New aged care reforms being introduced on February 27th, 2017 will hand greater control to consumers and place increased obligation on aged care providers to better understand their customers.
Consumers now wield the powerful sword of choice, and truly grasping what that means will be critical to outperforming competitors.
Aged care is going through a deregulation of sorts. The composition of aged care providers has seen a shake up in the past 10 years. For-profit suppliers have increased their market share by 5.3%, while religious suppliers have seen their market share fall by 4.6% during this period. The aged care industry is becoming much more competitive, and with for-profit providers entering the fray, competition is set to get even more aggressive.
With an intense competitive environment comes the need to stay one step ahead and identify where your competitive advantage lies. The days of regimented meal times, inflexible visiting times and lifeless residential care facilities are coming to an end. It has never been a more important time for aged care providers to understand their consumer.
So what changes are imminent and what do they mean?
No more ACAR
Aged care packages will no longer be allocated by the Aged Care Approvals Round (ACAR), which provides government grants to suppliers. Instead, these packages will be allocated to the consumer, effectively deregulating the sector. This will allow for greater competition within the aged care industry, encouraging innovation and more efficiently matching aged care consumers with products.
Importantly, these changes mean providers will now have to convince the consumer that they can provide the most suitable care for their needs.
Home Care
The composition of services in the aged care market is changing. The targeted provision ratio for residential care is expected to decrease from 86 people per 1,000 people aged over 70 to 78 by 2022, while increasing from 27 to 45 for home care packages over the same period. This represents a huge opportunity for aged care suppliers to shift and flex the way they provide home care packages by demonstrating a deep understanding of consumers’ home care needs and offering dynamic services and packages that deliver to these needs.
Future Policy
From a public perspective, the fundamental goal of the reforms is to minimise the time spent in residential aged care and this means keeping people in their homes longer. Short term restorative programs will be allocated for the first time in 2017 via the ACAR. These programs are aimed at assisting the elderly regain function and decreasing function decline.
The implications of this are that residential care will look to service mostly high care patients, the most discerning of all aged care consumers, while home care will look to fill the mild-moderate care gap. Loyalty within the over 70s segment of the population might make change slow in the early stages but inevitably aged care consumers will become more transient as time passes, exercising their right to choose the most economical and appropriate care for their individual circumstances.
