Home care providers see 40% increase in revenue during COVID-19 – but unspent funds hit $1.6B: StewartBrown

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Home care operators have increased their operating result to an average of $6.05 per client per day – a 40% increase on the $3.59 average in June 2020 – but care hours are still heading south as providers strive for efficiencies.

As we reported in July, the home care sector has been seeing its revenues rise – not because of increased revenue, but because of reduced costs and staffing hours.

This latest survey – which looks at data from 62,697 Home Care Packages or 37% of the sector – indicates that this is still the case.

Time spent in a HCP on the rise

Average staff hours per client per week were just 3.79 hours for direct care provision, down from 3.93 hours in June 2020.

Another hour was spent on care management every week, with just under 29 minutes allocated to administration and support services.

Many providers have reduced their costs, which is reflected in the percentage of total revenue spent on these areas – an average of 22% on care management, down from 26% in June 2017, and 10.5% of revenue being spent on administration and support.

Interestingly, the figures represent an increasing shift towards home care, with the average age of clients rising from 83.6 last year to 92.1 in FY21 while the time spent in a HCP rose to an average of 1.8 years, up from 1.4 years – good news for operators.

$10K average in unspent funds per resident

But the real kicker in the findings is the rising rate of unspent funds, in excess of $1.6 billion in June 2021.

Revenue utilisation has begun to rise – from an average of 84.8% last year to 87.3% in June 2021.

However, there is still significant growth in unspent funds – to an average of $9,855, up from $8,841 last year and more than double the average amount of unspent funds in 2017.

The Government’s Improved Payment Arrangements – which started its Stage 2 in September 2021 and will see the Government pay home care providers only for the actual care and services delivered to their care recipients – are designed to reduce this amount.

Senior Partner Grant Corderoy says that this won’t work – with unspent funds making up an average of 51.2% of Level 1 Packages and 21.6% of Level 4 Packages, the problem is too entrenched.

Home care reforms must deal with $1.6B problem

Grant (pictured here speaking at the LEADERS SUMMIT 2021) told StewartBrown’s 2021 Finance Forum that this issue must be addressed through the re-design of the home care system, one of the Government’s Royal Commission reforms.

In particular, he pointed to the need to look at care plans and funding, noting that the majority of home care recipients will only spend 2.2 to 2.5 years in a Package before they pass away or move to residential care.

“I don’t think we have got time to delay this,” he said.” I think this has got to be a significant aspect of the reform of Home Care Packages.”

Grant says if eight funding Package levels were available, for example, this would better fit the actual services used by recipients.

He also warned that the Government’s push to reclaim unspent funds will likely impact a number of operators that have been using unspent funds to prop up cash flows over the next 12 months.

“We need to make sure we don’t see provider failure for the wrong reasons,” he said.

You can find last week’s story on the StewartBrown residential care results here.