Home Care – CDC – What is the "right" unit price to charge from 1 July 2019?
With administration fees folded into unit pricing from 1 July 2019, providers need a new formula for recovering costs. See what to include—hourly rate, on-costs, admin, and margin—plus how to calculate Package Management and Other Costs correctly.
From 1 July 2019, the government wants Home Care Providers to improve transparency around their pricing, making it easier for consumers to compare. In order to do this, the government has decided that you are no longer allowed to charge an administration fee as that has to be built into the unit cost. The administration fee included your organisation's overhead expenditure including expenses such as marketing, office rent, insurance etc.
Doesn't sound too difficult does it? So what do you include in this to ensure you recover your costs and make a profit?
The following definitely has to be included:
- Employee's hourly rate – suggest you use the highest rate in that category eg personal carer rate/domestic assistance rate/nursing rate etc
- On-costs such as superannuation contribution, payroll tax, workcover premium etc. This is usually around 20% especially if you pay payroll tax
- Administration cost. This will include expenses such as your marketing, office rent, insurances etc. This may vary quite substantially between businesses so maybe anything between 5 – 10%
- Profit Margin – usually around 10%
If you're using external suppliers, you need to evaluate the highest rate, then add your admin charge on top of that as you have to make sure you're covering your costs in relation to organising the services, compliance and processing and payment of the account. You also need to include a profit margin on top of that.
The 5 Common Services that you need to publish pricing for are:
| Price for Common Services | How the provider delivers services | Standard Hours | Non-Standard Hours | Saturday | Sunday | Public Holiday |
|---|---|---|---|---|---|---|
| Personal care (Per hour) | Provider display one of the following, against each service: By the provider's staff / Through other service providers / By own staff or other provider | $ | $ | $ | $ | $ |
| Nursing (Per hour) | $ | $ | $ | $ | $ | |
| Cleaning and household tasks (Per hour) | $ | $ | $ | $ | $ | |
| Light gardening (Per hour) | $ | $ | $ | $ | $ | |
| In-home respite (Per hour) | $ | $ | $ | $ | $ |
Provider's most common price, for each service. Where providers offer genuine client choice of different prices for a service, providers can provide a minimum and maximum price point.
You can also charge a Package Management Fee which is based on the cost of managing the package and may include preparing the monthly consumer statements, managing package funds and compliance and quality assurance activities. You could calculate this based on the staff that manage this and the other costs such as paper, printing, postage etc.
Maximum Exit Amount – no changes.
You can also charge a Per kilometre fee if you charge the consumer for staff travel to/from their place. If you contract this out, you can include a minimum and maximum price.
Any Other Administration Costs will be included in your unit price.
Package Management (per level):
| Item | Basis | Level 1 | Level 2 | Level 3 | Level 4 |
|---|---|---|---|---|---|
| Package management | Per fortnight | $ | $ | $ | $ |
Other fixed costs:
| Item | Basis | Amount |
|---|---|---|
| Maximum exit amount | Max. Total | $ |
| Staff travel costs to visit you | Per km | $ |
| Separate costs when you want to receive services from a different provider | Provider to select 'Yes' or 'No' | Provider free text – mandatory field if 'Yes', optional field if 'No' – maximum 500 characters |
You need to make sure you can justify your charges to the consumer and they understand what they are being charged for especially if you want to reduce the number of complaints down the track.
If you are interested in chatting about your consumer on-boarding to make the process more efficient and less costly, contact Debra Baxter via the Care Collaborator web page: www.carecollaborator.com.au, email debra@carecollaborator.com.au or mobile 0438 020 728.