If you’ve been to one of my presentations, you would have seen the slide, “What coffee would you rather drink?” with the options – instant coffee or barista-made coffee. The choice appears obvious and for good reason – most of us are willing to pay extra for quality, especially when it is affordable.

It is, therefore, no surprise that The Royal Commission Recommendations have a clear emphasis on resident choice and preferences.

All of this comes back to Consumer Directed Care (CDC), which takes the resident from being a participant to becoming the chief decision-maker in the design and delivery of their services and lifestyle.

In this insight, we explore the cost of CDC and explore the potential for additional services to both fund and facilitate resident independence and choice.

JAMES SAUNDERS
Partner – Finance & Operations

Cost of delivering CDC

Providers need to be able to deliver on the resident decisions. From our experience, it is already common for providers to go above and beyond the specified care and services by delivering services such as:

From our calculations, the costings to deliver these non-prescribed services is between $700-$2,000 p.a. per resident.

Delivering non-prescribed services is only one aspect of facilitating CDC. In a mature market, we anticipate the need for new roles e.g Customer Service Managers. We also anticipate a requirement for further investment into appropriate residential accommodation.

Unfortunately, with 60% of providers in deficit and struggling to deliver on the current requirements, it is unlikely providers will be able to deliver any real innovation.

Funding CDC with Additional Services

While there is additional funding in the budget, the Government is never going to financially support any publicly funded system beyond the minimum requirement. To do so is inconsistent with a low tax agenda.

But there are ways to improve services, and this is evident with the introduction of RADs. We now see a higher standard of new accommodation, conducive to CDC which has in turn resulted in higher occupancy in those facilities.

Providers offer services not covered by the RAD or funding, just because they believe their residents deserve it. Unfortunately, this has led to the systemic decline in financial viability.

Our advice to providers is to charge a daily additional services fee as a condition of entry. In this model, we take a package approach, where the fee is far less than the total cost of the individual services. Can you imagine having someone tell you that you need to pay every time you want a glass of wine at dinner in your own home? The package approach allows all residents to have access to the same services at any time.

The daily package amount will of course vary depending on your residents and services. Our experience shows that residents, including those supported, are very much willing to pay at least $4.95 per day (up to $65). At this rate, you will receive an extra $1,806 p.a. per resident to support consumer choice.

If you have invested in your facility and established a good reputation, then charging for the additional services you provide is a no-brainer.

Making it happen

While most providers know additional services is required for CDC and to ensure long-term sustainability, they struggle with implementation. With the Quality Commission, the Royal Commission and COVID, there is always something that takes priority.

We find providers that have introduced additional services often do not comply with the regulatory framework and are exposed to significant financial and reputational risk, as we saw with the $6 million fine imposed on BUPA by the ACCC.

To support providers, we are conducting a joint webinar with ACSA and Russell Kennedy Lawyers to help you make it happen.

Here is a link to register: https://events.acsa.asn.au/event/webinar-planning-and-implementing-additional-services/

Alternatively, get in contact with us directly and we would be happy to share the insights of providers that are now reaping the benefits of additional services.

 

To find out more on how we can help you, contact James Saunders on 02 9239 9004 or email james.saunders@prideliving.com.au