The Royal Commission into Aged Care has highlighted the chronic state of many aged care service providers in the industry. With so many cases of organisations behaving badly this has increased focus on the aged care business model itself.
We know there are many quality aged care service providers thriving with strong relationships between clients and service provider. Some of these organisations are new entrants to the industry. They use new digital technologies to take market share from the less nimble and cost heavy traditional service providers. These new organisations are strongly supported by clients. They have strong leadership, committed well trained teams and great customer focused business processes. So what are this successful group of aged care service providers doing that the rest of the industry can learn from?
Let’s start with the macro environment. We know that the over 65 years’ population is growing quickly. It is forecast that more than one million Australians in the next decade will need aged care support. This means quality services to live independently or if living independently is beyond them living in an aged care facility.
Aged Care Royal Commission Report Findings
The recently released Aged Care Report has highlighted that the aged care industry in Australia is currently facing a range of challenges including:
- increased client demand,
- greater service expectations,
- additional cost of doing business,
- lack of workforce skills and limited training capability,
- expanded use of digital services,
- intense competition between commercial organisations and traditional community based organisations,
- further consolidation expectations from community based to private sector,
- changing government funding model, support and expectations, and
- increasing compliance standards to meet client expectations.
In today’s crowded and highly competitive environment, success depends on picking the strategic future trends correctly. Your Board will need an experienced and responsible management team. A key task will involve making decisions around project delivery from new investments. If this skill is missing then aged care service providers can quickly become unprofitable and turn ugly for the Board and CEO.
Australian Institute of Company Directors 2021 Survey
The Australian Institute of Company Directors recently surveyed 1,000 Directors working in the Not-For-Profit sector. The feedback from these Directors has highlighted that the old ways of doing business will no longer be effective nor competitive in 2021. The survey results found:
- 77% of Directors felt their organisations had to change their way of doing of business to respond to the impacts of Covid-19.
- Directors working in the aged care sector, the survey confirmed over 60% reported trading losses in 2020.
Aged Care service providers current business challenges influencing tomorrow
How prepared is your business to effectively Project Manage change for tomorrow? For those in decision making roles, we believe that in looking forward the focus will require building more efficient/effective and sustainable Client Services. In turn this leads to sustainable longer term financial stability.
Having been involved in the sector over the last decade it is sobering to reflect on the recent media horror stories concerning elderly client treatment by some organisations. We all have a responsibility to do better. So where do we begin?
Some of the bigger issues will require more effective investment programs using strong project management skills to ensure successful delivery. Unfortunately not all aged care organisations will have these skills in-house to complete successful implementation of critical projects.
We have identified some of the critical areas that will need a stronger project management focus from the C-Suite and Boards.
Covid-19 Short and Long Term Business Operational Impacts
The impacts of Covid-19 over the past 12 months have been a significant factor in the aged care sector due to the vulnerability of the 70+ aged clients, volunteers and staff. Many organisations have had to adapt rapidly to the challenges of keeping clients, volunteers and staff Covid-19 safe. This has led to changes in business processes with everything from staff working from home to traditional support services being delivered virtually for clients with internet access.
Economic and Financial Uncertainty
With over 60% of aged care service providers running at a loss according to Directors in the sector there is pressure on Boards to do more with the same level of resources. Inevitably this involves either cutting staffing costs or reducing level of services offered. Either way if an organisation cannot price services to not lose money there is a limited ability to remain viable in the long term. The Royal Commission Report makes it clear that elderly clients require affordable quality services. Many of the smaller service providers lack the scale to do this without an over-reliance on a volunteer workforce. It will be a challenge for Boards to keep coming up with volunteers with the necessary training to meet this demand whilst remaining financially viable.
Increased Legislation
The consequences of failing to deliver affordable quality services also brings increasing intervention by governments to ensure compliance. Governments are still funding approximately 70% of the cost of services provided. We can expect to see further changes in legislation and funding models moving forward. Without the Board having sufficient confidence in the operational service delivery systems there is every chance that future compliance audits will lead to a loss of licences to operate.
Increasing Clinical Requirements
Clients (and their families) will no longer accept “shoddy” care services from under-qualified staff whether they are provided in-home or in an aged care facility. Staff and contractor training will be a clinical requirement for compliance with legal consequences if this is not a high priority for Boards. Developing these clinical services will be a significant cost for many smaller organisations.
Higher Risk Profile of Doing Business
The risk of doing business has increased significantly following the impact of Covid-19 and traditional businesses relying on poorly trained staff are in trouble. The days of “best intention” volunteers running these businesses are numbered. The cost of insurance cover and increased client expectations means there is a growing risk for individuals and organisations. If you do not plan for a professional workforce future with strong business systems the ability to retain high quality staff to deliver services will diminish.
People Capability
How often do you hear in the aged care sector about the lack of a suitably qualified and trained workforce? Governments will demand an organisation wishing to retain funding can actually deliver a capable workforce to meet client expectations. Your ability to deliver quality services at an affordable price will be the difference between success and failure. Associated with a sophisticated workforce comes greater use of digital technologies to enhance staff productivity. Tomorrow we can expect to see greater use of digital technologies for clients that will deliver even better services.
If you are considering using an experienced outsourced project team to help with your next project let’s talk further. We would engage with you to examine the challenges you face and to identify how to maximise the value of your investment in these new projects. Call me on 0401767639 or send an email to john@lindfieldpartners.com.au. Good luck with your new projects. Hopefully we will read about your ongoing success as a leading aged care organisation in future media stories.