Home Care Reform – An Economic Model for the Future

Despite comparatively little criticism or structural change having been proposed in the Royal Commission report, Home Care has been the first sector to undergo significant reform. The papers that have been released to date suggest we are facing extensive reform which will fundamentally change the experience consumers have with the Home Care system. Early indications were that it would reduce choice and control and rewind the clock to a system that existed before the Productivity Commission report in 2011.

The most important element of the reform will be the approach to pricing. All indications to this point are that the reform program will attempt to regulate pricing at both the consumer budget level and the hourly rate of service. Regulating hourly rates however produces predictable incentives in the system and will become the strongest driver of behaviour.

Using real examples, this presentation will focus on why this reform approach appears to be attractive on a superficial understanding of the economics, and why it will almost certainly not achieve the desired outcomes relating to system costs or consumer experience.
Rather than starting with the flawed assumption that the lowest hourly rate always leads to the lowest system cost, we should ask what behaviours we want to see from consumers and organisations, then ask whether we are incentivising these behaviours.

We would propose that these should include:
• Downward pressure on the number of hours of service being delivered
• Improved service experience and lower costs through innovation, including:
o The use of monitoring and assistive technologies to reduce visits to the client home
o The use of telehealth services to reduce the number of Care Manager visits
o The integration of AI and Predictive models to encourage organisations to improve their preventative care models
o The increased formal integration of family and friends in the service delivery model

The proposed reform approach will almost certainly increase system costs in the longer term, reduce choice and control for consumers and drive a race to the cheapest complying service model. The presentation will look at lessons learned in the NDIS, VHC, HACC, DVA Nursing and many other similar programs that the Australian Government has put in place previously.

Within this environment of uncertainty, we will then take a brief look at what organisations should be doing to prepare for a reform program that has been poorly defined and delayed numerous times in the past 10 years.