Opinion: NDIS aspiration meets market reality

During the past 12 months, several long-standing and major providers under the National Disability Insurance Scheme have decided they can no longer operate in key parts of the scheme.

Among those more-familiar names are Therapy Focus, Anglicare, Centacare, Avivo, Annecto and BlueCare: all trusted not for profits with long histories, solid governance and deep experience supporting people with the most complex needs.

These are the ones we know about (there are plenty of others).

This steady withdrawal should be front-page news. These types of providers don’t walk away from their missions lightly and their withdrawal tells us something serious: the model for providing high-needs support for people with disability is no longer financially or operationally viable.

Identifying the core issue is not rocket science. NDIS funding for people with the highest needs has been reduced to levels that don’t match the real demands of providing safe, stable support.

Participants who previously received funding that reflected the complexity of their circumstances are now being placed in simpler, cheaper categories. Their needs and environment haven’t changed. Only the funding has. Providers can’t sustain the gap and are making tough choices to exit completely or withdraw so they can provide safe support to other groups.

Issues with pricing are made worse by a planning approach that keeps providers at arm’s length. The National Disability Insurance Agency designs plans without asking the organisations expected to deliver them what the support will actually require.

Families don’t always know what to ask for. Participants shouldn’t have to act as risk managers.

Planners are under pressure to process large volumes. The combination produces plans that don’t reflect operational reality.

Providers then face the choice of delivering at a loss or withdrawing. Increasingly, they’re choosing withdrawal because the numbers simply can’t work.

This is where the NDIA’s role becomes central. The NDIS was built on a market-based model. It funds supports rather than delivering them and relies on a competitive, diverse provider market to manage both competition and choice.

If you design a scheme around a market, you must also accept responsibility for stewarding that market.

That means understanding provider viability, monitoring supply for people with the highest needs, intervening where gaps appear, and ensuring the pricing and planning settings support the safe delivery of services.

The NDIA’s role is to deliver a market-based scheme that provide safe and quality supports. This means market stewardship is one of the NDIA’s fundamental responsibilities.

At the moment, that stewardship is falling short. The withdrawal of major providers is a direct signal that the part of the scheme responsible for the most complex participants is shrinking.

Yet the policy response has been remarkably passive, as though it’s reasonable to assume any remaining provider – regardless of experience, capability or organisational stability – can absorb people with very high needs.

They can’t. And many of them are already facing the same funding pressures that drove the exits in the first place.

Before long, we’ll see more providers collapsing mid-service. And they won’t be the orderly exits we’ve seen with the aforementioned withdrawals.

When the most capable operators leave a scheme that relies on market supply, the agency controlling the funding cannot step back and hope less-equipped providers can hold the line. That is the opposite of stewardship.

The consequences of all this don’t stay neatly within the NDIS. When complex participants lose support or receive inadequate support, the impact turns up in GP clinics, emergency departments, mental health services, police callouts, school disruptions and the justice system.

These downstream costs fall overwhelmingly on the states, not the Commonwealth. The idea that cutting funding in the NDIS saves money is simply wrong. It moves the cost to systems that are less equipped to respond and far more expensive to run.

For senior leaders across business, government and the community, this is the real economic and policy challenge. The NDIS is a central part of how Australia manages disability, workforce participation, health expenditure and long-term social stability. If the specialist parts of the provider market collapse, the system loses capability that cannot be quickly replaced.

The NDIA must take its market-stewardship obligations seriously and not assume providers can absorb endless downward pressure.

To that end, it must monitor supply, recognise viability pressures and intervene early when the part of the market that supports the highest-needs participants starts to fail.

We all have skin in game here. The stakes are bigger than provider balance sheets and go to the heart of whether the scheme can still deliver what it was created to deliver.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.