Home Care Pricing Reviews – Operational Adjustments You Shouldn’t Miss Before the Switch

We have previously written about the impact of the pricing decision under the new regulations in the Support at Home program, noting that we believe hourly rates, on average, will need to increase by around 40% to compensate for the loss of Package Management and Care Management revenue.

Since these previous articles, the Department of Health and Aged Care has released its pricing guidance, and we are pleased to note that it corresponds with the calculations undertaken by finance professionals in the industry. This, therefore, supports our previously noted conclusion that the industry is being established on a sustainable footing and that IHACPA is fulfilling its independent role competently.

In this Insight, we highlight a key issue emerging consistently from the pricing reviews we’ve undertaken for providers.

Uneven Impact Across Clients

While lifting the prices in line with the Department’s guidance may theoretically offset the loss of Package and Care Management revenue, our modelling shows that the outcome is highly uneven across the client base. The root of the issue? Wide variation in service usage patterns. 

Without early operational adjustments, these discrepancies could lead to significant short-term revenue and margin losses.

Real-World Examples from Service Provider Data

Let’s look at two typical examples of monthly service patterns from our reviews (names have been changed):

→ The net result for the provider is a $400 loss – with no offsetting drop in activity.

We are consistently seeing this pattern across multiple service providers.

Short-Term Pain, Long-Term Gain

Over time, we expect these issues to resolve themselves. Clients and providers are incentivised under the new system to spend their full allocation and avoid overspend. The proposed new pricing will leave providers in a better position in the longer term. However, providers who delay analysis or avoid early operational changes may face a difficult transition in the lead-up to 1 July.

The financial impact will likely be felt more acutely for organisations currently charging higher Care Management and Case Management fees, as it is reasonable to assume that the price signals being sent to operational teams regarding increased service hours are weaker in these organisations.

Get Ahead of the Change

Our recommendation is clear: Conduct your pricing analysis now and make the necessary operational adjustments - while the current system is still in place. 

This will include:

If your organisation hasn’t yet reviewed its client service patterns or modelled the impact of the new pricing, now is the time. 

We’re working with providers across the country to prepare for the shift - and we’re here to help.