Designing Sustainable Financial Models for Complex Care Populations

Some of the most important care is also the least financially viable under traditional funding models. Complex patients, high-acuity residents, and participants with challenging behaviours often cost more to serve than reimbursement provides. Yet these are precisely the people who need care most.

This guide explores strategies for building financially sustainable models to serve complex populations without compromising care quality.

The Complex Care Financial Challenge

Complex care populations present specific financial challenges:

Higher Direct Costs: Complex needs require more staff time, specialist interventions, equipment, and supplies. Per-person costs significantly exceed population averages.

Funding Model Mismatch: Funding models often use average costs, disadvantaging providers who serve above-average complexity populations.

Unpredictable Variation: Complex care has higher cost variability. Stable months alternate with crisis periods requiring intensive (and expensive) intervention.

Staff Intensity: Complex care requires highly skilled (and highly paid) staff. Skill mix adjustments that work in standard care may not work with complex populations.

Infrastructure Requirements: Complex care may require specialised infrastructure - secure environments, specialised equipment, modified facilities.

Understanding Your Complex Care Economics

Before developing strategy, understand current economics:

True Cost Identification: Calculate actual costs for complex care populations. Many organisations do not know their complex care costs distinctly from general costs.

Funding Gap Analysis: Compare costs against funding received. Quantify the sustainability gap precisely.

Cross-Subsidy Mapping: Identify which populations or services subsidise complex care. Is this sustainable?

Variability Analysis: Understand cost variability patterns. What drives high-cost episodes?

Strategic Approaches to Complex Care Sustainability

Several strategies can improve complex care viability:

Specialisation and Scale: Concentrating complex care creates expertise and efficiency. A facility specialising in dementia care can achieve economies not possible when dementia care is scattered across general facilities.

Scale enables: dedicated staffing models, specialised equipment amortisation, expert recruitment, and reputation that attracts appropriate residents.

Acuity-Based Funding Optimisation: Within funding models, ensure complex needs are accurately assessed and documented. Under-assessment leaves funding on the table.

For AN-ACC: Accurate assessment of cognition, behaviour, medical complexity, and care needs determines funding. Investment in assessment capability pays returns.

For NDIS: Ensure plans reflect true support needs. Advocate for plan reviews when needs exceed allocated funding.

Service Model Redesign: Redesign care delivery to improve efficiency without compromising quality:

Skill Mix Optimisation: Use the right staff for the right tasks. Clinical expertise for clinical needs; support staff for appropriate tasks.

Technology Enablement: Assistive technology, monitoring systems, and automation can extend staff capacity.

Proactive Intervention: Early intervention prevents escalation. Investment in prevention often costs less than crisis response.

Integrated Care: Coordination across services reduces duplication, gaps, and costly transitions.

Alternative Funding Strategies

Beyond optimising standard funding, explore alternative revenue:

Grant and Philanthropic Funding: Foundation grants, government innovation funding, and philanthropic support can supplement core funding for complex care.

Research Partnerships: Academic partnerships may bring research funding while improving care through evidence-based innovation.

Social Impact Investments: Impact investors seeking social returns alongside financial returns may fund complex care innovation.

Government Innovation Programs: Pilot programs and innovation funding may support new models for complex populations.

Portfolio Management Approach

Manage complex care as part of a broader portfolio:

Cross-Subsidisation Strategy: If standard populations subsidise complex care, manage this deliberately. Ensure sustainable volumes of subsidising services.

Risk Balancing: Balance high-variability complex care with more predictable service lines.

Capacity Management: Manage complex care bed or place allocation to maintain financial balance.

Diversification: Diversify revenue sources to reduce dependence on any single funding stream.

Outcome-Based Contracting Opportunities

Complex care may suit outcome-based contracts:

Demonstrable Impact: Complex populations show measurable improvement with good care - reduced hospitalisations, improved function, better quality of life.

System Savings: Good complex care saves money elsewhere - fewer emergency presentations, shorter hospital stays, reduced crisis interventions.

Value Proposition: Articulate the value created by effective complex care. This supports arguments for better funding.

Advocacy and Policy Engagement

Sustainability may require policy change:

Funding Model Input: Engage in funding model reviews. Advocate for appropriate recognition of complex care costs.

Regulatory Dialogue: Work with regulators to ensure rules accommodate complex care needs.

Industry Collaboration: Join with other providers facing similar challenges. Collective advocacy is more effective than individual complaint.

Evidence Building: Collect and share data demonstrating complex care costs and outcomes. Evidence supports policy arguments.

Governance and Decision-Making

Board and executive leadership on complex care:

Mission Alignment: If serving complex populations is part of mission, governance should support this even when financially challenging.

Sustainability Boundaries: Define limits on cross-subsidisation and financial loss that are acceptable for mission-aligned care.

Transparency: Be transparent with boards about complex care economics. Informed governance requires accurate information.

Strategic Review: Periodically review complex care strategy. Is current approach sustainable? What changes are needed?

Warning Signs and Exit Considerations

Sometimes complex care becomes unsustainable:

Chronic Losses: Sustained losses without path to sustainability signal problems.

Quality Compromise: When financial pressure leads to quality compromise, the model is failing.

Staff Burnout: Unsustainable workloads in complex care lead to burnout and turnover.

Mission Drift: If complex care is consuming resources needed for core mission, review is needed.

In some cases, responsible stewardship means exiting unsustainable services rather than continuing until crisis forces closure.

Building Long-Term Sustainability

Sustainable complex care requires:

Realistic Economics: Honest assessment of costs, funding, and gaps.

Strategic Positioning: Deliberate choices about how to serve complex populations sustainably.

Continuous Improvement: Ongoing efficiency improvement and innovation.

Advocacy: Active engagement in policy and funding discussions.

Governance Alignment: Board and executive commitment to sustainable approaches.

Complex care sustainability is difficult but achievable. The organisations that succeed will serve populations that desperately need care while maintaining financial viability.