Why we think block-funding will continue for certain providers from 1 July 2024
CPSA would like to explain why it thinks that certain types of providers will continue to be block-funded after 1 July 2024.
IN CPSA’s first post, we said it was our interpretation that CHSP block-funding would continue for community transport, meal services, social support groups and cottage and centre-based respite. Another exception would be made for providers who provide in-home care in what the Department calls “thin or niche markets”.
Many of our readers were not so sure that this is how things will work out.
CPSA would like to explain why it is of the view that all providers who fit the description will continue to be block-funded after 1 July 2024.
CPSA sees two reasons why the Department of Health and Aged Care is exempting certain providers from the general move to activity-based funding.
First reason
The first is that the Department realises services these providers provide cannot be provided using a commercial, competition-based business model.
Community transport meets the need for transport which public transport (trains, buses and taxis) can’t meet. Community transport is by definition unprofitable. For a community provider to invest in a fleet of vehicles, they need a subsidy, that is, block-funding.
For meal services, there may be plenty of alternatives for the meals themselves, but it is the delivery where CHSP meal services will beat any profit- or surplus-oriented provider through the use of volunteers. Volunteers don’t get paid and are unlikely to work for free for a profit- or surplus-oriented provider. They frequently use their own vehicles, so the profit- or surplus-oriented provider would also need to invest much more in delivery vehicles than a CHSP meal service. There’ll be no takers for that.
The nature of social support groups is that they offer a safe haven for people to talk. They are inexpensive to run. The idea that one social support group would be competing for business with another social support group is unimaginable.
Cottage and centre-based respite requires investment of significant capital, which would be put at risk if cottages and centres had to compete against each other. Block-funding ensures there’s no risk to equity. If put on activity-based funding, operators of these places would most likely move their capital to safety, that is, they would sell up and would not provide respite any longer.
Second reason
The second reason the Department of Health and Aged Care is exempting certain providers from the general move to activity-based funding is not acknowledged by it, but it’s the sheer scale of what it is attempting to do.
There are 1,400 plus CHSP providers to be converted into profit- or surplus oriented operators at midnight 1 July 2024. This involves more than 800,000 clients.
At the same time, the Department will be under enormous pressure from its Minister for there to go nothing wrong.
This is what the Minister said in July last year: “Rest assured no one will be left behind or lose any services they currently have in place in this new timeline. If anything, with more than $9.5 billion in funding this financial year going towards in-home care support, older Australians will see real improvements in in-home care support well before July 2024.”
So, the Department will most likely jump at any chance to exempt CHSP providers from a transition to activity-based funding.
That’s why CPSA believes all those providers of community transport, meal services, social support groups, cottage- and centre-based respite will continue to be block-funded.
For the same reason, it’s highly likely that providers of other services will, to their surprise even perhaps, be found to be operating in “thin or niche markets”.
What the Department could do
These 600 words you have just read should of course be replaced by a simple statement by the Department of Health and Aged Care reassuring CHSP providers who are understandably very worried. Do those providers assume the worst and prepare for activity-based funding? Do they do nothing?
Letting the uncertainty continue is an unconscionable act.
IN CPSA’s first post, we said it was our interpretation that CHSP block-funding would continue for community transport, meal services, social support groups and cottage and centre-based respite. Another exception would be made for providers who provide in-home care in what the Department calls “thin or niche markets”.
Many of our readers were not so sure that this is how things will work out.
CPSA would like to explain why it is of the view that all providers who fit the description will continue to be block-funded after 1 July 2024.
CPSA sees two reasons why the Department of Health and Aged Care is exempting certain providers from the general move to activity-based funding.
First reason
The first is that the Department realises services these providers provide cannot be provided using a commercial, competition-based business model.
Community transport meets the need for transport which public transport (trains, buses and taxis) can’t meet. Community transport is by definition unprofitable. For a community provider to invest in a fleet of vehicles, they need a subsidy, that is, block-funding.
For meal services, there may be plenty of alternatives for the meals themselves, but it is the delivery where CHSP meal services will beat any profit- or surplus-oriented provider through the use of volunteers. Volunteers don’t get paid and are unlikely to work for free for a profit- or surplus-oriented provider. They frequently use their own vehicles, so the profit- or surplus-oriented provider would also need to invest much more in delivery vehicles than a CHSP meal service. There’ll be no takers for that.
The nature of social support groups is that they offer a safe haven for people to talk. They are inexpensive to run. The idea that one social support group would be competing for business with another social support group is unimaginable.
Cottage and centre-based respite requires investment of significant capital, which would be put at risk if cottages and centres had to compete against each other. Block-funding ensures there’s no risk to equity. If put on activity-based funding, operators of these places would most likely move their capital to safety, that is, they would sell up and would not provide respite any longer.
Second reason
The second reason the Department of Health and Aged Care is exempting certain providers from the general move to activity-based funding is not acknowledged by it, but it’s the sheer scale of what it is attempting to do.
There are 1,400 plus CHSP providers to be converted into profit- or surplus oriented operators at midnight 1 July 2024. This involves more than 800,000 clients.
At the same time, the Department will be under enormous pressure from its Minister for there to go nothing wrong.
This is what the Minister said in July last year: “Rest assured no one will be left behind or lose any services they currently have in place in this new timeline. If anything, with more than $9.5 billion in funding this financial year going towards in-home care support, older Australians will see real improvements in in-home care support well before July 2024.”
So, the Department will most likely jump at any chance to exempt CHSP providers from a transition to activity-based funding.
That’s why CPSA believes all those providers of community transport, meal services, social support groups, cottage- and centre-based respite will continue to be block-funded.
For the same reason, it’s highly likely that providers of other services will, to their surprise even perhaps, be found to be operating in “thin or niche markets”.
What the Department could do
These 600 words you have just read should of course be replaced by a simple statement by the Department of Health and Aged Care reassuring CHSP providers who are understandably very worried. Do those providers assume the worst and prepare for activity-based funding? Do they do nothing?
Letting the uncertainty continue is an unconscionable act.
