How providers can succeed in a competitive human services market

How providers can succeed in a competitive human

Three strategies human services providers, such as not-for-profits, care agencies and social housing groups, must consider to adapt to new competition | 🕒 7-min read.

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Global Lead for Human Services

KPMG Australia

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Commissioning and contestability is transforming the delivery of human services and the changing role of government is, justifiably, one of the primary issues. But governments are not the only organizations that need to quickly get to grips with this new way of working. Service providers, such as not-for-profits, care agencies and social housing groups, must also consider how they will respond – and learn to adapt.

Competition and the customer

One of the first issues providers need to address is competition. Accustomed to dealing with governments that are traditionally both the funders and customers of their services, providers will increasingly find themselves coming up against new competitors in the market. This may be from established providers, local, national or - increasingly – international, moving into new areas of delivery, such as an aged-care provider moving into the disability services market. Competition may also arise from innovative for-profit providers exploring opportunities in new markets. For example, Uber and Lyft have already started operating services for older people or people with a disability in remote communities in the United States1, and supermarkets are leveraging their expertise in the ready-made meals market that compete with ‘meals on wheels’ services.

This is a considerable change from traditional models where government decides the nature and scope of service delivery. In commissioning models built around individualized funding, the recipient of the services is the customer, with the power to decide which services they need, from whom, and how they want them delivered.

This means that providers must have a greater focus on customer engagement and understanding customer needs and preferences, rather than relying on accepted wisdom and presumptions. For example, it used to be accepted that there was little benefit in investing in technology in the aged care sector, as older people don’t use technology. Whereas in fact, research in several key markets shows that pensioners are avid internet users2.

Three competitive strategies for human services providers

So, what strategies do service providers need to adopt to succeed in this new environment?

1. Innovation and collaboration

There is a fundamental expectation of innovation from both consumers and government. Service providers are expected to be able to deliver services in a cost-effective manner, making the most of the budget available. They are expected to actively attract and retain consumers; while consumers themselves expect to be treated as individuals and receive personalized offers, rather than as a single homogeneous group receiving the same off-the-shelf services.

Providers are also expected to demonstrate their own commitment to delivering innovative services that achieve these objectives, rather than leaving government to accept all the risk.

By investing their own funds in service delivery, through co-funding for example, providers can show they are willing to share the risk with government, and demonstrate their commitment to working together.

2. Shared values

There is also a growing expectation of shared values between service providers and their users. People increasingly want to be partners in the support they receive and feel they have shared values and goals with the organization providing their services. They want a provider they can relate to, who shares their outlook and values, and is supportive of how they want to live their lives. A provider that is active in a community in other ways, such as volunteering, for example, is likely to be favored by members of that community over those that are not.

People want to work with providers to shape the support they are receiving. Too often there is a presumption that ‘we know best’ on the part of providers, or conversely, consumers can be confused by too many options. In reality, there needs to be a partnership between providers and consumers. It is the role of the provider to bring their expertise and experience to the table in a way that empowers people to engage and help shape decisions about the services they use, and how they use them.

3. Reporting and performance

First, performance measuring and reporting needs to be faster, more transparent and accessible to all stakeholders. In delivery models where funding is dependent on attracting consumers, providers must be able to monitor their key performance metrics in real time, so they can swiftly spot changes in demand – and therefore funding – and respond quickly and appropriately.

Second, both government and consumers expect to be able to understand whether outcomes are being achieved and money is being well spent, at both a program level, and strategic level. So for example, it means moving from measuring the outcomes of a specific homeless program on an individual, to looking at whether the level of homelessness overall is decreasing.

Adopting a collaborative mindset

Understanding these new expectations requires providers to adopt the principles of co-design, collaborating with service users to design service delivery in line with how they wish to receive it.

Crucially, providers must know who their consumers are now, and who they want them to be in future. This means both analyzing the information available, and using customer engagement strategies to deepen their understanding of their customer.

For example, is there a group of service users who don’t drive? Whose only income is state benefits? Or who are potentially prepared to pay more for a premium service? This kind of knowledge is essential to enable providers to optimize their service provision and business performance.

It may mean that providers will not be able to service all consumer groups, if groups of consumers don’t fit the organization’s target market. Instead, they may focus on a smaller, more defined market and service it well, rather than trying to fit disparate groups into a one-size-fits-all model.

Customer service is a new workforce priority

Implementing these changes will result in significant changes to the workforce and capabilities of providers. Roles will need to be more flexible, both structurally, in terms of working patterns, but also functionally, with staff learning new skills and taking on new roles and responsibilities. This will require a change in approach on the part of employees, from simply delivering services to delivering a good customer service that is flexible and adapted to each individual’s personal requirements. This may be as simple as greeting someone in the manner they prefer, knowing when to wish them a birthday, or making their bed in the way they like.

Employees at all levels will need to adopt a strong customer service focus. Through better customer engagement, they can strengthen their understanding of what it takes to communicate with and engage people. This includes basic activities such as maintaining a high quality, easy navigable website and easy-to-understand marketing literature, to more operational issues such as making it easy for people to talk to someone when needed, or ensuring calls are returned promptly.

Implementing changes of this scale will inevitably take time. Training models will need to be updated to respond to this new environment and there may be an impact on the types of people attracted to work in the sector. Care workers will need to be empowered to respond flexibly. So, if they visit a consumer to clean their house, for example, and the consumer asks them to take them to the shops instead, they are supported by a decision-making framework and training to enable them to safely do this. It is down to providers to clearly define these parameters and give staff the ownership they need to take decisions.

It’s time to adapt

Only by adapting their delivery models to a competitive environment and learning to truly engage with their customers and respond to their individual needs will providers succeed.

They need to demonstrate their commitment and their willingness to innovate in the quest for better services and more efficient delivery. In doing so, they must accept more responsibility for ensuring consumer satisfaction, both at an organizational and individual level, empowering their people to think on their feet in the interests of the consumer. And they must be prepared for their performance to be measured and scrutinized, both by government and by consumers themselves.

With new and disruptive responses already moving into the human services sector, providers need to quickly understand how best respond to this changing environment - and then move fast to thrive.

Liz Forsyth is a key adviser to government as well as the private and not-for-profit sectors. Liz’s practice specializes in strategy, policy development, program design and reform, service improvement, resource allocation and funding methodologies and evaluation.

Recently she has lead major projects related to establishing the Australian National Disability Insurance Scheme, developing new integrated service delivery models for reducing violence against women and children, developing a model regulatory framework to support deregulation in social services at a national level.

Footnote

1Berrios, L. (2016, November). Uber, Lyft fill needs gap in senior transportation. Retrieved January 26, 2017.
2Google Consumer Barometer 2016; Roy Morgan Research Australia 2016.

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