NDIS to challenge provider models

The disability services market in Western Australia could be threatened if organisations fail to adequately prepare for the full rollout of the National Disability Insurance Scheme, Intelife chairman Nicolle Jenkins says.

The scheme will take effect in WA from this month, with full implementation by 2020.

Under the NDIS, rather than being allocated a provider, individuals and families will be given funds and have control over which provider they go to.

But it will also mean less funding for services by organisations dealing with complex disabilities, following the state government’s review of the cost of such services.   

“NDIS from a reform perspective is all about creating efficiencies in the sector, which I think everyone would agree needed to occur,” Ms Jenkins told Business News.

“And I think it’s fair to say the efficiency of organisations and their effectiveness will weed out weaker players, and in a marketplace that probably should occur, but it’s about how you get that balance where at the end of the day our clients don’t suffer for it.

“What we’re concerned with is the pendulum will swing so far that there’s potential market failure, because organisations will not be able to meet the demand, as there’ll be fewer organisations left to be able to supply (services).”

Ms Jenkins said the Intelife board had anticipated the need to change for some time, and its first strategic move was to name a chief executive with a commercial background.

Appointed last year, Steve Edgar had previously worked in management positions for companies including Wefarmers, WorleyParsons and Bedivere Group.

Ms Jenkins said Intelife had increased its net equity by 15 per cent and boosted cash reserves by about 40 per cent since Mr Edgar’s appointment.

Mr Edgar said the NDIS would mean a 30 per cent decrease in revenue for Intelife during the next few years, despite the expectation the provider would deliver the same services.

“Thrown on top of that, you’re no longer going to get paid in advance and you’re going to have every individual paying you,” he said.

To overcome the funding reductions, Mr Edgar said Intelife needed to behave more like a business and drive bottom-line efficiencies, which would be a massive cultural change for staff.

Among the most pressing challenges was the lack of funding for factors such as client transportation and staff training under the new pricing structure.

It meant the executive team needed to make it clear to frontline staff what services were billable, and prepare them to manage clients’ expectations. 

For example, if families wanted transport to remain in their service private funding would need to be arranged or a trade-off for other services organised.

“It’s about helping the frontline understand what we can charge for and what we can’t charge for and what that means for their service delivery; it’s a real culture shift,” Ms Jenkins said.

Ranked eighth by revenue on BNiQ’s charitable organisations list, Nulsen Disability Services is another provider that recognises flaws in the pricing structure proposed by the National Disability Insurance Agency (NDIA).

Chief executive Gordon Trewern said Nulsen was capable of withstanding the first one to two years under the NDIS, but beyond that it would not be financially sustainable unless the pricing was reconsidered.

“The NDIS presents a lot of challenges for us; we operate in a very complex disability space, and first and foremost the scheme was not structured with people with complex disabilities in mind,” Mr Trewern told Business News.

“In-home community support costs $60-$62 per hour; the (NDIA) is willing to pay $45 an hour, so someone needs to bridge that gap.

“We’re getting some really positive signs from the (NDIA) that they want to work through this, because they don’t want to see market failure.”

It was announced recently that the federal and WA governments contributed $5.2 million to top-up the Information, Linkages and Capacity Building grants intended to support organisations and individuals with the transition to the NDIS.

“This funding is in addition to the $3 million awarded to 27 organisations across the state in March this year, and the $20.3 million set aside in the 2018-19 state budget for a Sector Transition Fund,” the announcement said.

In the lead-up to the transition, Mr Trewern said Nulsen was also working to drive efficiencies to build its balance sheet as it prepared to move to a payment-in-arrears system.

Part of that meant Nulsen would need to cull some of its extracurricular programs, such as its arts program, or seek alternative means of funding, he said.

“We’re actually going out now to seek sponsorship to be able to continue the Youth Patron program, because that’s a classic example – it’s highly valued by the schools and has a great impact on our future leaders,” Mr Trewern said.

The Youth Patron program, which has been running for 14 years, involves students from All Saints’ College, Methodist Ladies’ College and Hale coming together with clients from Nulsen to foster youth leaders and build community awareness around disabilities.

“A lot of these kids, they come from privileged backgrounds, but not everyone is the same, so it’s about getting them to understand there are people in our community who need support to be able to do some pretty basic things,” Mr Trewern said.

“We have a collective responsibility to make our society what it is, and that’s an inclusive and respectful society that looks after its most vulnerable citizens.

“So the program is about having that conversation with the students, about what roles and responsibilities we have.”

He said it was important that Nulsen continued to stay true to its values.

Its business model would be based on the service profit chain model that led with customer satisfaction and capable employees.

“The NDIS is a very transactional system and it doesn’t allow for that civil society function that we have,” Mr Trewern said.

“It’s not just about the person with the disability.

“This gets to be a challenge because some families need more support than others and these things are not billable hours, as they say, in the NDIS.”