Disability service provider Rocky Bay has navigated its second not-for-profit acquisition, as it makes the move towards extensive infrastructure redevelopment.
Disability service provider Rocky Bay has navigated its second not-for-profit acquisition, as it makes the move towards extensive infrastructure redevelopment.
The path forward may be unclear for some service providers as the National Disability Insurance Scheme is rolled-out across Western Australia, but Perth not for profit Rocky Bay is taking steps to ensure the business remains strong well into the future.
As the organisation celebrates 80 years of operation, chief executive Michael Tait told Business News Rocky Bay was well placed to navigate the shift from a state to a federal system.
Rocky Bay is affiliated with the national Ability First alliance, which Mr Tait says has given essential insights into the NDIS.
“We’ve had good exposure to what the NDIS has meant on the east coast, we’ve been able to prepare ourselves for that,” he said.
Mr Tait said he had noticed a heightened level of anxiety among service providers over the NDIS rollout, particularly in relation to pricing issues.
His major goal was to get the pricing right and he noted that, after talks with NDIS executives and consultants, Rocky Bay’s chief financial officer Adam Maxwell had been pivotal in increasing the pricing on a national level.
“The reality is, we work on the smell of an oily rag,” Mr Tait told Business News.
“We haven’t had margins ever, therefore I don’t know if our sector can get that much tighter.
“Government would love to make you believe that we’re not efficient, but I have seen very few inefficiencies in this sector.
“We work on the basis of 10 to 15 per cent overhead cost, and there are very few businesses out there that have that level of administration cost.”
Additionally, Mr Tait said the disability sector had not had to deal with such major structural changes in over a generation.
“I come from the corporate sector, but most don’t in our sector,” he said.
“We breed our own, which means a lot of people haven’t been exposed to large business change for a long time.”
Despite the sector upheaval Rocky Bay has consistently grown in output and revenue across the past decade.
It is ranked fifth by revenue on the BNiQ Search Engine charitable organisations list, at $57.7 million.
Mr Tait said it was incredible to reflect on the immense organisational growth across the tenure of recently resigned chair Graham McHarrie, who will be succeeded by Susan Male.
The company had growth over 300 per cent over the five years, he said, adding that a customer-centric approach had been the reason for massive growth in Rocky Bay’s customer base.
“It’s amazing how many people think they need to spend a million dollars on an ad campaign to grow the business in the sector at the moment,” Mr Tait said.
“Because there’s a naivety – they haven’t needed to do this before, so this is all such a new world.”
Rocky Bay has completed two mergers in recent years, the first with Valued Independent People (VIP) in November 2016.
Mr Tait said VIP’s management, a parent group that had founded the company, had gone about the process in a logical manner.
“They were very reflective and professional in their thinking that they probably wouldn’t last an NDIS, but they were in a good position to negotiate a good outcome at that point in time before they drew down on their bank balances,” he said.
Because of the emotion tied up in the not-for-profit organisations, as well as low working capital, Mr Tait said there needed to be clear motivation for mergers beyond money or shareholder value.
A month ago, Rocky Bay also took on the disability aspect of Baptistcare, as the aged-care provider decided to narrow its services.
The acquisition had not only provided growth to Rocky Bay, but also skilled staff.
“The organisation was doing really well in its customer service, so we picked up a lot of people who know how to do that stuff,” Mr Tait said.
Rocky Bay is continuing to plan for expansion, announcing last Friday that a $4.8 million grant from Lotterywest would go towards redevelopment of its Mosman Park facility, with matched funding from the Rocky Bay Foundation bringing the project funding up to almost $10 million.
The redevelopment is expected to cost between $15 million and $18 million, with additional funds to be sourced through public fundraising and further grants.
The project is expected to commence in August 2019, with completion anticipated by 2021.
The expanded facility will cater for an additional 700 clients, beyond the current 475, when it reaches full capacity in 2022.
Mr Tait said the redevelopment was vital to Rocky Bay’s future, given the Mosman Park facility was no longer fit for use.
“Why shouldn’t people with a disability expect quality venues?” he asked.
“This is the next step for us, ensuring the built form adds value to our services.”
