The aged care and disability sectors are going through significant change in Australia. With the ongoing rollout of the NDIS (the largest social reform since Medicare) and the introduction of Home Care reforms in early 2017, there’s a lot happening all at the same time.
These are two extremely complex initiatives, and they have some major implications for providers and consumers alike. However, to summarise (and simplify), we’re seeing two major changes:
- The gradual end of block funding; and
- Increased flexibility for consumers.
To expand on the first of these elements: historically, disability and home care providers received upfront payments from the government for the care services they said they would deliver each year. In the new environment, however, both home care and disability providers no longer receive cash payments in advance of service delivery; they only receive funds once the actual service has been delivered. Might sound fairly logical, but it’s a huge change for two industries that have relied heavily on upfront payments for a long time.
While the second major change is a positive one for consumers, it only magnifies the implications of the lack of upfront funding for providers. Previously, it was difficult for consumers of aged care or disability services to switch providers. The provider held the funding (and was paid in advance) and there were no clear mechanisms to allow consumers to move to another provider. This meant the power was in the hands of the provider – guaranteed upfront cash flows and minimal customer churn. With a big focus on consumer flexibility, both home care and disability reforms will make it much easier for consumers to procure services from whichever provider best suits their needs.
With such major reforms rolling out across two of the largest industries in Australia at the same time (aged care and disability services combined account for about a quarter of government spending each year in Australia), it’s almost certain that we’ll see (more) growing pains across these sectors over the next few years.
We’ve already started to see new providers enter the market with innovative delivery models, great tech and favourable pricing structures. We’ve also seen an increasing amount of negative press surrounding the impacts of the NDIS on providers. How are existing providers going to adjust to this new environment? Only time will tell, but a few areas that I think are critical include: workforce flexibility, streamlining existing business processes, maximising the power of referral networks and technology. Just a few areas that I’m keen to explore in future posts!