The NDIS represents a significant change to the way disability services are delivered in Australia. The new regime will provide greater funding to deliver better lifestyle outcomes for those impacted by disabilities. Here, Grant Thornton discusses what this means for the business model of providers.
We all understand that under the NDIS services will be acquired on a discretionary basis by the consumer, at the rates either proscribed or agreed, limiting pricing flexibility.
This will require providers to develop business models that allow services to be provided within the available prices.
Current models that are aligned to block funding without regard for markets and customers won’t make the grade. This is supported by evidence coming out of Europe and the UK, where similar changes have demolished the not-for-profit sector, and where many consumers are receiving less service than they did before.
These set up the fundamental parameters of organisational design that will enable Boards and Executives to define their business and create a new model that is sustainable in the future.
This requires a clear strategy and an understanding of the desired culture.
With a ‘fixed’ price regime, a key element of creating a sustainable organisation is understanding the costs of doing business.
This includes direct and indirect costs, as well as fixed and variable costs – the volume equation needs to be analysed and factored into the overall model. That is: How much do you need to sell to breakeven, and how much do you need to sell to make the target surplus for future investment?
A key aspect of understanding profitability and sustainability will therefore be to understand costs.
An example of how costs can blow out if the utilisation of staff deteriorates is provided in the table below.
Table 1. Labour utilisation
The effects of labour utilisation can significantly impact profitability and sustainability
Here are the key activities providers can undertake in preparation for the implementation of the NDIS (and to ensure sustainability):
Change and competition are
coming HERE!!!... and time is ticking for organisations to adapt to the emerging competitive environment.
What can you do now?
The NDIS represents a significant change to the way disability services are delivered in Australia.
The new regime will provide greater funding to deliver better lifestyle outcomes for those impacted by disabilities.
Funding is provided for three support purpose categories:
These stated purposes are supported by the NDIS Outcomes Framework. The Framework aligns eight domains that have been developed to measure goal attainment for individual participants and overall performance of the Scheme.
These Domains help participants think about goals in different life areas. They assist planners to explore where supports in these areas already exist and where further supports are required.
The following table aligns the Support Purposes with Outcomes and support categories.
In many cases prices for services are prescribed under the NDIS.
The following is an exert of the pricing guide issue from 1 July 2016.
Associate Director, Operational Advisory
Seniors Living, Disabilities Aged and Community Care
D +61 7 3222 0387
T +61 7 3222 0200
M +61 404 991 866
Darrell has 30 years’ experience in professional services, the commercial, not for profit and public sectors in Australia. He has a strong track record in developing trusted relationships, leading strategic development, change, transformation, business optimisation and commercialisation in both external and client side roles.
Through effective engagement and focussed facilitation processes, Darrell has worked with disability service providers, aged and community care organisations to improve profitability and prepare for change.
Darrell is the President of a not for profit mental health organisation preparing for the introduction of the NDIS.
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