Last week, I attended the Newcastle/Lake Macquarie Community Care Network. The highlight of the morning was a presentation by Jodi Calvert on Disability Care Australia 2 months on.
Disability Care Australia provides for care based on demand. Providers need to have a more flexible workforce that can cope with demand for service peaks and troughs. Indeed some, 203 providers have been registered in the Newcastle region, that’s a lot of competition for services!
A crucial point for service providers to understand is that you
will compete for services in the future. This will encourage a price driven marketplace. That is, some service decisions will be made based on price. The disability care capped price is the most you can charge, not THE PRICE you can charge. As more commercial firms (like us) enter this sector, prices for services will reduce – can you keep up?
Clients will be responsible for managing their own plans with pre-determined goals to work towards, many of which may be based around exiting the system. The whole idea behind the system is that clients can come and go for support as needed during their lifetime. A huge shift from the old system of services for ever and a shift that will have an impact on providers who have a large number of permanent staff they have to find work for.
I was amazed at the lack of understanding of the new system.
The new system is one I have worked within for a very long time. As a professional recruitment (broker) business owner and manager, I have worked within price driven sectors and markets and had to continually seek ways to reduce my costs. I understand the importance of differentiation in a crowded marketplace and delivery of a high quality service at a reduced cost. The recruitment industry has worked this way for many years, so I’d like to share some thoughts on making it work for you. You must understand your cost of delivery. That is, for each hour of service you provide, what is the associated cost? It is so much more than just the workers costs. Most of you would have many, many (too many in view) staff who don’t directly generate services for the business. The new system has taken away the need for this cost as they carry the administrative burden. All you have to do is provide the service at the cost the client wants to pay. Sounds simple but is a huge shift from how many of you have been running your organisations for decades. You must look at your systems and find ways to streamline processes and service delivery mechanisms to reduce costs. To survive in the future, you need to be lean in terms of staff,
A further challenge is that you must be able to staff your business for peaks and toughs in demand. That may mean aligning yourself with firms such as HomeCare Australia who can provide additional staff for peaks in demand. I believe there will be a larger market for us and we will both compete with you and also help you with staff demands.
To be profitable and compete with the commercial businesses that will enter this sector over the next few years, you must have a tight grip on costs within the business. For example, in the recruitment sector, we work on a benchmark of internal staff salaries being less than 50% of gross profit. I would hazard an educated guess that for many providers, internal salaries is their main cost. To be competitive in the future, this area needs to be addressed and quickly. What activities in your business could be outsourced to reduce internal salaries?
If you don’t have the expertise to navigate these waters, then go find it. There are plenty of management consultants whom have experience in are-engineering businesses for change. Get in touch with me, I would be happy to provide some insights into how to facilitate the change so that you not only survive but prosper.
