Concerns about the NDIS sustainability have been around for over five years.
In 2017 Christopher Knaus a journalist for The Guardian newspaper wrote “Disability providers across the country are struggling to remain viable” and Ken Baker, chief executive of the NDS, said two-thirds of disability service providers had reported to the commission that they were “Very worried about their capacity to provide services at current NDIS prices” and “In trying to meet those very, very tight prices, there are compromises made on quality.”
In FY’ 2017-18, The price point for the NDIS line item ‘Assistance to access the Community’ (Monday to Friday, daytime) was $44.72.
The current price point for that same NDIS line item is now $62.17. That is nearly a $20 per service hour revenue increase in 5 years, a 39% increase. During that time period inflation is approximately 16.2% so that still leaves a large portion of the increased NDIS payments available to service providers.
Even with that increase in NDIS payments, people today are still concerned with service providers financial positions. The current NDS CEO, Laurie Leigh, stated on 28 Nov 2022 “The fact that many more providers are expecting to make a loss this year is particularly concerning”.
Kathryn Bermingham wrote for The Advertiser newspaper on 16 February 2023, “The head of a large disability provider, says “massive shortfalls in NDIS funding have contributed to the organisation’s dire financial position.”
And yet not all is equal… When looking at annual report figures for some of Australia’s largest providers, the profit margin experienced ranged from -6.02% right up to 8.71% (or just a casual $43 million in profit).
How can some orgs be doing so well and other continue to struggle with NDIS sustainability? In one word – Efficiency!
Now is the calm before the storm. Before change goes into overdrive again. In 7 short months, Minister Shorten will publish his review of the NDIS and the Royal Commission will hand down their final report into the Violence, Abuse, Neglect, Exploitation and Discrimination of people with disability.
Now is the time for leaders to not only adapt but learn how to thrive within it. The most successful organisations will flourish by celebrating a culture of change and implementing efficient, flexible processes that ebb and flow with the world around them, whilst still ensuring a quality product is delivered.
Small changes can go a long way, but sometimes it’s hard to see the forest through the trees.
We recently completed a business health check for a small service provider that was struggling to meet their margins under the reasonable cost model and found them ways to save over $230,000 through restructuring their processes and identifying opportunities to lean into technology.
|Restructure in support of streamlined processes
|Reviewing routine operational expenses
|Creating human redundancy by implementing technology solutions
We also found ways that they could claim more effectively for the service they were actually delivering. Too many times we hear providers say we just foot the shortfall. A recent example was a provider who was charging a lower line item price to a participant because the participant had not been funded appropriately and would have received ‘less hours of support’.
The issue with this behaviour from providers in decisions made by the NDIS is predominantly based on data. If let’s say this is done by 3,000 of the 18,000 providers, for ten hours a week, this would equate to an almost $8 million skew of data. Meaning in the future participants will have a harder time getting the funding they need as the agency will continue to make decisions based on the data they have and organisations will continue to fund shortfalls and struggle with their viability!
Another small to medium provider we work with has saved over $150,000 in a 12-month period by outsourcing their Executive HR and Quality Management functions to us. They only pay for the deliverables they actually need, when they need it, rather than holding a big continual corporate overhead.
The moral of this story is that small changes can make big differences for NDIS sustainability.
Now is the time for providers to consider things like: –
- Reviewing technology solutions. There are so many solutions out there now for a fraction of the cost of what equivalent solutions were five years ago or the human replacement to get the job done. One excellent software package we use and recommend for our auditing and continuous improvement is Tendable.
- Ensure you are getting all of the benefits you can. For example, Microsoft gives NFP’s free Office 365 Business premium plus 10 licenses and reduces the license fee to under $7 per license after that.
- Using OneNote within Microsoft Teams to capture meeting minutes instead of having an admin staff to take minutes.
- Reviewing high intensity participants to ensure you are charging at the correct rates.
- Reviewing marketing spend and strategies. How much of your marketing investment is generating leads that are then converting to sales? Which platforms are no longer effective but still costing you every month?
- Invest in your people. Currently there are some fantastic incentives from the NSW government for traineeships. This is a win/win you get financial incentives but massively improve the quality of your work force and your employees get the chance to gain a national qualification.
- Probably the hardest but most needed piece to review is people. Is everyone on the team actively contributing equivalent or more of their salary? This is always difficult, but now is the time to review your corporate overhead and efficiencies.
The key here is that whilst organisations can implement a combination of the above strategies to create modest saving, you don’t want to fall into the trap of one-off initiatives to become more efficient. By making a long-term commitment to efficiency you will set the pace that the competition needs to keep up with. This means re-thinking some of your current ways of operating to ensure that efficiency is reflected in your organisational strategy, the metrics you use to measure success and your culture. This will take your disability org from good to great in a period of predicted unprecedented turbulence.
For information on NDIS sustainability and many other aspects of the disability sector, please Contact – Supporting Potential