This article will delve into the key stakeholders, current challenges, funding and support mechanisms, provider roles, participant experiences, and the future of the NDIS.
The NDIS Sector in 2024
The disability sector in Australia has undergone significant disruption and change since I started working in the sector 12 years ago largely driven by the implementation of the NDIS. In that period I have worked in the WA state government Disability Service Commission (DSC) block funding model, worked as a Local Coordinator in the WA NDIS (WA’s own version of the NDIS) and finally within the national NDIS model and its subsequent iterations.
While the NDIS has been truly transformative for hundreds of thousands of people with disabilities across Australia promoting choice & control and individualised support planning, like any significant reform it has not been without its challenges. These challenges include Scheme sustainability challenges (the NDIS is costing far more than projected), a lack of consistency, overall complexity of the system, skilled workforce shortages, fraud and unethical behaviour, and in more recent times price limit freezes resulting in provider closures particularly in the current economic environment of higher inflation and cost of living.
The recent independent review of the NDIS aimed at getting the NDIS ‘back on track’ has recommended significant changes aimed at enhancing the Scheme's sustainability and efficiency. While these changes promise long-term benefits, they also present immediate challenges that both providers and participants must navigate.
Independent NDIS Review
The independent NDIS review, a pivotal development this year, has offered a comprehensive evaluation of the Scheme's operations and effectiveness. Key recommendations from the review focus on improving participant outcomes, streamlining processes, and ensuring financial sustainability. These changes are expected to address systemic issues such as long wait times, inconsistent plan approvals, and high variability in provider quality and compliance including support coordinators.
For providers, the review's recommendations necessitates a shift in operations. Enhanced focus on participant outcomes means that providers must adopt a more personalised and responsive service delivery model. This shift, while beneficial for participants, requires significant investment in staff training, technology, and process reengineering for providers. A key recommendation included mandatory registration or ‘enrolment’ for all NDIS providers. This aims to improve consistency and regulation across the disability sector, ensuring that all providers meet the same criteria for safety, professionalism, and continuous improvement.
For small independent providers, this mandatory registration represents both a challenge and an opportunity. While the compliance requirements will mean higher regulatory costs and administrative burden, meeting these standards could enhance credibility and attract more participants. On the other hand, larger non-profit organisations (NFPs) face the dual pressures of adhering to these regulations while managing shrinking profit margins amid rising wages but often fixed price limits.
Several large NFPs have found it unsustainable to continue operations under the new regulations, leading to market exits and consolidations. Some disability organisations and advocates are calling for a 1% loading for registered NDIS providers to account for the increased compliance and regulatory costs associated with registration. While this loading will provide some financial relief, it may not fully cover the additional expenses. Providers must continue to advocate for fair and adequate funding to support their compliance efforts. This includes engaging with policymakers and collaborating with other providers to present a united front.
Maturing Marketplace
After 10 years, the NDIS marketplace is maturing rapidly, driven by these regulatory changes and evolving participant needs. This maturation is characterised by increased competition, higher expectations for service quality, and a shift towards innovative service delivery models.
Providers will need to increasingly leverage technology to improve service delivery and participant engagement. These will include digital platforms for plan management, telehealth services for therapy, and online support tools. Participant-driven support models may also become more common. These innovations not only enhance accessibility but could also help providers manage costs and improve efficiency.
However, the market is also seeing a wave of closures among providers following the recent NDIS Pricing Arrangements and Price Limits Update. Many business model have been unable to adapt to the new economic realities (particularly affecting therapy and support coordination) which have hit many providers hard. With costs rising and the price limits freezing, profit margins have been squeezed.
Price Freezes and Challenges for Large NFPs
The July 2024 announcement of price freezes in many NDIS pricing arrangements (particularly those offering therapy and support coordination services) has meant the price limits have not kept pace with rising operational costs. Operational costs are rising with higher inflation, higher cost of living and higher wages mandated by the Fair Work. While higher wages are essential for attracting and retaining skilled workers, they also increase operational costs. Large NFPs, once the backbone of disability service delivery, are now facing unprecedented financial pressures.
The combination of registration and compliance costs, price freezes, and rising operational costs has made it increasingly difficult for these organisations to maintain a viable profit margin. Many have had to close their doors or significantly scale back their services, reducing the availability of experienced and trusted providers in the market.
Providers must now find ways to deliver high-quality services within these constrained budgets. This often means adopting lean business practices, investing in efficiency-enhancing technologies, and collaborating to share back-end technology/administrative costs.
Despite these efforts, many providers have been forced to reduce their service offerings or exit the market entirely. We will continue to see more merges, acquisitions and ‘collectives’ to enable providers to share resources and reduce their operational costs while maintaining revenue.
Transition from Support Coordination to Navigation
Another key recommendation from the NDIS review is the transition from support coordination to Navigation. This marks a significant shift in the NDIS landscape. Many support coordination companies have closed their doors due to rising costs and price freezes for over a decade while has consolidated the market.
The timeframe for this change and the Navigation model is not yet clear but it will look different to the current support coordination model. The NDIS review recommends that Navigators are subject to a tender process. This may look like an ‘approved list’ of Navigator organisations local to each area that NDIS participants can then choose from.
These Navigator organisations may work in physical hubs where participants can come into the office and meet with their Navigator and training and continuous improvement may be mandatory, potentially implemented or commissioned by the NDIS Commission.
The risk here is that tenders will only be awarded to larger partners in the community organisations, removing the right of choice and control of participants to choose the person or organisation that will help them navigate through the NDIS. Greater consistency and lower variability in the quality of coordination/navigation is needed but not at the expense of removing participant choice and forcing smaller, independent and innovative providers from the market.
Watch this space.
Greater Focus on Fraud Detection
The NDIS Commission has stepped up its efforts to detect and prevent fraud within the Scheme. This increased scrutiny aims to protect participants and ensure that funds are used appropriately, but it also adds to the compliance burden for providers. Providers must now implement more robust internal controls, conduct regular audits, and stay vigilant against fraudulent activities. While these measures are necessary to maintain the integrity of the Scheme, they also require significant investment in compliance infrastructure.
The NDIS Commission's role in regulating the sector has become more proactive in 2024. This includes more frequent inspections, stricter enforcement of standards, and harsher penalties for non-compliance. Unscrupulous providers face severe punitive measures, ensuring that participants receive safe and high-quality services.
For ethical providers, this increased regulation can be seen as a double-edged sword. While it helps level the playing field and weed out bad actors, it also means additional administrative burdens and higher compliance costs. Providers must stay updated with the latest regulatory changes and continuously improve their practices to remain compliant. However, like in any industry this can be seen as the ‘cost of doing business’.
SDA Market: Challenges and Opportunities
The Specialist Disability Accommodation (SDA) market is also undergoing significant changes and sits within the wider context of a housing crisis in Australia. The supply and demand dynamics are shifting, creating both challenges and opportunities for providers. There are also markets within the SDA market itself.
Supply and demand waxes and wanes within the four SDA design categories and share models based on participant disability-support needs reflected in NDIA Home & Living decisions and subsequent participant demand for these dwellings. Recent developments in the SDA market include efforts to increase supply through new construction projects and retrofitting existing properties. While the demand for high-quality, accessible housing remains strong, SDA providers must navigate complex regulations and funding mechanisms to deliver these services (build homes to meet stringent SDA requirements) and fill vacancies (match participants with the right SDA design category).
This market is beginning to mature with participants looking for bespoke and homely accommodation to live in rather than ‘hospital like’ efficient to build standardised homes built at scale with an institutional feel. I have seen big impacts from small low cost changes and strategies from seeking input from the participant who is moving in to participate in aspects of the design or furnishing.
Recent Removal of Sex Work as a Reasonable and Necessary Support
The recent decision for the NDIS Minister to rule out sex work services from the definition of reasonable and necessary supports has sparked considerable debate within the NDIS community. While this change will affect a very small percentage of NDIS participants it has been met with strong resistance from the disability community as it reflects a narrowing of the Scheme's support definitions.
Scheme Sustainability and Projected Growth
Sustainability remains a critical focus for the NDIS, with the government committing to an annual growth target of 8% for the NDIS by July 2026. The details of how this will be achieved is contained within the NDIS Financial Sustainability Framework.
As competition increases, providers must balance the need for growth with the imperative to deliver high-quality services and carve out their niche. This involves investing in staff training, technology, and infrastructure to support sustainable expansion. The sector's future depends on the ability to adapt to changing conditions and continuously improve service delivery.
At Circle SC, we remain committed to navigating these changes and continuing to provide exceptional support to our participants. The challenges of 2024 are significant, but they also present opportunities for growth, improvement, and greater impact.
