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Home care market competition: Who’s new?

Home care market competition: Who’s new?

KPMG analysis shows that the home care market is changing fast with new entrants now making up over a third of all providers in key locations. A majority of the new providers are already delivering other types of home care, retirement living or residential care services, and 70 percent are for profit businesses. Leaders of existing providers that aren’t alert to the shifting landscape will struggle to define their own position and retain customers. However, existing providers do have many strengths and by setting a clear strategy they can build sustainable businesses and thrive in greater competition.

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Old and young hands on a walking stick

Increasingly competitive marketplace

Home care providers have faced warnings for some time now that deregulation of the Home Care Package (HCP) market will lead to increased competition. Early signs were detected in the last few months, with many providers reporting a drop in new consumers. Further evidence emerged when the Australian Ageing Agenda’s reported in July1 that the number of approved home care providers has grown by 40 percent in the last financial year. The latest Aged Care Funding Authority report stated that the number of applications for approved provider status approved by the Department of Health grew from 75 in 2015-16 to over 200 in 20172.

Who’s new in the Home Care market?

But who are the new providers and what does this mean for existing providers?

KPMG’s analysis of My Aged Care entries reveals some interesting developments. We identified that 95 out of a total of 301 providers (specific to the markets surveyed) are new to delivering Home Care Packages. In the major states (New South Wales, Victoria, Queensland, Western Australia and South Australia), new entrants made up around one third of providers, while only around 10 percent in smaller jurisdictions were new. Of the markets we examined, new entrants were most noticeable in New South Wales, Queensland and Western Australia.

We researched 20 metropolitan and regional locations across the country, targeting suburbs with high numbers of people aged 65 years and over and identified those who did not hold HCPs at 30 June 2016.

For each location, we focused on providers who have commenced targeting Home Care Package consumers in the last twelve months, as advertised on My Aged Care, and providers who delivered Home Care Package providers in 2016, as well as those who have expanded their operations in the last 12 months.


Notably, there are significantly more new providers compared to existing providers who have simply expanded into new jurisdictions. Of the providers new to home care:

  • almost 70 percent were for profit businesses, including four US franchises
  • over 70 percent were already providing other types of home care, retirement living or residential care,
  • 40 percent were also targeting the disability sector
  • a small number were working with culturally and linguistically diverse communities
  • a handful were labour hire agencies that have expanded into direct service provision
  • over 90 percent were targeting only one jurisdiction at present, while four providers were targeting three or more jurisdictions.

Consumer considerations

Increased choice of home care provider is undoubtedly a positive development for aged care consumers. Sector reforms are already driving existing providers to refresh their service offerings, while new providers are bringing innovative ideas and service offerings. Niche providers (e.g. for people with disability or culturally and linguistically diverse backgrounds) are also emerging that can potentially deliver better services to those with specific needs.

Nonetheless, the new provider landscape also carries risks and challenges for consumers that providers need to be aware of. Consumers often face a bewildering array of choices, a labyrinthine pathway to care, unfamiliar terminology, and dubious claims from some providers (not everyone can be Australia’s premier aged care provider!). The quality of information posted on the My Aged Care website varies considerably and much is unhelpful for consumers. Many providers appear to be trying to game the service finder tool by registering multiple times for a single location, requiring consumers to search through pages of repeated entries. Some providers indicate extensive multicultural and language competencies, while others leave key fields incomplete. At times during our research, we even struggled to simply identify who the provider was because the provider either didn’t clearly list it or used different names when registering the same provider.

Consumers are becoming more sophisticated buyers and will shop around in an increasingly competitive market. They are looking for clear and simple descriptions of services, a sense of the provider’s values and a positive customer experience. Some providers coming from adjacent markets have a very straight forward value proposition that will appeal to the modern consumer. Providers that confuse the market – either intentionally or otherwise – risk alienating their potential consumers and will lose out.

Threat or opportunity? Getting your house in order

While this is a dramatic shift in the market, most of the new providers only have a very small footprint with few or no Home Care Packages and also face the challenges of establishing themselves against established brands.

Nonetheless, their entry into the Home Care Package market highlights the dangers of complacency for existing providers. To respond effectively to the new competitive landscape, we recommend that providers should:

  • Be clear about your value proposition and communicate it! Understand your clients and their needs, your strengths (and weaknesses), and your market.
  • Deliver quality services while providing a positive end-to-end customer experience. Recognise that care is much more than a service or transaction. In responding to competition, you need to give attention to your team culture, behaviours, products and efficient business processes. Many providers are updating their brand and investing in marketing campaigns, while giving insufficient attention to their client intake practices, website and the My Aged Care website. It is important to attend to all areas of your organisation.
  • Price your services competitively. Think through charges for services, equipment and consumables, brokerage and exit fees. New entrants are using price as a competitive advantage.
  • Be ready to innovate. You can’t afford to stand still. Innovation may mean new services, new products, new prices, new behaviours and new technologies. With so many older Australians already online, we can only expect more technology to play an increasingly crucial role in customer service.

Home Care Package providers are still adapting to the new, consumer led market and increased competition certainly adds to their pressures. It is essential that providers respond to these changes in a sustainable way by understanding their market in more detail, engaging their consumers in new and innovative ways, and developing new services.

Competition is healthy and providers that embrace the challenge will be able to thrive.

References

  1. e.g. Commonwealth Home Support Programme, Department of Veterans’ Affairs services or private services.
  2. Belardi, L. “Home care changes spark influx of new entrants”, Community Care Review, 20 July 2017.
  3. Aged Care Funding Authority. Fifth report on the Funding and Financing of the Aged Care Sector, July 2017. Australian Government; Canberra: 2017.
  4. Analysis was conducted during August-September 2017, surveying the following suburbs – NSW: Double Bay, Mosman, Port Macquarie; Victoria: Brighton, Mornington, Yarraville; Queensland: Bribie Island, Maroochydore, Caboolture; Western Australia: Busselton, Dianella, Rockingham, Joondalup; South Australia: Glenelg, Victor Harbour; Tasmania: Devonport, Sandy Bay; Australian Capital Territory: Kambah, Kaleen; Northern Territory: Darwin.

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