What Not-for-Profits can do to ensure they survive and flourish under the NDIS

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"Providers will face unprecedented requirements for detailed and granular information"

To say the National Disability Insurance Scheme (NDIS) is ambitious with far-reaching implications for service providers and the people they serve is a radical understatement. Being an outstanding service provider is an achievement in itself but it will not be adequate to ensure the success of organisations under the new scheme. When obtaining Government funding under this programme, like any other, the devil will be in the detail.

Providers, and the finance teams that support them, will face unprecedented demand for detailed and granular information on the services they provide in order to achieve compliance and receive funds.

A Human Services client of mine was recently sharing their concerns over the extent of the tide shift and the current cost of providing their service (read their story here). Even before the NDIS there has been a squeeze on margins due to increased labour cost and rising recurring ancillary costs necessary to continue to provide services.

The existence of new funding under the NDIS brings the commercial prospect of intensifying competition in service provision. While this may be an unintended consequence, this competitive change will require current service providers to focus on ensuring they are minimising costs and maximising revenue while enhancing their service in order to compete. This can only be done by beefing up their analysis and planning, to make sure they are not left behind and to insure their future.

In order to realistically determine the true cost of services and the effective margin, costs will need to be allocated down to level of service. For most organizations Excel, the current de-facto analysis standard, will not suffice. Rather than plans written in stone they must now become agile and dynamic incorporating "what-if" capabilities as a matter of course.

The prerequisite for all of this is combining financial, HR and client data into the planning model. A tool like CALUMO becomes a crucial weapon in the arsenal required to pro-actively respond to the new landscape. Its not just about having a tool like CALUMO, it must be capable of being rapidly deployed and easily used and extended by non-technical users..

The National Disability Insurance Scheme (NDIS) at a glance:

  • The NDIS rolls out from July 2013.
  • The phased roll-out will initially see 10,000 people with disabilities receiving support in the first phase.
  • By the time the scheme rolls out in its entirety in 2020, it is expected to serve 460,000 Australians with disabilities at an average rate of just over $48,000 per person.
  • The NDIS is expected to double the current workforce engaged in the disability services sector.
  • The NDIS uses a client-based funding model where the client determines against which services and providers he or she spends their government funds. Service providers will not only need to manage client's funding plans, but also ensure that clients are aware of their services.
  • The NDIS website lists over 550 cost items ranging from $12.34 to $30,000.
  • There are over 250 registered providers for the rollout areas in NSW, VIC, TAS and SA. These organizations range in size from less than $1m to over $200m in annual revenue.
  • It’s conceivable that existing not-for-profit service providers will be joined by and compete with for-profit organisations attracted by the new funding regime.

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