03 July 2014
Welcome to a new era for Aged Care!
With the passing of 1 July 2014 we are amidst a whole range of reform agendas, government funding changes and economically enforced efficiency in the Australian aged care sector.
WHAT’S AHEAD FOR AGED CARE?
Free markets are opening up. Funding platforms are shifting. ’Consumer pays’ is becoming a reality for the industry as our taxpayer-derived Government funding declines.
The greatest impact for most aged care providers will be felt with the switch from resident bonds and retentions to RADs and DAPs. This change will create a Net Capital Outflow for those providers who have collected (and relied upon) consumer funding via bonds to date.
WHAT ABOUT THE FUNDING OPPORTUNITIES OPENING UP WITH THE DEMARCATION OF HIGH AND LOW CARE?
Although ‘High Care’ residents may now be liable to contribute to their residential places – the reality is these residents often enter urgently and without access to the necessary lump sum for a RAD. Generally they rely on the sale or reverse mortgage of their principal place of residence (not ‘home’) in order to fund their care needs.
The often acute nature of their care means that many will likely only pay a DAP while a resident in your service. For providers – this option is good for income (and bank loan serviceability) – however it doesn’t offer a source of the capital funding required to pay out bond liability refunds.
HOW WILL THE IMPACTS OF THE CHANGES BE TRACKED AND MONITORED?
The Minister for Social Services, Hon. Kevin Andrews MP, has instructed the Aged Care Financing Authority (ACFA) to report back monthly around the macro-economic impacts of these capital funding changes.
HOW WILL YOU TRACK THE IMPACTS ON YOUR AGED CARE SERVICE?
With reform underway, all providers need to make the choice of whether to wait for ACFA industry updates and reactively manage their performance - or to proactively monitor the specific impacts on your organisation.