NDIS prices creating potential provider exodus

The number of disability providers considering exiting the market has more than doubled in the past year as just 13 per cent of operators were able to break even.

Vision Australia government relations and advocacy manager Chris Edwards with his dog Eva. Picture: Arsineh Houspian

The number of disability providers considering exiting the market has more than doubled in the past year as just 13 per cent of operators were able to break even, in a trend peak bodies warn could risk the viability of the industry and its capacity to implement Labor’s landmark NDIS reforms.

As part of a damning report that industry body National Disability Services (NDS) said included the most worrying figures they had ever seen, 80 per cent of providers revealed they were concerned they would be unable to continue providing NDIS services at current prices, while 21 per cent said they were considering closing their doors entirely.

NDS analysis found the providers on the cusp of leaving supported nearly 30,000 people with disabilities.

“If quality providers leave the system, the quality of the NDIS is undermined,” NDS chief executive Michael Perusco said.

“We agree reform needs to happen and we want the scheme to be sustainable, but it will only be sustainable if quality providers remain in market.

“Over the past decade we have seen similar issues arise as we see in this report, but we are more concerned about this year’s ­results.”

Labor has implemented a raft of reforms in an effort to reduce the scheme’s annual growth to 8 per cent a year, fearing the NDIS could otherwise blow out to $100bn a year by the end of the decade.

Changes include the tightening of rules around what NDIS funding can and cannot be spent on, while more resources have also been provided to allow more eligibility reassessments.

However, many disability service providers have raised alarm about their ability to keep operating under current price structures, an issue being reviewed by the agency.

As part of the increasing financial pressure, particularly on large not-for-profits, a number of organisations have begun rolling back services, including Vision Australia, which announced it would be pulling out of Western Australia by the end of the year.

“Vision Australia is … having significant sustainability issues due to NDIS pricing,” Vision Australia government relations and advocacy manager Chris Edwards said.

“Last year our wages bill went up by $6m. Some of that is new staffing but the majority is inflationary and wage cost increases and none of that is recognised by any increase in NDIS pricing.”

The NDIA in June announced it would lift price limits by 3.19 per cent, which peak bodies declared was as good as a “price cut” given it did not reflect the ballooning costs faced by organisations.

“The impact on the human level is disability services are having to make decisions that will reduce,” Mr Edwards said.

As part of the NDS state of the sector report, more than 90 per cent of providers said the NDIS policy environment was uncertain, with 80 per cent agreeing or agreeing strongly that their staff were exhausted by the continual changes to the NDIS.

And while 55 per cent of all providers were in surplus in 2016, that figure was down to 35 per cent by 2024.

“If quality providers leave the system, that will result in disruption to people with disability,” Mr Perusco said. “If they have no choice but to leave, there is no support for people in some communities, particularly in the ­regions.”

There are currently more than 640,000 people on the $40bn-a-year NDIS.

The government reforms – which are also intended to crack down on fraud and “wedding tax” style mark-ups for equipment and services marketed to NDIS participants – are aimed at saving $14bn over the forward estimates.

In response to concerns over pricing settings, NDIS Minister Bill Shorten has said while he understands “a range of businesses are doing it tough at the moment”, the National Disability Insurance Agency was “working towards delivering a new pricing approach in 2025 that ensures the market is able to support the diverse needs of NDIS participants and the scheme’s ongoing sustainability”.