UnitingCare NSW.ACT Chief Financial Officer May 2014 · UnitingCare NSW.ACT Chief Financial Officer...
Transcript of UnitingCare NSW.ACT Chief Financial Officer May 2014 · UnitingCare NSW.ACT Chief Financial Officer...
UnitingCare NSW.ACT Chief Financial Officer May 2014
ACS Community Forum 10 November 2015 Steve Teulan Uniting
• CDC conversion of Home Care Packages (HCPs)
• Commonwealth Home Support Program (CHSP) transition from HACC, DTC, NRCP and ACHA programs
• Introduction of My Aged Care (MAC) and Regional Assessment Services (RAS)
• Medicare Online DHS (Department of Human Services) for HCP claiming re-introduced. Reconciliation of pre-1July claiming continuing.
• Increased competition in sector, including new entrants with different business models, direct marketing to consumers by unfunded service providers
• Consumer expectations increasing
Community Care – Changing Environment
• Income-tested user charges (substituting for care subsidy) by up to $5,000 (pensioners) or $10,000 (non-pensioners) annually
• 40% of eligible older people reject packages
• Reduced demand for lower level packages
• Increased demand for higher level packages
• Overall reduced occupancy/greater competition
• Decreased client fees
Home Care Packages– Changing Environment 1 July 2014
HomeCare Packages – Changes on 1st July 2015
• Consumer conceptually “owns” Government subsidy – provider accounts to consumer for services provided.
• Accounting treatment of revenue changes from full subsidy to value of services rendered.
• Most profitable clients became least profitable.
• Unspent funds are retained generally by provider on client’s exit from package
Home Care Packages – Changes from February 2017
• Full deregulation of home care packages supply
• Consumers will truly “own” funding and go to any provider of their choice
• Unspent funds are unlikely to be retained by provider
• Significant number of new entrants and expanded geographical coverage of existing entrants
Prior to Consumer Directed Care (CDC) Home Care Packages
Subsidy
Accounting for Revenue
Cash Received
Total (maximum) subsidy held and retained by provider
Revenue recorded when cash received
At all times, maximum cash subsidy received equalled accounting revenue.
=
Consumer Directed Care Home Care Packages
Subsidy
Accounting for Revenue
Cash Received
Total (maximum) subsidy held and
retained by provider
Revenue recorded only as services provided (ie revenue
earned model)
“Unspent” / unearned subsidy recorded as
liability
“Unspent” / unearned subsidy recorded as revenue
28 days after client exits package
Cash rec’d (max subsidy) equals accounting revenue 28 days after client exits package
Deregulation of Home Care Packages (Expected future guidelines)
Subsidy
Accounting for Revenue
Cash Received
Subsidy funds received and unspent funds unlikely to be
retained
Revenue recorded only as services provided (ie revenue
earned model)
Provider does not receive benefit / revenue from
unspent funds
Cash retained by provider equals only revenue earned from services provided
Changing Environment for Private Hospitals in 1990s
• Health insurance funds became price-setters for hospitals as part of Federal Government’s No Gap approach to hospital charges to consumers
• Hospitals could be excluded from health fund contracts resulting in much lower rebates and very high out of pocket costs for patients from that fund
• Consolidation of sector as large ASX listed for-profit hospital providers emerged
• Encouragement in NSW of co-location of private hospitals with major public hospitals
Mater Hospital North Sydney
• “New” Hospital opened in 1990
• Not for profit hospital which had services owned and operated by Sisters of Mercy on the site since 1911.
• Strengths in orthopaedics and obstetrics
• New cardiac services
• Radiation oncology, chemotherapy, pastoral care etc • Efficient in LOS and high patient satisfaction
• Significant long term debt funding
North Shore Private Hospital
• Opened in 1998
• Owned by Ramsay Health Care
• Co-located on Royal North Shore Hospital site
• Natural strength from public hospital in cardiac, neurosurgery, obstetrics and gynaecology
Immediate Impact on Mater of New Competitor
• Patient mix of NSPH exactly as forecast
• Reduction in occupancy
• Profitability downturn
• Lost some doctors
• A small number of staff left
• Risk of deteriorating negotiating position with health funds
Actions Taken
• Introduced new Board members with commercial skills
• Friends of the Mater established
• Opened new consulting rooms and encouraged new doctors
• Reduced costs by 5%
• Renegotiated debt on more favourable conditions
• Contracted for public patients (briefly)
Actions Taken
• Undertook market research
• Created new brand based on strengths
• Used strengths, distinctiveness and differences to position hospital for future and leverage with health funds
• Responded strongly to aggressive approach to
negotiations by health funds
Identified Distinctiveness and Strengths
• Service strategy was built on strengths and advantages
• Created new brand
• The ethos of service delivery was consistent across all key services
• Used strengths and differences to position hospital for future
• Maintained high levels of patient satisfaction and service efficiency
Subsequently
• The Mater joined the St Vincent’s (Sisters of Charity) Health Group
• Received a private donation of $30 million for cancer (melanoma) services and built leadership in multi-disciplinary cancer care. • Continuing leadership in obstetrics and orthopaedics • Cardiac services were grown • NSPH was also successful, later increasing the size of
the hospital by one third.
Lessons Learned – Know yourself, your competitors and your market
•Reinforce your distinctive identity and purpose every day
• Communicate your distinctiveness to consumers and referrers
• Use your visible and invisible strengths • Know where you will grow (eg cancer)
Lessons Learned – People
• The right people at all levels • Set clear KPIs for all of your people
• Empower people to act in a faster
market
• Expect your best people to be targeted
Lessons Learned – Financial Sustainability
• Be ready to withstand a financial a financial shock • Create a financially sustainable operating model • Avoid knee-jerk reactions to the initial impact