“Before [the United Kingdom’s] new system was implemented, 95 per cent of the services providers were Not for Profit whereas now it’s completely flipped and 95 per cent of providers are for-profit businesses” (Paul Paxton-Hall, quoted in Xavier Smerdon, Disability NFPs Facing ‘Oblivion’ Under NDIS Changes, 7 May 2015, Pro Bono Australia).
Lessons from the UK
The United Kingdom has had a self-directed funding model in the disability services sector for a number of years. Clients are assigned a budget which can be spent on disability services in accordance with a support plan that the client has the dominant role in writing.
This funding model has precipitated a significant relative increase in the number of for profit disability service providers in the market, and a significant relative decrease in the number of not for profit organisations in the market. Some not for profits have merged, others have simply failed to adjust to the new environment.
A number of highly competitive for profit providers, such as Choice Care Group and Cambian Group have developed significant economies of scale and a large share of the disability services market.
This should serve as a warning to all not for profit disability service providers in Australia. Unless they are able to adopt the organisational structures and marketing practices that are necessary to compete with for profit disability services providers, they will struggle. They may well be undercut by for profit providers that are able to market their services in a more attractive way, and that have experience in developing competitive products, pricing models and diversified revenue bases.
Getting on the front foot early
Good not for profit disability service providers will already be on the front foot. The longer it takes not for profits to make the necessary changes, the more likely it will be that for profit providers will already have a foothold in the market.
Putting the right employment structures and processes in place is a prerequisite for ‘future proofing’ a not for profit organisation in a competitive market populated by savvy for profit entities.
Many not for profit organisations have large, permanent work forces employed at fixed locations for regular rostered hours. This is unlikely to serve a not for profit organisation well in a situation in which an individual care plan requires employees to work at a variety of different locations at irregular or unpredictable hours.
If not for profit organisations are going to cope in the new environment, their employees must be able to be deployed flexibly in order to meet the demands of the increasingly powerful customer. Employers must be able to respond to more sudden downturns in demand by reducing labour costs.
These forces have prompted a fairly rapid casualisation of the workforce in the United Kingdom. Organisations in Australia should think carefully about how they can use casual work arrangements for their benefit, whether it be by hiring causal employees or contracting with specialist labour hire agencies.
Not for profit organisations also tend to implement and enforce human resources policies in a way that requires centralised observation and reporting. For example, many disability service providers require employees to write handwritten reports about client incidents in a physical logbook. This is likely to be more costly in a market that requires employees to do a lot more unsupervised work at irregular locations.
How can JFM Law help?
JFM Law works with small to medium sized not for profit organisations to restructure their workplace in a way that helps them to achieve their strategic goals. We have developed a cost-effective fixed price an audit service for not for profit organisations who wish to make their workplace NDIS-ready. Contact JFM Law on (02) 9199 8597 for a no obligation chat. If you would rather get in contact through email, send your question through or by email at wehelp@jfmlaw.com.au
The information contained in this post is current at the date of editing – 27 November 2023.
