How the New NDIS Disability Support Worker Cost Model and Pricing Arrangements Impacts Providers

How the New NDIS Disability Support Worker Cost Model and Pricing Arrangements Impacts Providers

In the wake of the National Disability Insurance Scheme (NDIS) releasing its updated Disability Support Worker Cost Model and new pricing arrangements, providers are grappling with the practical implications of the changes. Notably, there is a significant shift in the wage to revenue ratio and a notable decrease in temporary loading, which could make the forthcoming year challenging for service providers.

Breaking down the numbers:

The total rate increased from $62.17 in 2022-23 to $65.47 in 2023-24, reflecting an increase of 5.31%. While this is an uplift, it's worth noting that this falls below the inflation rate of 7% for the same period. Therefore, in real terms, there is a decrease in the total rate.

Diving deeper into the cost model, there are some crucial details worth unpacking. The wages and on-costs have risen from $43.86 to $46.64, a 6.34% increase. This increase outpaces the overall rate increase and inflates the wage to revenue ratio from 70.5% to 71.2%. This shift is crucial as providers are required to expend an hour of labour to bill an hour of revenue. The result? A more substantial portion of the total rate will be directed towards wages, leaving a lesser residual for providers.

Non-wage residual saw a minor increase from $18.31 to $18.83, translating to a rise of just 2.84%. Simultaneously, the operational overheads and corporate overheads have seen an increase of 6.43% and 6.41%, respectively. These increases, unfortunately, have not kept pace with inflation, meaning a real-term decrease in the resources available for these crucial aspects of service provision.

Furthermore, the temporary loading has seen a significant decrease of 46.72%, going down from $1.22 to $0.65. Temporary loading often acts as a buffer for providers, helping manage unexpected costs and fluctuations. With such a considerable decrease, providers will have to be even more meticulous in their financial planning.

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The Rent Challenge:

Another significant challenge facing providers is the issue of rent for Supported Independent Living (SIL) homes. With the Disability Support Pension (DSP) contributions not keeping up with inflation and rental surges, providers are likely to shoulder a larger share of rental costs.

The median house rent in all capital cities has seen an increase, varying from 3.00% in ACT to a staggering 13.60% in Adelaide. However, if we take a look at the contributions towards rent, there is a substantial shortfall. For instance, in Sydney, where the median house rent is $650 per week, the DSP contribution (assuming a 1:3 ratio) is $452, leaving a shortfall of $199 per week. This pattern is consistent across all cities, with the shortfall varying from $29 in Melbourne to $239 in ACT.

These figures illuminate the critical issue here - DSP contributions are not keeping up with rising rental costs, placing an increasing financial burden on providers. In a situation where providers are expected to cover the shortfall, their financial viability can be put at risk.

What does this mean for providers?

The modest increases in rates, coupled with an amplified emphasis on wages, may put providers under strain. Providers will need to meticulously manage their resources to keep their operations viable and services consistent, given that overheads have not increased in line with inflation.

While the wage increase is essential for fair compensation for disability support workers, the augmented wage to revenue ratio can squeeze margins and potentially impact the ability to provide comprehensive services.

The sharp reduction in temporary loading further adds to the challenges, leaving providers less room to manoeuvre in case of unforeseen expenses. This might result in providers having to cut corners elsewhere or reconsider certain services, potentially compromising the overall quality of support.

Surviving the year ahead

Given these changes, providers need to adopt a strategic approach to ensure sustainability. A more granular understanding of their operating costs, revenue streams, and service delivery models is crucial.

While challenging, the year ahead is not insurmountable. Providers that can maintain operational efficiency, streamline service delivery and find innovative ways to manage their finances will be better placed to weather these changes. Developing a robust and flexible business model, exploring new NDIS products, and focusing on unique value propositions will be key to enduring these challenging times.

It's worth noting that while these changes present challenges, they also underline the importance of the NDIS's mission. Amidst these financial considerations, the goal remains to provide the best possible support to those who need it most. And as always, providers who can balance financial sustainability with excellent service provision will continue to play a vital role in the success of the NDIS.

As the year unfolds, it will be interesting to see how providers adapt to these changes and what strategies emerge in response to the evolving NDIS landscape.

Tania Gomez

Creating strong business foundations to help NDIS businesses thrive

1 年
回复
Cassandra Keeping

Masters Degree in Lived Experience, Passionate Writer and content creator. Support Coordinator, Advocate for the Voiceless, life-long student of the Social Sciences, Proud Gamilaroi Woman

1 年

So often I have to work for free to get a participant a decent enough plan to actually fund their needs. There is no avenue for reimbursement without putting in another 15 hours of unpaid work, which may or may not be paid. You don’t do this job for the money, but it would be nice to actually get paid for the work you do.

Junelle Rhodes

Founder/Director at Mavin Living

1 年

Great to see it broken down, concerns me new comers to the sector give the wrong messaging to the ndis and say this is viable. As a Sil provider, the provider of last resort we often face circumstances of poo planning decisions, funding running out. A lack or flexibility and reactivity when a participant declines…but we are expected to just continue. With this pricing continuing that will be more difficult. As I said during the transition to the ndis. It is up to the sector to say no, not do it. The more we do it the more ndis justify this is viable and they made the correct decisions.

Tracey G.

consultant & leadership professional

1 年

Providers can't continue to reduce overheads this then impacts on the level of service and places increasing pressure on people in a sector that is already challenging. With the increasing compliance demands I'm unsure how the NDIA expect providers to survive which in turn limits people's choice. I don't think the idea of the NDIS was to see providers go broke. What is their end game?

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