Reform is not a budget activity

Like me, I expect you received lots of emails and summaries of the budget very soon after it was delivered. The main theme I’ve seen in these is disappointment that the Taskforce recommendations were not dealt with. If you’ve read any of my recent posts on the Taskforce or heard me talk to it, you will know that I held the view that it would not feature in the budget, so I’m not disappointed in the budget.

Let me recap why I hold this view. The rules around accommodation require an amendment to the principles, or the rules when they are settled, and other elements mostly require legislation. So, it was always reasonable to assume any changes would fit into those timelines. The Minister has confirmed this. The second reason we expected little from the budget was the process for budget inclusion. Changes to policy/programs need to be submitted to the three central agencies and then to cabinet for approval. There simply wasn’t time for this process to happen within the budget cycle.

The budget is not the place for policy reform, this occurs within what is called a ‘policy window’. In government, everything has a political context, this means there are times when policies are dealt with. Essentially, government deals with policy shifts when the window of opportunity suits it. Having undertaken much reform in aged care with much more planned, the budget didn’t represent a policy window for aged care. As many commentators have stated, the budget was about inflation and cost of living pressures, and frankly aged care doesn’t rate on this axis.

 

BRUCE BAILEY
Managing Director

Having been disappointed with the budget, many commentators in the aged care sector are now lamenting that the sector can’t move forward. We hold an alternative view. Strategy is always developed in the context of future uncertainty. As we’ve written previously, good strategy anticipates and is both robust and flexible to allow for shifts as the context changes. In our view, you can develop and execute sound strategy within the present uncertainty. Last week, I facilitated a strategic planning workshop, and this organisation is both refining the strategy developed two years ago and looking to make big capital decisions.

This is being done in the context of an understanding of the long-term direction of the following key external influences:

1. The ageing population

2. Consumer preferences and capacity to pay

3. Government macro policy and the signals in aged care and retirement living regulation

4. Relative market position

5. Workforce

6. Corporate advantage and weakness

If you were waiting for RAD retention and higher contributions to daily living, you can improve your current outcome by up to $5,000 pbpa, by implementing Additional Services and optimising your accommodation charges.

The latest Quarterly Financial Snapshot released by the Department contained the following statement:

“annual analysis undertaken by the department through the FRAACS 2021-22 demonstrates the cost of delivering care is fully funded, indicating that some providers may use care funding to cover losses in the everyday living and accommodation streams. The department will continue to monitor this closely to ensure care funding is used to meet care requirements consistent with the government expectation that care funding is spent on care. The analysis shows there is an opportunity for improvement in these areas to increase the financial viability and sustainability of the sector, including providers pricing accommodation appropriately.

We’ve been doing a lot of work on Additional Services and Accommodation Pricing. As a general observation, many providers have not yet accepted that care funding under AN-ACC will not allow the sort of cross-subsidy of accommodation and hoteling services that ACFI did. The message is clear: a core element of any strategy has to be to generate a return on each of the three activities inherent in residential aged care: Care, Accommodation, and Activities of Daily Living (ADL). Since the government is not funding ADL and accommodation, providers can and should act without delay to put these aspects of their operations on a commercial footing. If you would like to discuss this, please give us a call.

For more information on how we work with clients from the following links:

I’m sorry if you think you missed out in the budget. Give us a call or send us a message so you don’t miss out on your chance to increase your operating outcome by $5,000pbpa.

To find out how we can assist your organisation, contact Bruce Bailey on 0407 211 108 or email bruce.bailey@prideliving.com.au