You need to change your aged care business strategy.

This is an summary of the presentation made by Rhod Ellis-Jones at the LASA National Congress in Adelaide on 20 October 2014.

I want to make it clear from the outset that this presentation is about winning.

Aged care business strategy to win in a competitive market and economic context. And, for many of you, winning against the odds.

But these are circumstances that many, many other industries have faced before yours. So there are lessons we can learn, guidance we can take, as we navigate the next stage in a long phase of change for the Australian aged care sector.

Like most – if not all – people, no company glides effortlessly forward, with no peaks and troughs, no bumps and bruises. Most companies experience impacts beyond their control that can yield a crisis of identity, of purpose, and transformational change.

So, faced with these ‘known unknowns’, how to win?

You need to change.

There are many critical competencies but some are more appropriate to providers developing aged care business strategy. They are:

• Knowing the target audience
• Reliability
• Innovation (incremental and transformational)
• A unique identity
• Purpose (shared with consumers and stakeholders)
• Resilience/adaptability to change

I have made the calculated assumption – based on experience and data – that the overwhelming majority of aged care homes in Australia are of high accommodation quality, have effective systems, and well trained staff. These are not competitive advantages, they are the base expectations of older people and their families.

There are operational considerations: a relentless focus on quality and efficiency for example. There are financial considerations: ASX listed companies have capital at their disposal never before seen in this sector.

But these six factors I’ll talk about can mean that even a single facility operating on small margins in a competitive environment can win.

Knowing the target audience

Dementia sufferers stuck inside living hell with no way out. That is the headline of this opinion piece by former federal MP, Barry Cohen. It was a cry of obvious pain and perhaps humiliation from a man whose personal identity was once defined by the company of power brokers but is now defined by the company of residents with more advanced Alzheimer’s than him.

But that’s not what caught my attention. 668 words in, the Hon Mr Cohen lists nine things he feels – emphatically – need to be changed. Among them a private phone in each room, changing the location of the call buttons to be more convenient, more presentable food, wider beds, bright coloured controls and reading lamps.

The Baby Boomer in him speaks loudly. Suddenly it is obvious that transition we have been talking about – from war babies to post war babies with commensurate leap in expectations – is upon us.

Mr Cohen wants more and he should have it. A full service menu for his pleasure and his cost. Consumer directed care with diverse choices and experiences.

The article wisely avoids naming the aged care home in which he resides. It is most likely in a leafier suburb. But that doesn’t mean those living in streets less umbrageous would not have equally as pressing, if quite different, needs.

The lesson here is one of knowing the consumer. Not to develop a care plan; rather, to match the needs, likes and expectations of people in the catchment from which your facility will draw with responsive services and accommodation.

Start by remembering that we are all consumers. We all repeat a mental and physical pattern of behaviour when weighing up a purchase decision. We consider price but price is not value. We look for affinity with our own tastes and values. We weigh up what this decision says about us.

Providers need to:

• Engage regularly and seamlessly
• Address consumer context, emotions and functional needs: empathy map
• Ask who is influencing decisions? What is their path to purchase?

And remember, when the money is in your hands, the decision looms large.

CDC has already raised expectations of choice and better service.

Consider walking across a grassy public oval versus your own backyard that you have mowed yourself or paid someone else to mow. See how you only notice the missed sections or the impressive one inch fringe on your own patch? Your time, your money.

Reliability

Big Macs sliding down the serving tray. Clones, like the friendly staff.

But we’re Lovin’ It. Why? Because we know what’s coming.

McDonalds likes to play up the experience of hanging out at ‘Maccas’, the quality of the fresh produce (really?!), and the ever changing menu – but the facts don’t lie.

We return again and again – some of us a little too much – because we can taste the burger before we enter the drive thru.

I wouldn’t dare compare the professional care and quality accommodation of an aged care home to a burger joint but… the rule absolutely applies.

Inconsistent communication between staff and family members – particularly in a care setting – raises concerns over consistency, stability and quality of service.

If I am shopping around – I’ve seen the website and I have the brochure – I don’t want the brand promise, the value proposition, to be hollow when the snarling receptionist greets me and my family on arrival – and then disappears for 15 minutes.

Similarly, I don’t want to see welcoming smiles let down by poor marketing and communications materials or poor attention to detail in decor, artwork, furniture, gardens.

As Coco Chanel once said: God (not the devil) is in the details.

Innovation

Tomorrow you are not an aged care service provider.

What will you do with your assets, competencies and customer relationships?

For some aged care providers this may be a reality as competition from well funded rivals becomes too fierce.

At the agency we worked with skills and industry training boards as the federal government funding was being ceased. These organisations were suddenly not viable – even though there was significant ongoing demand for their services.

It is very similar to what Medicare Locals are going through right now. And many arts organisations after consecutive years of government funding cut-backs.

Like any good investor, you need to look at diversifying your revenue streams and – using your company’s purpose as your compass – find opportunities to leverage your advantages.

Picture a home with a warm glow emanating from inside. That glow represents golden opportunity for in-home aged care providers.

Most companies would die for the customer relationships in-home aged care have – the trust, the access, the ability to scan the home environment for service and product extensions.

If your mission is to increase independence, health and wellbeing, why wouldn’t you be considering products and services that achieve those goals in addition to ‘traditional’ aged care service. If you don’t, others will.

Clothes, sensing technology, educational video content, nutritional foods… Think about the channel partnerships you can form with other companies and health services providers.

Remember that what you offer today will not be what you offer in the future.

An example.

Tchibo was founded in 1949 in Hamburg, Germany, with humble origins as a coffee bean roaster, distributor and retailer.

Today it has over 1000 shops and 22,000 so-called Frische-Depots in bread shops and supermarkets as well as 12,300 employees worldwide.

At some stage Tchibo’s leaders realised that, although it sells coffee, the brand experience is about trust, quality and reliability.

So they started selling an ever increasing range of products and services that have nothing to do with coffee but all have the marks of quality and reliability.

Its weekly-changing range of other products include clothing, household items, electronics, travel, insurance, mobile phone contracts and appliances.

Consider what defines your brand and the relationships you have with customers. What welcome surprise can you create by offering more?

This is what they call innovation. And innovation is expressed in important interrelating ways:

 Unique identity

“We provide high quality care in boutique, hotel-style accommodation enabling you to enjoy independence, dignity and a great lifestyle.”

That melange of glib, tired and increasingly meaningless words is despairingly common across the websites of aged care providers and retirement villages.

What are the alternatives? How about: “Live well”.

Quality accommodation, professional nursing – these are not points of differentiation for your business, they are the base expectations of consumers.

Identity is a fascinating phenomenon. In an aged care context we are considering multiple levels of identity and how our brand influences and is informed by them.

Purpose

What do you stand for?

One of the most significant megatrends in the corporate sector globally at the moment is the move to establish and communicate purpose in branding. Our agency is doing a range of work in this space – starting with defining current social impact and then developing business strategy to make impact a growth engine for the company over time.

It makes sound business sense:

• NYU Stern research determined that 60% of consumers will pay a premium for goods that offer a social or environmental benefit.
• Nielsen research determined that 50% of global consumers are willing to pay more for goods and services from companies that have implemented programs to give back to society – a 5% increase on 2011.

Aged care businesses express purpose through mission, brand identity, business strategy, values, events, employee behaviour, architecture (RAC), partnerships and marketing/PR.

Purpose cannot be ‘stuck onto’ a company. The mission should state it, and actions should demonstrate it.

Aged care providers always have purpose. You are an agent of health and wellbeing.

Look to your local community context and consider how important your company is to:

You can find shared purpose with your community in ‘building stronger communities together’.

Shared purpose is the basis of co-creation of services which means building a market for your service before you deliver it.

It means a network of advocates and referrers. It means perpetual relevance to your customers and their influencers.

Resilience and adaptability to change

We know about change in aged care – Accreditation; Productivity Commission inquiries; Living Longer, Living Stronger; Consumer Directed Care; My Aged Care…

And yet still we have advocacy for change. The authors of the Grattan Institute’s Dying Well report (released on the 28 September 2014) makes these key points:

If you are a residential aged care provider, you know the acuity of care has increased. Does this report advocate for less demand, and even higher acuity? What does that mean for your business model.

If you are an in-home care provider, you know the government behinds you. From a consumer perspective but also cost. But rapid shifts always beget transition challenges. The social impacts of escalating in-home care arrangements cannot be offset by that nascent industry, ‘telehealth’.

“$670m payday for Regis founders as aged care group floats.” So read the headlines on 7 October.

Corporate activity in the aged  care sector has taken off with plenty more on the horizon. It will mean:

• Private capital flows into sector of a size never seen before
• Mergers and acquisitions for economies of scale
• Specialisation of smaller providers as they find service niches
• Integration of hospitals, health services and aged care (particularly in Catholic sub-sector)

All providers need to be scanning these changes – these ‘conditions’ – to understand the threats and opportunities facing the company, its people and its clients.

The game has changed and you need strategy and tactics to win.

Reading the title of this conference and this session, ‘Break through business’, I had one song ringing in my ears.

We chased our pleasures here 
Dug our treasures there 
But can you still recall 
The time we cried 
Break on through to the other side 
Break on through to the other side.

Yes, the Doors. I had to use it of course! And I can.

We have cried through much change and instability, and we are now seemingly chasing the treasures of stockmarket listings and major mergers.

Watching history unfold, I can say we cried (foul) too much and now the zeal for capital is a little too raw.

So, let’s consider, as a sector and as individual companies, what our employees, residents, families and clients need to see and hear.

What, in their eyes, makes a great company?

If you want to survive and win – if you want to break on through to the other side – get that dynamic right.

Thank you.