s extremely fragmented and as mentioned demand for services is on the increase, it’s important for NFP providers to remain competitive and agile, while seeking opportunities for growth in the sector.

Smaller providers in particular will need to start thinking strategically, looking for opportunities with larger organisation to ensure the longevity of the business and their service to clients. Smarter boards are talking to larger organisations now whilst their balance sheets are still healthy.

Outside of mergers and acquisitions – there are opportunities, particularly among not-for-profits, to band together in order to achieve the benefits of scale and a stronger offering for clients. Re-evaluating your position as a not-for-profit provider in the face of reform and consolidation will put you in good stead to take advantage of opportunities that may arise.

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