There has been a wide variation in July price increases to home care services – and reports of clients refusing to consent to increases – across the country as home care providers face ever-declining margins.

Danielle Robertson, Founder and CEO of DR Care Solutions which advises on navigating aged care and disability services, told The Weekly SOURCE there was some evidence of considerable price increases, pointing to one national provider that had increased its hourly rates by 15%, but then raised its care management fees by 70%.
 
As we reported in May, the Albanese Government announced that Home Care Package (HCP) funding would increase by 11.9% from 1 July 2023 to cover the cost of the Fair Work Commission (FWC)’s 15% wage rise and other increases in prices.

Operators told The Weekly SOURCE that they fully supported the wage increase for direct care workers.

However, they also stated that direct care costs have increased by closer to 22% on the back of the 15% wage increase, a 5.75% increase in the minimum wage, a 0.5% increase in the Superannuation Guarantee and increases in insurance and WorkCover premiums, all of which came into effect on 1 July.

One home care provider said they had increased their hourly rates by 10 to 15% and were absorbing the additional costs into their business.

“I can’t put my costs up [by 22%] so we looked at what would be a fair value for our customers.

“Our administrative, package management and care management fees are all still significantly below the caps too, so that is still not meeting our increasing costs.”

Care and Package management fees capped

Under reforms introduced by the Federal Government on 1 January this year, fees for care management for home care were capped at 20% of the package level, while package management fees were capped at 15%.

Operators also reported that a small number of care recipients had refused to consent to price increases – under the Aged Care Act, home care recipients need to approve any increase in charges.
“We’re in conversation with one client where the family agree to it, but the individual doesn’t,” said one provider.

“We are just trying to be transparent in our communications about what our actual costs are because the messaging from Government – that they are fully funding the 15% increase, but only increasing the money by 11.9% – is confusing for customers.”

“The legislation is quite clear,” added another operator. “In that case, we have to find a way to support the client, even though it’s an unsustainable price for us.”

The SOURCE: home care providers are seeing their already thin margins shrink further, setting the stage for greater sector consolidation.