Senate Community Affairs Legislation Committee, , 7:49:04 to 7:51:56
Senator Ruston highlights reports of significant administration cost shortfalls per resident. IHACPA discusses their engagement with Stuart Brown's benchmarking data and the difficulties of applying a uniform cost allocation method across the sector.
Topics: Health, Procurement
Speakers: Prof Michael Pervan, Senator The Hon Anne Ruston
So but but I mean the point that I think Professor Pervan's making him, he's been doing that for 40 years. We haven't been doing this for 40 years, and um and we're at a pretty critical juncture in terms of um age care viability. Um aging Australia and Stuart Brown and a number of the providers have um identified funding shortfalls per day from administration costs, which is why I started in the first place with administration costs. And they're talking about shortfalls of somewhere between sort of nine dollars and twelve dollars fifty per resident per day from administration costs alone. Um so if we just go back to the administration costs, um have you like having seen that data, I'm sure you've seen it if I've seen it, um have you done any analysis as to whether that Those figures are correct.
I recently actually spoke to Stuart Brown about that proposal. And sorry, I'll take half a step back. I agree with Stuart Brown in that our methodology around cost allocation and pricing should be debated, reviewed on an annual basis, and and you know, we're not being defensive about the way that we do our job. But in respect to that letter that was circulated, Stuart Brown themselves aren't adopting that methodology, but they are amending their own. And we actually have been using the Stuart Brown administration cost allocation method in terms of how we build that reference cost. So we have been using their method, but they're now changing their method. So we will uh work with them and follow that journey and see if that produces a better uh or more accurate pricing Um the only caveat on that conversation is that Stuart Brown provide benchmarking information for their subscriber members. That's a different sort of data set to the one that you use to calculate prices, but both sides are smart enough to know what those differences are, so you know it won't be identical, but we can work off each other's homework to a certain extent. Um when we modeled that alternative, we found that it had very differential results for different cohorts of the providers, and in particular, we were concerned that it wasn't going to produce a significant benefit for the not-for-profits. So it had a disproportionate impact. Some benefited a lot and some didn't benefit at all.