How home aged care providers compete for your business

Article published 20 March 2023

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How home aged care providers compete for your business

The way competition works now and how it will work in the future

Competition in home aged care is not a pretty notion. You’re somebody’s profit centre. Competition is already happening in home care. It will hot up as soon as the new In Home Age Care program starts on 1 July 2024.

Ads for home care packages on the sides of public transport buses are the most visible part of the commercial, competitive approach taken by HCP providers. Compare that with the modest CHSP provider logo on a community transport bus or car.

On 1 July 2024, the HCP (Home care Package) market will effectively gobble up the current CHSP (Commonwealth Home Support Program) market. The new program will be called In Home Aged Care, but it will most likely be HCP rebadged. HCP providers will be gunning for what is now still CHSP business. They will try to cherry-pick and go for the most profitable parts of the CHSP first. Then they will work their way down. They will leave unprofitable parts alone.

How CHSP providers compete and beat HCP providers now

One reason why former HCP providers will be able to poach clients from former CHSP providers is pricing. HCP data reports have showni it. Many CHSP clients with HCP level 1 and 2 needs are reluctant to move across to HCP. The reason often is cost.

The CSHP has a far more relaxed approach to client contributions to the cost of care. In commercial terms, this means CHSP providers are competing with HCP providers. They are beating them on price.

But from 1 July 2024, CHSP providers will lose their built-in pricing advantage. All IHAC providers will presumably be using the same client contribution rules. These will presumably be the same (or similar) as the rules used in HCP now.

So, CHSP providers will lose a competitive advantage. IHAC providers can no longer compete on price. That leaves quality, or the perception of quality.

Hence the huge ads on the sides of city buses. That’s the way HCP providers currently compete with each other.

But there is one more reason why HCP providers will have a better transition to IHAC.

How HCP providers have a better chance to succeed under IHAC

CHSP providers are block-funded. Block-funding means they receive a set amount in advance for an entire quarter. This money is accounted for by providers at the end of the quarter.

HCP providers have slowly been getting used to activity-based funding.This is where providers get paid in arrears for a month of operations. The amount they receive varies with the number and hours of services they have provided. As a result, HCP providers are now completely set up for activity-based funding. They are now actually receiving activity-based funding.

The rubber will hit the road on 1 July 2024. On that day, CHSP providers will have to have a transition plan to activity-based funding in place. They will have to move from a system where they received a known sum of money upfront to a system where they provide services first and get paid after. That won’t be easy.

Former HCP providers will have an obvious advantage in the competitive battle scheduled to commence on 1 July 2024.

What does this mean for you, the care recipient?

If you are on CHSP, you will suddenly have choice of provider, or providers.

It may be a choice you will have to exercise sooner or later. Your former CHSP provider may not be able to cope with how the new program (IHAC) works.

If you are on HCP, it’s unlikely much will change.

In theory, all home care providers will be competing on quality. However, they are likely to be constrained. There simply won’t be enough staff to consistently provide high quality care. Unless magically workforce issues get solved by 1 July 2024.

Also read:

Getting ready for IHAC, the In Home Aged Care program

In Home Aged Care: stuff you need


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