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hidden and not so hidden fees in aged care

The following excerpt has been released by the Department of Health on Friday 2nd September 2016.

information for approved providers of residential aged care homes: Additional services, including ‘capital refurbishment’ type fees

The department is aware that a number of providers have charged or are proposing to charge fees for additional services, including ‘capital refurbishment fees’ or ‘asset replacement contributions’ to residents. This information has been prepared to assist providers to understand their responsibilities when charging such fees.

This information does not constitute legal advice. Approved providers should seek their own independent advice.

legislative context

The Aged Care Act 1997 (the Act) and the Aged Care (Transitional Provisions) Act 1997 (the Transitional Provisions Act) regulate the amount of fees that aged care providers can charge to residents. Relevant provisions are found in Division 52C and Division 56 of the Act and Division 58 and Division 57 of the Transitional Provisions Act.

These provisions require that fees charged for, or in connection with, residential care, or for care and services specified in the Quality of Care Principles 2014 (the Principles) cannot …

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once upon a time in aged care

Once upon a time you were happily operating a residential aged care facility and making a nice profit.

Along came the aged care reforms and things started to change. The environment became more competitive, there were new fees and charges, transparent pricing information and changes to the revenue base. The reforms implemented more home care packages to help older people remain at home so the people needing residential aged care were older, frailer and sicker and they stayed for a shorter period of time. As a provider you were rewarded with higher payments for caring for these older, sicker, frailer people.

Then the government realized that the amounts they were paying to providers for care were growing more rapidly than expected and there were multiple competing priorities on the government purse. So from January 2017 the aged care funding changes mean the reward you as a provider were receive for looking after these older, sicker, frailer people will get smaller.

Lots of different groups looked carefully at the impact that these changes to funding would have. To varying degrees they …

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home care reforms – a golden opportunity for the not for Profit Sector

With the right service model, carefully articulated value proposition, robust business processes, leverage of organizational strengths, and commitment to mission and values the not for profits are well positioned to thrive in the future home care package market.

early days

Aged care in Australia started with not for profit organisations supporting marginalized and destitute people (mainly men) in the early 1900’s. Until the 1950s aged care services developed through voluntary organisations with various religious and social philosophies. Many well-known groups such as the Uniting Church, Red Cross and Country Women’s Association were heavily involved in caring for and advocating for the needs of elderly people. These organisations were small locally based organisations with their own governance structure who established the services and supports that they thought best met the needs of their community at this time. Legislation between the 1950s and 1980s fostered the development of locally based private and not for profit care providers. From the mid-1990s there has been the growth of corporate aged care and in recent years consolidation in both the for profit and not for …

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MYEFO = increased consumer funding of aged care

Yesterday, Treasurer Scott Morrison released the MYEFO which included review and reduction of funding to the aged care sector.

The reality is the government faces a huge financial challenge in returning the budget to a surplus and will look for savings wherever possible. Each budget announcement seems to include pain for the aged care sector. The Ideal Consultancy expects that the scrutiny of the rapidly growing aged care sector will continue. Whether this is fair is another question.

The aged care sector has and will continue to undergo significant reform. The two key themes are consumer choice and increasing focus on consumer contribution to care.

Financial viability remains a challenge and for some services, such as rural and remote services and services supporting people who are marginalized the only option will be government supplements and possibly philanthropic support.

However astute mainstream providers will be increasingly looking to consumers to increase their revenue base and to compensate for changes to government funding.

Over the 18 months since July 2014 providers looked to maximize their accommodation pricing. The industry has received a …

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responding to consumer preference in aged care

The aged care reforms move the sector to a market based consumer driven environment; in this competitive environment consumers have transparent information on price and service offering and are required to contribute to accommodation and care costs. This will significantly reshape consumer (and family) expectations.

While we know that the aged care sector needs to build an additional 20,000 beds over the next six years, it is evident that consumer preferences are driving the need for refurbishment of old and outdated buildings.

let the facts speak for themselves

According to the DPS Guide and Ideal Consultancy national consumer survey of 800+ people (more on that soon), and consistent with The Ideal Consultancy’s (Ideal’s) consumer forums (32 in 2015) and Ideal’s 1,435 Residential Aged Care Mystery Shopping exercises

77% of consumers report their preference is for single room accommodation, with a private bathroom. 17% are seeking Residential Aged Care accommodation that provides additional personal space such as a lounge area or separate living room.

Further, with the publishing of accommodation prices occupancy levels are reflective of consumer sentiment – the …

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plan your aged care business growth

how to plan your aged care business growth smarter

The Australian aged care sector needs massive investment to build capacity to meet future demand for aged care resources. Older Australians have a preference to remain at home, but for some this simply is not possible. At 85 years 22% are in permanent Residential Aged Care; this has declined by 3% since 2004.

allocation of age services

The aged care reforms increase the overall availability of aged care services to 125 operational aged care places per 1,000 people aged 70+ years by 2021–22. Recognizing consumer preference to remain in the community the growth is in Home Care places with the number of Home Care packages to increase to 45 places. The number of Residential Aged Care places will decrease to 80 places per 1,000 people aged 70+ years; and in the future the Short Term Restorative Care and Transition Care Places will be included in the residential aged care planning ratio.

Using robust methodologies to model demand and identify opportunity is imperative for business growth, viability and sustainability.

Whilst not all forecast …

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On February 1 2017 the protected world in which Home Care providers have operated will be unrecognizable.

Where the provider previously allocated a vacant home care package to an eligible and willing consumer they will now need to compete with providers across the nation to ‘win’ the opportunity to provide a home care package to the most worthy waitlisted person in the country.

the market

At 30 June 2015 there were 72,702 Operational Home Care packages provided by 504 Home Care Providers.

The market is highly fragmented across the 66 planning regions:

14 providers operated 1,000 or more packages 58% of providers operated 50 or fewer packages In 18 planning regions there were 50 or more providers however In 12 planning regions there were 10 or fewer providers


Currently the market place is protected – the provider holds the package and allocates it to an eligible consumer who is willing to accept a package; if the consumer wants to switch providers they must find themselves another package. Waitlists are strong.

To date the implementation of the Aged Care reforms …

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consumers comment on unfairness in home care packages

From July 2015 Home Care packages must be delivered on a Consumer Directed Care (CDC) basis. The essential features are consumers should have greater autonomy in choosing services that best meet their needs and preferences and transparency and accountability in funding and budgeting at the individual level.

Sounds like a win!

ABC Lateline (29 Sept 2015) highlighted the challenges being experienced. It is early days but consumers in the story struggle to understand why approximately one third of package funding is consumed by administration and case management fees; particularly as under the CDC model they should have the opportunity to take on a greater role in organizing and administering their own package thus reducing these component costs.

The role case management can play in supporting and guiding people to maintain their independence and the need for administration was either not well explained to them or consumers do not perceive a need for or value these elements.

The Commonwealth invests $1.3B (2013-4) in home care packages. Of the 73,550 operational home care packages 81% are delivered by the not for …

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ideal’s top 5 aged care essentials for an incoming minister

Malcolm Turnbull, Australia’s 29th Prime Minister has made sweeping changes to his Cabinet within his first week in office.  While most of the nation seems to have a new spring in its step and a renewed optimisim, here are our recommendations to addressing the aged care industry’s challenges.

Focus on Aged Care. While we welcome a new Social Services Minister, given our ageing population and the impact this will have on the economy, aged care should be much higher on the agenda.  Our elders should be seen as valuable and, as a country, we need to be supporting them, encouraging them to remain in the workforce for longer, that we take ageing seriously and as a country we can best care for people in their later years. Use smart technology to get all systems talking. Address issues quickly and move quickly to a ‘one-stop shop’.  Applications and features need to be user-friendly and easy for customers to navigate and use. Revisit the Productivity Commission Report. There are missed opportunities in the report and, because we are moving towards a ‘user pays’ …

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the final call: acar

There’s only three weeks left to submit an application for ACAR!

With most states facing a reduction in the number of places available this year, competition will be fierce.  For 2015, there has been an overall national reduction of two per cent for residential places and a reduction of nine per cent for Home Care places.  For aged care providers, this means that the need to submit a compelling application is critical.

While new aged care places are made available for allocation in every state and territory based on a number of criteria such as population projections and current levels of service provision, this year, a consultation process took place with a broad range of aged care stakeholders – the aim was to provide further insight into aged care needs within the planning regions.  This was a particularly good opportunity for linguistic and culturally diverse service providers to demonstrate specific and special needs, and put forward their case for places in their areas.

If you need assistance with putting together you ACAR application, our ACAR Writing Guides is just the answer.

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