Across the last decade, home care services in Australia have been steadily growing. The new wave of older Australians have a desire for a more active lifestyle and a preference to live in their own home for longer. Additionally, as aged care funding structures continue to change, advancing the growth of home care supports a diversity of service needed to meet the economic challenges that lie ahead.
Therefore, home care plays an increasingly important role in the community and for the economy. In this article, we will further explore why.
Older Australians want to live in their own homes for longer, not only due to an attachment to their house, but because of the areas in which they live and the communities they are a part of. Approximately 85% of older Australians receive support from family, friends and neighbours for their mobility, care and communication needs. However, it has been predicted that the demand for informal care will outstrip supply within the decade. Should that eventuate, home care services could be the more likely alternative to meet these needs.
In recent years, the suite of changes to home care funding structures has particularly benefited providers with high service quality. Since February 2017, instead of home care packages being allocated to providers, they have instead been assigned to eligible consumers, who then, in turn, can choose their desired provider. Previously, a provider would retain unspent funds from a consumer who ceased receiving a home care package. However, since February 2017, if consumers change their provider, then after an agreed amount for exiting is deducted, the balance of unspent package funds goes to their new provider. If a consumer is no longer in need of receiving home care altogether, then any unspent funds (after the exit amount is deducted), is to be returned to the government.
Home care providers who can best meet the needs and wants of the market will be well-positioned to capture the revenue from unspent funds in addition to attracting first time home care clients. Factors such as these are driving the increased competition in the market, particularly by for-profit businesses. KPMG researched 20 locations across Australia with a large representation of individuals aged 65 and over. They found that of the organizations new to providing home care services, close to 70% were for-profit businesses. It was also found that new entrants to the home care market represent over one-third of providers across key locations.
As consumers recognize the greater range of aged care services available to them, organizations that are not yet planning for how they will position their business in such a diversified market will face significant competitive pressures.
Research by The Australian Institute of Health and Welfare analyzed how people used aged care services. The study integrated data from over 5 million people between July 1997 and June 2014. It was established that over 1,000 different pathways into aged care were taken. However, 76% had accessed home and community care first.
Therefore, the obvious opportunity for aged care organizations is to provide both residential care and home care services, so that you can develop and maintain a relationship with a resident who may commence as a home care client and later transition to residential care.
I am not suggesting that it is not possible to run a successful aged care organization in the future without providing home care services. However, I am suggesting that organizations need to prepare for the changing aged care landscape in which home care increasingly exists.
On June 30, 2017, there were 71,423 people in-home care packages. Twelve months later that figured jumped to 91,847, and by June 30, 2019, there were 106,707 people in a home care package. By 2021-22 the number is predicted to reach 140,000. Residential aged care supply, however, is growing at a much slower rate and it has even been reported that residential care demand is mainly in balance with supply.
In recent years, the Australian Government has been providing about three-quarters of aged care funding, leaving the consumer to fund the balance. This ratio will likely swing more in favor of a user-pays system in the years ahead as our economy will not have the capacity to maintain the status quo.
In 2018-19 the Australian Government spent $19.9 billion on aged care. Two-thirds ($13 billion) went to residential care, and one-sixth ($3.3 billion) went to home care. In this same period, permanent residential care was received by 242,612 people across 873 providers. Comparatively, 133,439 people received a home care package across 928 providers.
As the number of home care providers continues to grow, developing a clear plan for the years ahead is of utmost importance. Again, regardless of whether you elect to provide home care services or not, having a clear plan for how you will meet the changing care needs and preferences of older Australians is a core requirement to ensure longevity in an increasingly competitive market.
We further explore and discuss many of the abovementioned topics and others in our eBook; The Growth and Demand for Home Care: Signals for a Changing Aged Care Landscape.
Download your copy here to read more about this important topic.