Understanding the financial implications of recent and upcoming regulatory changes
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In an era of sweeping regulatory changes, the aged care sector finds itself at a critical juncture. Luke Greive, Chief Executive Officer of Infini8care, offers invaluable insights into the challenges and opportunities facing providers in this evolving landscape.
The Impact of Regulatory Changes
Recent reforms have sent shockwaves through the aged care industry, prompting many providers to reconsider their position in the market. “The aged care reform and regulatory changes have had significant impacts on aged care providers resulting in many choosing to exit the sector,” Luke explains.
These changes have necessitated substantial increases in expenditure across various areas:
- Increase in quality/compliance team members,
- Increase time to report and record information for frontline staff,
- Increase systems and solutions to collect and submit data to the various reporting systems that the Government utilises
- Increased expenditure on Governance requirements around Boards and committees.
The crux of the issue, according to Luke, lies in the disconnect between these increased requirements and the current funding framework. “Unlike many other businesses, it is difficult for aged care providers to pass these costs to consumers under the current funding framework,” he notes.
Balancing Compliance and Financial Goals
In the heavily regulated aged care sector, compliance is non-negotiable. However, the prohibitive funding framework presents a unique challenge. Luke’s approach at Infini8care is to exceed minimum compliance requirements and leverage this as a unique value proposition.
“At Infinite Care, we choose to ensure exceeding the base minimum compliance requirements and share information with our residents and future customers as a unique value proposition,” Luke states. This strategy aligns with their long-term sustainability goals and investments in quality assurance and improvement initiatives.
However, the sector faces ongoing workforce shortages and increasing costs. Luke points out, “This situation is not getting any better with relaxing of international recruitment and visa protocols as the increase in need is increasing at a pace that out strides recruitment capacity.”
The Role of Strong Governance
Luke emphasises the correlation between strong governance practices and both financial sustainability and quality care outcomes. “Our investments into improved compliance and strong governance have correlated with a strong uplift in occupancy and people choosing to call our aged care sites, home,” he says.
Infini8care‘s focus on strategic planning ensures that financial investments are directed towards areas that improve consumer outcomes and meet long-term sustainability goals. Luke explains, “By establishing mechanisms for monitoring and evaluating care processes, our organisation can identify areas for improvement, implement evidence-based practices, and enhance consumer safety and satisfaction.”
Adapting Financial Management Strategies
To meet new regulatory requirements, providers are investing heavily in capabilities across people, processes, and systems. This includes recruiting new expertise in financial and compliance management and reporting.
“We have invested into continuous improvement capabilities including data and information capabilities to ensure the right people have the right information at the right time to manage and report on our business,” Luke shares.
Looking Ahead: Upcoming Regulatory Changes
Luke identifies several upcoming changes that will significantly impact providers:
- Increase in mandatory care minutes in October 2024 – “Aged Care providers are still awaiting IHACPA to advise on pricing increases in October to identify the level of support for funding this legislative increase.”
- The new Aged Care Act – “which is still largely unknown, however, the level of impact could have significant costs associated.”
- Merging the homecare funding system
“All these financial impacts will generally be impacting upon providers’ sustainability as they are largely unfunded,” Luke cautions.
In light of these challenges, Luke advises a measured approach: “I would encourage providers to take a measured approach to investing in capabilities to navigate the regulatory changes and not be reactive to change. These changes will have strategic and long-term implications and require a strategic and well-formulated approach.”
Luke Greive was one of the speakers at Aged Care Week 2024. We are gearing up for a better and bigger event next year! Stay tuned here.
Ritchelle is a Content Producer for Healthcare Channel, Australia’s premier resource of information for healthcare.
