The Australian Government’s “Living Longer, Living Better” (LLLB) package was released on 20 April 2012 as a response to the Productivity Commission’s “Caring for Older Australians” report. While the package included $3.7 billion over five years for aged care, there are some serious implications to ongoing viability for many in the sector.

There are significant claw backs by the government in Residential Aged Care, with cuts appearing to be most heavily weighted towards high care and dementia specific facilities. Residential aged care providers most at risk are those who have taken a less than conservative approach to ACFI scoring

In the Community Care setting, from July 1^st 2012 the joint State/Commonwealth Home and Community Care agreement is split into two agreements, one State and one Commonwealth. The impact on Community Care providers is significant…

• Under the original agreement, providers would fully expend the allocated government funding in providing services to clients, and also spend some or all of the co-payments received from clients. Any left-over co-payments could be reinvested into improving service delivery.
• Under the new agreement, any copayments that are collected would need to be expended first, followed by government funding. If there are any funds left over, the surplus would be returned to the government.

This new model allows no room for reinvesting into the organisation, and creates a tension where every provider needs to do things smarter and more efficiently than ever before.

At the forefront of every provider’s strategy should be the governments general thrust towards Consumer Directed Care (CDC). CDC is the aged care equivalent of buying online, where the aged care client (or their family) will be able to shop around via “host providers” (lets call them shopping portals), to pick and choose the services they require from a range of providers. This is an excellent result for the client, as it empowers them with choice. It also highlights my earlier point about service providers needing to do things smarter and more efficiently than ever before.

The provider landscape will soon become far more competitive, and organisations will be forced to provide a better experience for consumers, have their services more easily accessible, provide far greater transparency over costs, think creatively about avenues for revenue generation, and be extremely cost competitive. There is a significant role to play in all of this by e-health. In fact, failure to embrace e-health over the next two years has the potential to put providers out of business.