Solutions

Principle 1: ‘The aged care system should support older people to live at home for as long as they wish and can do so safely.’ 

When the Australian Government released its ‘Final report of the Aged Care Taskforce’ in March 2024, the first principle of aged care funding focuses on the need to strengthen the home care support model.

“The demand for home care has been rising sharply and is projected to continue growing well into the future,” says the Taskforce. This sharp growth curve drives the need for the aged care sector to ‘ensure it is on a stable footing with capacity to scale services and support quality of life for older people.’

The Taskforce also recommends that aged care providers ‘increase their capacity to cover the costs of delivering services in residential care.’ The demand for aged care continues to grow, and providers must figure out how to scale while improving their financial management in order to support this growing need.

Is the aged care sector investing in R&D?

To enable Principle 1, it is clear that change within the sector is needed. To facilitate this change, the Taskforce report recommended that aged care providers must develop innovative care models and research best practices.

But sadly, this is an area where most of the aged care sector falls short. The Sydney Morning Herald writes that according to the most recent tax office data, the average Australian firm spends 0.4% of its total expenditure on research and development, whereas, in residential aged care, it was a meagre 0.016%.

The analysis found that aged care invested just $464,953 of its $2.9 billion expenditure in 2020-21 on research and development. This was significantly less than the regulatory services industry (which spent $8.3 million on R&D), ambulance services ($1.3 million) and, embarrassingly, even the beekeeping industry ($4 million).

Why is spending money on R&D such a bitter pill to swallow?

The reported low levels of investment beg the question: Why is R&D such a low priority in the aged care sector?

According to StewartBrown, the largest accountancy organisation dedicated to providing professional services to Australia’s not-for-profit and aged care sectors, it’s all about (poor) financial performance. Simply, it boils down to the sheer number of home and residential care providers currently operating at a loss.

In its ‘Aged Care Financial Performance Survey Report’ for the six months ended 31 December 2023, StewartBrown says that 51.6% of aged care homes continue to operate at a loss (63.1% at Dec-22) and 31.4% operated at an EBITDA (cash loss) (41.6% at Dec-22).

The average operating result for residential aged care homes across all geographic sectors was an operating loss of $2.25 per bed day (Dec-22 $15.98 pbd loss) for mature homes (which exclude outliers). This represents an operating loss of $764 per bed per annum, compared to the Sep-23 YTD operating surplus of $289 per bed per annum.

It’s understandable that given the environment of loss, finding the kind of investment needed for effective R&D, is challenging.

How can you embrace best practice and innovation without R&D?

The Taskforce report includes a section on ‘quality, innovation and transparency,” where it recommends that aged care providers ‘develop and scale innovative care models, invest in technology, and conduct research into best practices.’

But without a dedicated budget, is embracing best practice and innovation a pipe dream? Is the aged care sector doomed to lag behind other growth sectors – including beekeeping?

Thankfully, the answer to that question is a ‘no.’

While discretionary R&D investment may be tight for smaller aged care providers, there is no need to start from scratch. It is time for the industry to look towards commercial sectors, who have been leveraging technological innovation for years, to uncover solutions that can support their needs. Local technology partners like Redmap have already developed, tried, tested, and refined solutions that support and comply with the best financial practices for the sector.

Our Accounts Payable Automation solution is the perfect example. We have been supporting clients in for-profit industries such as mining, construction and retail and manufacturing for more than ten years. Now, we have partnered up with AlayaCare to develop fully integrated solution that works for aged care, offering them the same efficiency as large enterprises have been accessing.

Some of the benefits? AP Automation makes compliance responsibility less onerous and significantly reduces the administrative burden. Built-in checking mechanisms improve aged care providers’ capacity to cover the costs of delivering services, ensuring their ability to meet the regulatory, deadline-driven requirements that underwrite essential funding.

The same AP technology enables easy scaling, as automation allows for an increase in vendor invoices without additional adding headcount to your team. With more internal efficiency and less paperwork as a byproduct of streamlined and automated processes, the cost of AP administration decreases, and the ability to reconcile costs more rapidly and accurately increases.  

By adopting technology that delivers industry-aligned best practice and innovation, aged care providers of all sizes can move forward, scale, and feel more prepared to support an influx of clients.  

Learn how we make our clients’ businesses more streamlined & efficient.

 
 
 
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