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Commoditizing Home Care Services – is it care?

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What does commodity mean?

The meaning of commodity as per the dictionary -Commodity: noun commodity \kə-ˈmä-də-tē\ or commoditization \kə-ˌmä-də-tə-ˈzā-shən\: A reasonably homogeneous good or material, bought and sold freely as an article of commerce.

Or as described by Ron Vianu commoditization is the by-product of price transparency without any meaningful way to differentiate services based on quality.

Here is a question for you. Can you imagine whipping out your smartphone, opening an app, and arbitrarily dispatching a person, who you don't know, to your parent's home to give your frail Dad a bath? It seems unthinkable … but is it?

With two-thirds of the Australian population using a smartphone, coupled with network connectivity and high rate of Internet penetration, technology providers can target this large A$5 billion home care market. Families can access custom apps allowing them to view services in their area, select a visit from a particular person and make an appointment.

Share Economy Models

With the role of technology in health care ever expanding, new direct-to-consumer models that bring services to people at home are piquing the interest of venture capital companies and other investors. The health care industry has been known to lag behind in terms of technological advancement, but the Uber effect in the US has already started with HomeHero, Honor, Carelinx, and Care.com who are adopting Uber-like models to directly connect home care workers with the families who need them.

They have arrived in Australia too … offering services at $25/hr. At 25/hr there can be no question that this is attempting to turn home care into a commodity and to make price the only differentiator.

The question is, is this a necessarily a good thing or a bad thing?

On the good side, the argument is that innovative technology lowers costs and increases convenience to unimaginable levels. The example everyone sights is Uber. This high profile company has transformed the taxi industry by disrupting the traditional delivery model through client-centric technology providing a more convenient, transparent and affordable service. The success of Uber has sparked a frenzy of organisations to seek out ways to "Uberize" their industries. So can it apply equally to home and community care in Australia?

On the bad side, the arguments can be raised that the Uber-carers are not properly trained or screened, they are not insured, they are not supervised by nurses, they are not employees of the company, there's no considered outcomes-based care planning process, there are no care notes or reporting to a care management team, there are no quality standards, there is no case management … the list goes on.

The point is, if the consumer doesn't see any value in the features and support services around home care … then cheap care is a good option. That's their choice … right?

I completely agree with a market based system where care companies compete based on quality and service. This, after all, is what the recent Government changes to home care are seeking to achieve. The problem as I see it is that the structure of these Uber-care businesses in Australia is using the aged care, tax, superannuation and employment system as a form of competitive advantage.

Private-pay home care is not regulated in Australia. It is in virtually every other major OECD country. Home care is only regulated in Australia if the provider is a beneficiary of government funding. Uber-care businesses are, therefore, only one carer away from getting into business … there's literally no barrier to entry.

People that are self-employed in Australia can avoid the PAYG tax system in prescribed circumstances. If an Uber-carer is on a separate service contract with each family they look after they can avoid the PAYG rules. In the same way, the family they are working for does not have to pay superannuation or Workcover. Large employers in the care industry also have to pay Payroll tax and have well policed but costly workplace health and safety procedures. The end result is that the Uber-care businesses are cheap because their costs are a fraction of what they would be if the carers were employees, not the least of which is the cost of administration and the compliance burden.

The owners of Uber-care businesses can operate on tiny margins as their overheads are tiny. The businesses are fully automated with very high end software. They rely on volume to make money, taking a small percentage from each hour of service delivered by the individual carers. The beauty for them is that they can focus on marketing and advertising, including massive social media campaigns, while the rest of the industry is bogged down in overheads and compliance.

The scary thing is that government regulation has handed Uber-care a competitive advantage!

Caring is fundamentally a different position

Let's face it, we all welcome technology advancements in the delivery of care for our loved ones – or more specifically in the delivery of care to our parents. The home care industry has been largely under served by technology, with telehealth and other technologies slow to catch on in Australia. But we need to take pause in our rush to Uber-ize the world. Caring for older and disabled Australians is fundamentally a different proposition.

Older Australians and people living with disability represent a highly vulnerable class in our society. Ensuring the proper nursing oversight for care delivery is vital. And combining that oversight with world-class technology is powerful. Today we at Right at Home and other formal care providers use a breadth of technology solutions that allow our clients to be served in their homes and communities with compassion and respect. We hand pick, train, credential, insure, support, supervise, and deliver quality carers to this vulnerable class of citizens. We deliver peace of mind to the sons and daughters who care for their parents.

When we started Right at Home Australia our premise was to deliver world-class, quality home care where we go the extra mile for our most vulnerable. We are not alone in this … the market is full of hard working organisations who do their best to deliver high quality care. We have not deviated or waivered from this principle. In fact, these ill-advised, Uber-like direct care start-ups have only strengthened our resolve to being a leading home care provider.

For my wife and I, delivering care to the parents who raised us, as we watch their health declining, is a very personal issue. I can't imagine whipping out my iPhone, opening an app, and arbitrarily dispatching care for my parents. And just as I am intimately involved with the delivery of care to our parents, so too are we to our clients. Why? Because it's personal. It is really that simple.

Right at Home Australia is a franchise home care system that provides private pay, in-home supportive care for older Australians, disabled adults, and people recovering from surgery, to help them continue living independently.Right at Home is an international business with over 520 offices, looking after over 19,000 people every day, across the USA, Canada, United Kingdom, Ireland, Brazil, Japan, Netherlands and China, delivering expert care to discerning clients. Right at Home Australia is your local expert for issues related to caring for your loved one and is dedicated to keeping you informed about home care. Right at Home offers in-home care and assistance so your loved one can continue living independently and enjoying a vibrant life. Our caregivers are screened, trained and insured prior to entering your home so you can trust us with the caregiving while you focus on your loved one.

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