CHA: Price competition to be imperative

August 26, 2014 | Aged Care Finance

Aged care providers no doubt understand the impact of the July 1 changes, and will already have measures in place. The key now, according to Catholic Health Australia (CHA), is being aware of greater price competition in the sector.

Increased price competition is now a feature of residential care under the new accommodation payment arrangements, which were put in place on July 1 this year. In the past, accommodation pricing in high care was fixed, and set by the government regardless of several factors, which have been listed below:

  • Location;
  • Level of amenity;
  • Building quality.

The only exemption to this ruling was extra service facilities, which often offer a higher than average standard of services. This can include range and quality of food, accommodation and extra non-care services.

The new arrangements, which have applied to facilities since July 1, require prices to be set and published on the facility website and

Impacts to pricing

Residents also have full discretion now in regards to payments, representing a substantial overhaul from the previous system. They're now able to pay in three ways – either a fully refundable deposit, an equivalent daily payment or combination of both.

It's important to note that the equivalence is calculated according to a legislated formula.

This pricing overhaul adds another level of competition between aged care providers in residential care (as well as the home care sector).

Price competition will of course continue to be a driving force in the aged care sector, and it's going to be essential that prices are set correctly as part of long-term financial sustainability. Aged care providers will need to ensure that they understand the market if their services are to be priced competitively.

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