Third of providers report a loss, warn no capacity for reform

Disability providers may not be able to implement the recommendations of the NDIS review without immediate government investment to help fortify the sector, industry leaders have warned.

Almost 70 per cent of the 432 organisations surveyed said they were worried they could not continue providing NDIS services at current prices.

Disability providers may not be able to implement the recommendations of the NDIS review without immediate government investment to help fortify the sector, industry leaders have warned, following new figures that reveal more than a third of providers are operating at a loss.

The NDIS review last week made 26 recommendations for sweeping reform, with Minister Bill Shorten confirming the government would respond within the next six month and implement changes over a five year time frame.

However, disability peak body National Disability Services raised alarm over the “fatigue” already being felt by many organisations struggling to deliver services.

In its State of the Disability Sector Report, NDS revealed almost 35 per cent of respondents reported an operating loss.

“This is the worst year ever since we’ve been doing the survey since May 2016. In terms of providers’ financial outcomes, over a third of providers made a loss last year, plus about 20 per cent who just broke even or came close to breaking even,” NDS chief executive Laurie Leigh told The Australian.

“So that’s about 50 per cent of the market, which is just going backwards. There’s a pretty clear line that goes across the whole eight years.”

Almost 70 per cent of the 432 organisations surveyed said they were worried they could not continue providing NDIS services at current prices, while more than 80 per cent were getting requests for services they could not provide.

Kate Fulton, the chief executive of disability provider Avivo, said the government should consider a one off cash injection like that offered through the NDIA after Covid to ensure businesses could keep running.

“Registered providers are experiencing market failure and … We are looking for governments support now, either a one off payment to acknowledge the cost of being registered or reduction in unregistered providers’ rate by 3 per cent and passing this to registered providers to acknowledge the (disproportionate) costs,” she said.

Ms Leigh agreed the situation facing many providers was urgent and would present challenges to implementing the massive reforms called for by the review.

“We’ve got providers already withdrawing from the NDIS market. And we’ve got providers saying that they are specifically picking clients who are not so complex because with people who have complex needs they end up losing even more money because the pricing is completely wrong,” she said.

“There is a level of fatigue in the sector. We’ve had 10 years of uncertain policy environment with the NDIS where it’s been rolled out with changing and updating policies and moving and a few years of Covid. The other side of it is the financial capacity of providers to revamp their systems, to change things around, to do things again. That’s clearly more fragile than it was previously.”

Ms Leigh welcomed the review’s recommendation for all providers to be registered, which she said would establish “proportionate regulation” across the sector, organisations would still struggle as changes were rolled out.

Mr Shorten used his National Press Club address on Thursday to assure “good businesses” in the disability sector that they had “absolutely nothing to worry about”, but also warned he was not interested in helping organisations make big profits.

“The aim of the Scheme is not to see double-digit, 20 per cent, 30 per cent, 40 per cent, returns to particular businesses,” he said.

“It’s to look after the people on the scheme and their families.”

The NDIS review made recommendations that went to pricing and improving service delivery, including a call for the Commonwealth to develop a new NDIS pricing and payments framework that would offer better ways to pay providers promote the delivery of quality supports and “the continuity of supply”.

And in response to workforce shortages faced by businesses – three quarters of which the NDS survey identified as struggling to fill jobs – the review called on governments to roll out attraction and retention initiatives and create flexible migration pathways for care and support workers.