Home care providers have cut their prices following the government’s introduction of compulsory fee reporting on the My Aged Care website, saving the government up to $1 billion.
The government made it compulsory to disclose home care fees only last week – on 1 July 2019 – and already it is becoming clear that prices are falling.
Perth-based independent retirement planner, Peter Tyndall, told HelloCare, “What it says to me was forcing them (home care providers) to publish, made them all look at their costs.
“They’ve all changed them, and most of them have reduced them.”
Study revealed exorbitant home care costs
A study earlier this year by Mr Tyndall found some home care providers were charging exorbitant fees.
Mr Tyndall compared the prices of eight home care providers, four for profit and four not for profit. His case study looked at level 2 package with a prescribed set of needs.
“It was the only way I could compare apples with apples,” he said.
Mr Tyndall found one home care operator was charging an administration and management fee of $7,000 on a $15,000 package. “That’s 40 per cent (of the package),” Mr Tyndall said.
By comparison, another operator was charging an administration and management fees of only $36.
In another extreme case, one provider was charging $191 per hour for gardening services.
He found some providers were charging different fees altogether, such as fees for onboarding, exiting, case management, and reviews.
On looking closely at the numbers, Mr Tyndall found home care providers charging high administration and management fees were charging lower hourly rates for their services. And vice versa – those with low administration fees had higher hourly rates for care.
Fees fell after compulsory reporting of fees came in
Mr Tyndall revisited the case study after the government made it compulsory for home care providers to report their fees on the My Aged Care website only last week.
He found the home care provider that had charged the $7,000 administration fee, had reduced the fee to $3,000. However, the same provider increased the fees for their care services.
They managed to “claw back” $3,000 with higher fees for care services, Mr Tyndall said.
The difference to the bottom line was about an $800 saving, he said.
Some providers still defying requirement to publish fees online
Two of the providers Mr Tyndall was looking at had still not published their rates, and they were not alone.
“They’re in default. And they’re not isolated in that, I did come across others,” Mr Tyndall said.
Mr Tyndall suggested home care providers that don’t publish their fees online should not be able to advertise their services on My Aged Care.
My Tyndall gave the example of one provider that did not publish travel costs. To find the information, users had to navigate to the provider’s own website, to discover travel costs to the tune of $2,500.
“It’s not a perfect world. There’s still some work to do,” Mr Tyndall said.
Providers reduced costs by up to $1,200 a year
“Overall, of the six remaining from the original case study, five reduced their costs by up to $1,200. One increased their costs by $1,000,” Mr Tyndall said.
The provider that charged $191 an hour for gardening, had reduced the gardening rate to a much more reasonable $50 per hour, Mr Tyndall said.
Overall, the savings amount to between 3 per cent to 6 per cent, he said.
The lower cost amount to a saving for the government of between $500 million and $1 billion, Mr Tyndall said.
Home care providers face tough financial conditions
With many home care providers already struggling financially, lower costs could force some out of the industry.
The most recent report from aged care consultants, StewartBrown, showed the financial performance of home care providers surveyed deteriorated in the nine months to March 2019.
The surplus average per client day fell by $0.90 per client day to $3.48 pcd. The figure as at the end of March 2018 was $4.39 pcd.
Only last week, Perth high-end home care provider Berrington went into voluntary administration.
“They are obviously feeling some pain,” Mr Tyndall said.
Some operators will “fall by the wayside”
My Tyndall told HelloCare, “I’ve been around business for 30 years and what I’ve found, on a general level, is that some operators aren’t very efficient or effective.
“I think what will happen will be they (providers) will need to innovate and make sure they are providing a good cost-effective service, and those who aren’t will fall by the wayside.
“And that’s probably a good thing for the industry.”