Australian Disability Enterprises: Observations on the transition to the NDIS
April 6, 2017
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Ian Turnbull, Senior Manager

 

Synergy, in partnership with Keogh Bay Consulting, have over 10 years’ experience working with small to medium disability enterprises in outer metropolitan and regional areas of Australia.

Recently, we delivered advisory services to 25 Australian Disability Enterprises (ADEs) to assist with transition to the National Disability Insurance Scheme (NDIS).

Common concerns for ADEs

In transitioning to the NDIS, Synergy found that most ADEs are concerned with some, or all, of the following:

  • Uncertainty over financial viability
  • Expansion of services – commercially and under the NDIS
  • How to market NDIS services
  • Ineffective costing and pricing tools
  • Succession planning

Uncertainty over financial viability

Many service providers are experiencing financial difficulties under ‘business as usual’ conditions. Our review of the financial statements of our 25 ADE clients found that 55% (14) of ADEs returned a deficit for the 2015-16 financial year, while only 45% (11) returned a net profit.

The possible change to a new wage assessment tool as a result of legal challenges against the BSWAT, Skillsmaster and Greenacre wage assessment tools, was identified by the ADEs (and supported by our financial modelling) as a key risk to future financial viability. Synergy analysed the effect on wages for ADEs should a tool such as SWS become the primary wage assessment tool. We found that the average supported employee wage will be higher under SWS than average for the current Skillsmaster and Greenacre wage assessment tools. This will result in higher employee costs and will impact profitability.

Expansion of services – commercially and under the NDIS

Many ADEs expressed an interest in broadening the range of services offered to support employees under the NDIS. The range of services included:

  • School Leavers Employment Support (SLES)
  • Day Options Services
  • Individual Employment Support
  • Life Skills Training
  • Plan Management
  • Transport

However, most ADEs expressed concern over the lack of detailed guidance on the delivery of these services and the pricing of items under these services.

Many ADE boards have also expressed an interest in developing alternative business lines for their ADEs. Synergy have facilitated a number of workshops with board members and management to explore the pros and cons of implementing alternate business lines.

How to market NDIS services

There was a general lack of understanding across many ADEs as to how to market their services to NDIS clients. Supports provided to current employees need to be quantified, and a formal approach developed to communicate available supports and services to the carers and families of supported employees.

Ineffective costing and pricing tools

Many ADEs had limited or ineffective costing and pricing tools. These tools often included only the direct costs associated with their products or services, and did not recognise indirect costs such as corporate overheads. The inability to effectively cost or price products and services has a direct impact on the profitability and future viability of the ADEs.

Limited succession planning

Many ADEs did not have succession plans in place. This was of particular concern for smaller ADEs in circumstances where the CEO/General Manager takes leave or is ill for extended periods. This concern is exacerbated by limited policies, procedures and other guidance documentation.

Key areas for development

Key areas for development for ADEs and other service providers in advance of transition to the NDIS are:

  • Understanding the financial and operational impact of upcoming change events.
  • Developing short-term and long-term strategies to improve viability of the existing operating model in advance of NDIS transition.
  • Targeting additional services that the ADE can provide to existing and new supported employees under the NDIS.
  • Investigating the feasibility of alternative activities and business lines that may improve the viability of the existing operating model.

For more info on our NDIS provider readiness services or a general chat, contact Ian Turnbull by emailing iturnbull@synergygroup.net.au or Jonathan Price by emailing jonathan.price@keoghbayconsulting.com.au.