Rabbits in the SaH headlights
5 minute read
Last week Matt Hart and I wrote an article called Cuts & Complexity - Support at Home 2025. It has been our best-read Invox article ever. It was well-researched and initially it was well-received.
But a bit of criticism of the article started to surface later in the week.
Some industry commentators said Invox was irresponsible for publishing our analysis that potential cuts were coming to Care Management. They said we should wait until November for the IHACPA pricing, we should have waited for more detail before raising our concerns. The public criticisms came even though we had raised our concerns as questions that we thought needed to be answered. We genuinely wanted to know if we had possibly got our conclusions wrong.
One high profile leader even criticised the article for being ‘scaremongering’ and another commentator advised of the need to calm down and trust the government and the process.
We were genuinely surprised with these responses. You would have to look far and very wide to find an experienced NDIS provider who would agree with advice to calmly wait for more clarity with the government’s pricing approach. Prices are often set low and compliance is set high, then higher. The government have consistently screwed down prices and made it harder every year for many good organisations to remain viable in the NDIS.
And then when things got really tough, the government turned on providers.
The ‘shonky providers’ narrative in the NDIS has been driven hardest by the government. They are quick to criticise the sector using this language and very slow to reluctantly acknowledge ‘there are some good providers’. They have made it very hard for organisations to maintain morale when many are working incredibly hard to provide quality services in a tough environment.
Trust in government process amongst NDIS providers is in short supply.
People who think the aged care sector is different and that the government will look after them have very short memories. Remember the lows of residential care Covid deaths and the way the aged care sector was vilified by government?
And the same as with the NDIS, home care is increasingly moving to an approach that is based on market forces. One of the key drivers of this shift is that government wants providers to be more efficient. In theory, these efficiencies will support government to pay less for services, such as paying lower Care Management fees.
When prices are set by government at lower levels, costs like corporate overheads need to be cut or the organisation does not survive. The thinking is market forces will weed out providers with cost structures that are too high. Governments are happy for some organisations to disappear, that’s markets at work. No more fat cat charities, no more lazy inefficient organisations that are not value for taxpayers money. New organisations will simply pop up to meet consumer needs at better prices. Sounds good doesn’t it?
But as Paul Sadler and Kathy Eagar have argued in two previous Invox articles, market forces are very blunt instruments. The theory does not work that well in (community services) practice and it’s not just home care corporate overheads and Care Management fees that are going to suffer.
In the NDIS, market forces have damaged and sometimes killed rural and remote services and services for people with more complex needs. Market forces have really disadvantaged CALD and ATSI providers. This is where the euphemism ‘thin markets’ gets used. Instead of the government saying we stuffed up and market forces do not work in these areas, they call them ‘thin markets’. Thin markets are areas where organisations cannot afford to provide the level of service people need. The costs are too high and the payments for providers are simply too low. New organisations are not popping up in thin markets.
As Lynsey McDonnell pointed out in her recent article, the approach the government is taking using market forces with capped prices (that’s an oxymoron we could explore in another article, another day) advantages providers with very low back of house costs. It advantages providers who do not spend much money on things like training or quality systems and it favours organisations who focus on client groups that are easy (less costly) to service.
We note the government has announced some limited grant programs will be established in thin markets in SaH. But, let’s not wait to demand that these programs are funded to a level that is adequate to meet the very diverse range of needs out there. Spoiler - they won't be.
We have also heard a rumour that IHACPA pricing for residential care is going to be ok, but that’s only a rumour atm. The government may well look after residential care after so many years of neglect - in the first round of pricing. But, remember pricing is not a one-off event, prices can easily be set lower in later years or just not adjusted for inflation (yep, another sneaky NDIS lesson).
But even if they do look after resi care, the recent DOHAC webinar has confirmed the government is not planning to give a leg up to the home care sector. ‘Efficiencies’ are coming in SaH.
The Invox question in the Cuts and Complexity article was about the 10% cap on Care Management - that it is a long way down from the average current Package 3 charge of 15.8%. That’s a massive real cut of 38.5% on the average level of fees currently collected. Our latest Invox analysis using the most recent Quarterly Financial Snapshot shows an even larger cut. Providers are currently charging Care Management fees at an overall average of 17%.
Our question about the cuts was answered in the webinar. They told us there is no other hidden funding for Care Management, but they said: you can pool the 10% funding. Given providers can already pool funding this response misses the point while confirming the cut.
But it’s not just about cuts to Care Management fees. We are concerned about a bunch of other SaH issues including the level of unfunded costs created by the complexity of administering the new program. We are also worried about how people with diverse or complex needs will get support in the future. We think the government is demonstrating it does not understand the dynamics of funding high quality home care services.
So, should we take the advice to stop raising these concerns about government pricing and policy in SaH? Should we all just wait for the detail to land - just before the sector has to implement it all?
At Invox our answer is a resounding no. We will continue to question bad policy, cuts and complexity as we see it, even if it does upset a few.
We get why the sector needed to be united so that the legislation gained bipartisan support. But that’s not the same as being uncritical of reform elements that disadvantage home care providers and service users.
Waiting for the government and IHACPA pricing to fix it for us later in the year is a bad idea. Trusting the government and the process they are developing in SaH is a rabbit in the headlights kind of place to be.
Postscript: In 2015 I wrote Rabbit in the NDIS Headlights. The blurb for that article was: Some of the service providers we've met over the last couple of years remind us of a rabbit in the headlights, seeing danger ahead but not responding. Roland explores why so many organisations are stuck and how the dramatic changes ahead will force them to move.
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