By Ken Ridgwell – Principal Outcomes Plus
The coming aged care reform, especially to home care packages after February 2017, is quickly bringing digital disruption into sharp focus. For some, the hard work of transformation to a ‘selling organisation’ is still a long way off, and it’s not hard to understand why.
The aged care market in Australia is rapidly becoming more competitive, yet it’s hard for existing providers to change their ways. The Australian home care market is made up of a large number of providers, many of which have no brand identity in the wider community. Their survival is going to depend on their marketing strategy and their ability to counter new entrants and disruptors in what was once a closed market.
The biggest barrier to their business will be the legacy systems and mindset of their management. Historically they have delivered a small number of packages and probably achieved an average margin of something greater than 10 percent. There has never been an imperative to spend vast sums on technology and advertising. Their websites exist purely because they felt they needed a digital presence because, after all, you don’t look like a serious business without one. Put simply, they are in the worst of all worlds, typified by:
-A lazy web site that is neither user friendly nor is it designed for search engine optimisation, mobile phones or social media
-A high cost structure due in part to a worker friendly EBA and, in the case of not-for-profits, a need to provide a better quality service that is not matched by a higher price
-Old systems with limited functionality and no customer interface
-Competitors offering similar services at half the price using contractors and comparatively sophisticated technologies
The future of aged care started yesterday. Now is the time to get going as complacency will not be rewarded. For some, especially Local Government, that time has passed.
Every provider needs a clear understanding of where they will fit into a future market.
In some cases, there will be a stark realisation that they must reluctantly merge, sell or quietly leave the industry. They simply do not have the scale, resources or the management to operate in this new paradigm.
For others, there will be development of a new strategy, most likely followed by investment in technology, marketing and staff training. The business model may need to change dramatically, including the engagement of labour through brokers or the new breed of digital disruptors. For these providers, there will be resistance to shredding part of their existing market simply because it is now too expensive to service. Becoming a niche provider however, is a valid survival strategy.
At this stage the future of home care particularly is unclear, however overseas experience points to the dominance of larger providers with branding power and scale.
Whatever path aged care providers take, it’s imperative they do something now. Doing nothing is simply not an option.
Ken Ridgwell is a founding partner and principal of Outcomes Plus. He is a chartered accountant with significant experience in senior management roles within the non-profit aged care sector. To view his full credentials click here.
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