Public Residential Care; Privatisation – Ethos & Reality

LASA State Congress & ExhibitionTrevor Carr

Chief ExecutiveVictorian Healthcare Association

Ethos & Reality

• Ethos – change to implement reforms from Living Longer Living Better

• Reality – market withdrawal – metropolitan Melbourne

Public Sector in Victoria

• Public sector plays crucial role in regional and remote locations. Fills market gaps, ensures service availability and continuity

• The largest provider in the State– Currently 6000 (12.5% of total)– 1060 of these metro– 4940 without metro beds = still over 10% of Victorian

market

Public Sector in the Market Environment

• Philanthropy to competitive reality

• Offering a great product that your community wants and needs– Adapting to trends

• Positively market that product– Changing the dialogue to identifying our strengths– Whole of organisational approach– Focusing on consumer experience

Trends in the Aged Care Sector:

• Increasing consumer expectations on quality, type and flexibility of care– Increasing consumer choice and control

• The transition of the aged care sector to a competitive marketplace

• Rising resident acuity and related increases in demand for high-level clinical care and shorter resident stays

VHA PSRACS Readiness Project Summary

• State Government funded project• Sector led• Purpose: to provide support in addressing the

federal aged care reforms• Scope: all services providing PSRACs• Runs until end of 2014

VHA PSRACS Readiness Project Outcomes

• Development of a Financial Model and Supporting documentation

• Operational Readiness Tool• Regional forums • Release of Targeted Information Products• Weekly Information Bulletins• Point of contact and enquiry for PSRACS

Reform & Change Management - I

A well-prepared aged care provider has:

• An aged care vision, strategy and action plan

• An engaged board, senior executives and staff team who understand the reforms and how they will affect their own roles within the organisation

• An embedded and shared commitment to continuous improvement and best practice

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Reform & Change Management - II

• A workforce and cultural change-management strategy, including training and other staff engagement activities

• A detailed consumer and community engagement strategy

• A plan to successfully compete in a market-driven sector

• A comprehensive understanding of revenue and cost structures

Reform & Change Management - III

• An understanding of future infrastructure requirements in a changing sector environment

• Up-to-date systems ready for the changes to service structure, provision and billing after 1 July 2014

• A culture of accountability and responsibility for quality and risk management between board, executive, staff and consumers.

Policy issues

• Unclear position re growth

• Access to capital - barriers

PSRACS Maximum accommodation prices: Metro

* Prices not available for 6 Metropolitan PSRACS as at 24 May 2014

PSRACS Maximum accommodation prices: Metro

Maximum RAD METRO STATEWIDE

$ 0-250K 1 8

$ 251-350K 18 89

$ 351-450K 2 45

$ 451-550K 1 28

$551K and over0 0

Total 22 170

MAXIMUM AVERAGE METRO MELBOURNE STATEWIDE Highest RAD $ 344,000 $ 374,000 Lowest RAD * $ 330,000 $ 339,000

* Not shown above

PSRACS Maximum accommodation prices: Rural

Maximum RAD RURAL STATEWIDE

$ 0-250K 7 8

$ 251-350K 71 89

$ 351-450K 43 45

$ 451-550K 27 28

$551K and over0 0

Total 148 170

MAXIMUM AVERAGE RURAL STATEWIDE Highest RAD $ 371,000 $ 374,000 Lowest RAD * $ 334,000 $339,000

* Not shown above

The reforms are positive

• These reforms are better for consumers

– More choice, more control, more transparency, better access

• If implemented effectively the reforms present an opportunity to the public sector

• Setting a positive culture around the reforms and upcoming change is crucial

Reality – the Melbourne market

the Victoria Budget Update 2012/13 initiative – “Growing non-government provision of aged care beds”. The announced initiative stated: “...a measured reallocation of Government managed aged care places to non-government providers in the metropolitan area....(which) will result in a shift in the provision of services, and will not reduce the number of places available to Victorians, or the continued high level of service quality ”. The December 2012 Budget Update indicated savings of $25m of subsidy savings in 2014-15 and $50m in 2015-16 onwards.

PSRACS profile – metro Melbourne

Network Locations Generic Places

Mixed Places

APMH Places

Specialist places

Total Places

Eastern Health 3 30 0 60 0 90

St Vincent's Health

3 30 0 60 0 90

Alfred Health 3 90 0 30 0 120

Peninsula Health 2 0 0 48 0 48

Monash Health 5 130 100 64 0 294

Austin Health 2 60 0 20 0 80

Melbourne Health

8 30 0 152 66 248

Northern Health 1 30 0 0 0 30

Western Health 1 30 0 0 0 30

TOTAL 28 430 100 434 66 1,030

PSRACS profile – metro Melbourne

Issues: Services for aged people with mental illness not well

established in the non-government sector – (? ongoing support to new providers by government)

Location typology – freehold, crown land, colocation Some facilities sub-scale (<30 beds) Variable fabric condition Transmission of business issues – public sector wages

PSRACS profile – metro Melbourne

Options:• Transfer as is• Transfer with development potential• Transfer with site master plan for

redevelopment• Relocate off site (the majority of beds in

scope)

Invitation to register:

The OpportunityThe Department intends to select a prequalified panel of service providers that will have the opportunity to:

► Work in partnership with the Department to develop options for reallocation of places and investment in capital developments or redevelopments

► Gain critical mass in the future of aged care services provision

► Deliver complex residential aged care services across metropolitan Melbourne.

Invitation to register:

ObjectivesThe objectives of the Department are to:

► Maintain the number of aged care places available to Victorians, and continue the high level of service quality

► Achieve a measured reallocation of public sector managed residential aged care places to non-government providers in the Melbourne metropolitan area

► Promote the provision of responsive and innovative delivery of aged care.

Progress:

• ITR closed in February• Due diligence of applicants underway• First round offers late 2014 (<500 beds and 3

land bank sites)

Thank you