Drivers and uncertainties as we prepare for NDIS
The philosophy and underpinning principles of NDIS are unquestionably long overdue. The intent is sound. However because funding for the disability sector has been always far less than need, there are concerns that the funding allocated by the government will not be enough to address the needs of people seeking funding packages.
My comments are therefore in the context that the vision is strongly supported by all who can see the potential of NDIS. However, there are many critical drivers and uncertainties impinging on the translation of the vision into practice for service providers. Under the circumstances, most service providers understand the inevitability of considerable ambiguity - and this uncertainty is in and of itself is one of the critical drivers that is affecting the planning of business models. Some of the uncertainties are listed below in more detail:
- The NDIS is new and is based on an insurance approach to funding which is a totally new concept to the sector. Historically, sector operations have been based on a welfare model and many organisations have been heavily reliant on fundraising to supplement inadequate government funds. It is likely that the public will assume that the increase they pay for the Medicare Levy will now be adequate to provide disability services and fundraising is likely to become even more challenging.
- Service providers in the disability sector will now need to operate as a business. This is an alien concept for most, and implies the need for significant change management processes.
- Service providers need to assess the cost of providing a service relative to the fees allocated by NDIS to assess their viability.
- Service providers need to canvass the possibility that there may be changes to the take up of their services – demand may increase (what is the capacity for growth?) or decrease (what is the viability of the service?)
- It appears that there has not been much recognition of a cohort of the disability population where an insurance approach is not readily applicable.
- In some instances (eg supported accommodation) the fee for all services provided to an individual in a shared setting has a huge administrative impost for both NDIS and the service provider. It is envisaged that this will not be sustainable.
- The model is based on people who experience a disability having ‘choice and control’. This means that people who have funding packages are very likely to consider which organisations can provide best value for money and disability services may then be in competition with each other.
- While heading into a competitive market there will also be the need for service providers to unite in order to have a more powerful voice on critical issues that relate to what is and isn’t funded under NDIS.
- The model is being developed as it is rolled out. This implies a lot of uncertainty because there are currently no answers to some key questions. In some instances, stated expectations have not been met (e.g. timelines for rolling out services) which has meant that some providers have employed staff when there are not yet any people allocated funds to purchase services.
- Current funding arrangements (block funding paid by DSA in advance) will be replaced by fee for service in arrears. This means that disability services will need a quantum of funds to maintain solvency during the transition phase from the current to new funding arrangements. It also means that there is a likelihood of a proportion of bad debt for agencies which are not used to dealing with this.
- Many service providers in the trial sites report that the NDIS fees do not meet the cost of service provision.
- The service delivery model does not take account of many ‘unseen’ yet vital services provided by agencies as part of the block funded process. The sector has relied upon a generosity and pragmatism in the sharing of resources such as transport to events which may well have to go in the new world and this will be a great loss.
- As things stand, there is no cancellation fee for a service – yet services will be obliged to have staff available to provide the service and if people don’t use it, then the service provider will be out of pocket. This is an example of where service providers are required to operate as a business, yet standard business rules are not allowed.
- The fees proposed by NDIS are based on the modern award. Most staff will be on low wages which means service providers will have difficulty attracting people with qualifications, skills and experience.
- The NDIS is recommending (indeed expecting) a lean corporate cost ratio compared with service delivery. The smaller the organisation, the harder it will be to provide some of the requirements for quality services.
- Under these circumstances, some organisations are not likely to be viable and already, there are examples of mergers and formal partnerships being developed to ensure some kind of future.
- Some governing bodies are not equipped to run a business and there is a concern that therefore, change management practices will not be equal to the task.
- NDIS/NDIA is expanding rapidly to manage the demand for services. There is variation in the knowledge and skill of new staff. This will clearly impact on those seeking services.
- There is a concern that some articulate and knowledgeable families are able to negotiate generous packages compared with less articulate families where the need may be greater, but not expressed in a way that attracts the funding that they might be entitled to. This could end up reinforcing existing inequities.