Annie is excited about becoming a National Disability Insurance Scheme participant. She has heard that the NDIS will help her lead a more independent and connected life.
Annie and her mum attended some information sessions and found out a bit more about the steps she needed to take to become a participant. Annie met with the agency planner and talked about her goals, her daily life and her needs. This conversation was a bit scary and unusual but it was nice to talk about her life and what she wants.
Now Annie has an approved plan and she needs some assistance to implement her plan. She speaks to her local area co-ordinator about her options. Previously she was grateful for the support worker she was allocated and she stayed in the local respite centre if there were spaces available. She can go back to her main provider but would like to see what else is available that is perhaps more flexible and able to meet her needs.
She has been also waiting for a new wheelchair for some time. She would like a chair that can be configured and she needs some modifications to her home so she can move out of home again.
Her NDIA plan includes some employment goals but she is uncertain about where to start this. She would like to go to Scouts but doesn’t know if they will welcome her, or understand her needs. She is interested in having as much flexibility and independence as possible, so she would like to explore managing her own plan.
It is exciting but also a very nerve-wracking.
To deliver on the promise of the NDIS for Annie we need to set up an NDIS marketplace that she feels connected to, confidence to interact with and one where she can find and access new types of services and supports.
To deliver for Annie the scheme needs to have in place:
- Planners (capacity for 460,000 plans over three years);
- Local Area Coordinators (LACs), Information, Linkages and Capacity building (ILC), and other community and peer networks, rolled out nationally, that help to support participant decisionmaking and develop their capacity to confidently express and exercise choice;
- Plan implementation supports and systems;
- Effective links to mainstream services;
- Responsive technology provision, with specialist assessors to think about the best solutions for housing and other assistive technology; and
- Easy ways to find new providers and a range of providers to choose from, delivering up to $22 billion per annum of funded supports.
The opportunity — and challenge
For suppliers, the NDIS represents a significant opportunity — and a challenge.
We know that the first few years of the scheme will bring significant growth opportunities, as well as growth challenges for those who deliver, or aspire to deliver supports and services to people with disabilities.
There is a growth challenge for supply as participants transition from state-funded programs to the NDIS, as well as people receiving funded disability supports for the first time. Growth is required in terms of scope and the level of supports for existing clients as well as new clients receiving services.
The number of people receiving disability supports nationally will increase from about 300,000 to 460,000 and the spend will almost double to $22 billion per annum. By itself this growth represents a significant transition task, but in addition the current base of supply is also being asked to fundamentally restructure and reposition the way services are delivered.“The market is highly fragmented with the largest provider only capturing 1% of the market at full scheme.”
Change is inevitable and necessary as the NDIS fundamentally “turns on its head” the ways of choosing and funding disability services.
There are differing programmes across the Commonwealth, states and territories, with legacies of a “welfare” system approach. Most providers are block funded and many have limited funds. Providers have managed to wash different sources of funding (fundraising, grants, etc) around their organisations to cover resource gaps. There have been minimal incentives to focus on individuals needs or outcomes, along with low levels of competition.
There have been observably high cost structures and system inefficiencies. High information asymmetry and what information is public is difficult to access and navigate. There are very high search and transaction costs for fairly disempowered participants. And it’s a workforce often characterised by high turnover, low wages and high rates of casualisation.
That said, we also have very strong service providers and deep experience across Australia who bring expertise and insights that we will need to draw on as we move towards transition.
A quick scan of the existing supply highlights significant market share of state/territory direct service delivery. We know each state/territory is currently contemplating its role in the market going forward.
Excluding state/territory supply, the market is highly fragmented with the largest provider only capturing 1% of the market at full scheme. We are already seeing supply growth and new service models emerge. Existing service providers are getting on board with the transformation and many are upbeat about the scheme. We are also pleased to see new entrants to the NDIS marketplace — these providers are successful in trial and are positioned to grow as the scheme rolls out.
We are embracing the disruptive innovation that the scheme is already generating, as the “market” begins to form. But we also know that the pace needs to be managed as best as possible to mitigate risks from transition that may impact participants and existing providers.
Examples of innovation
Take the case of medium-sized provider who was largely block funded with a generalised service offering. Under the NDIS, they have taken the opportunity to restructure their organisation and deliver different service options in response to the market — in this case being community participation, support co-ordination and brokerage of community links for participants.
As part of this transformation, they invested in new business systems and processes to drive efficiency and align practices with the NDIA model. They are now growing, delivering new services in response to participant demand and are hiring new staff.
We have also seen new providers emerge to fill a gap in the market. Take the case of a new small private organisation that is specialising in community participation, refining their model and offering as they go in response to participant demand. They now have a situation where they are at capacity, which is not a bad problem to have — they have carved out a niche and are being sought out by participants.
This just shows that size doesn’t equal success in the NDIS. They are now growing their business.
The agency’s vision is that markets are vibrant, innovating and competitive with sufficient levels of supply and demand to be self-sustaining and largely deregulated. In this, we are guided by the competition and choice principles outlined in the recent Harper Review — which reflect the scheme ambition of empowered user-choice and effective competition, and challenge us to achieve this through careful market stewardship and commissioning where this stewardship:
- Encourages a diversity of providers whilst preserving social capital;
- Encourages innovation, while being mindful of minimum standards of quality and access; and
- Invests for outcomes and ensures Scheme sustainability.
The ambition is that this can be achieved largely indirectly in a scheme where consumers contract directly with providers, and the market evolves to meet their needs. However, we also know that markets for human services are complex. The trade-offs between price and quality with outcomes, are not always observable.
The market steward role will focus on:
- Understanding and analysing the market — the agency will aim to provide thought-leadership and insights on emerging risks and best practice;
- Provision of information which is a powerful and necessary feature for a strong market with choice;
- Market facilitation — being a conduit for collaboration, problem solving and big-issue management; and
- Interventions, increasingly by exception only — to address gaps, or improve outcomes for specific markets (NB: the models and methodology for this are works in progress).
Some issues we will work to avoid are:
- Intervening as the first solution to all perceived market risks — it should only occur when the outcome is worth taking the risk for;
- Not providing useful and timely information about the demand and the market — or example, it is important to give the market a chance to respond by signalling the need;
- Not investing enough in building participant capacity and provider awareness of changes under the NDIS; and
- Focusing too much on price without considering quality and outcomes as part of a participant’s “choice”.
As we think about applied market stewardship which will take more time to develop and deploy, we think about what success looks like and what it will take to achieve it. It is important to recognise that, for stakeholders, the NDIS marketplace will not consist of one single national market, but rather, many interdependent and complex markets for supports and services. Each of these sub-markets needs to be understood and will warrant a differentiated response.
A quick look at the experience of the NDIS in NSW to date provides a snapshot of some of the key supports and services:
- Personal care and community support — which draw on the market for attendant care workers — constitutes the vast majority of the scheme spend.
- As this is a locally delivered personal support it requires consideration of the relevant catchment area and density. It is impacted by ongoing quality and safeguarding policy work, and may draw on workforce from other sectors such as ageing and childcare.
- We see many models for this service emerging — we have more work to do on what is best practice and what helps participants achieve their goals.
- Assistive technology — represents a relatively small percentage of the scheme spend, but it is critical in achieving independence and leverage of personal care.
- Work recently undertaken on assistive technology presented an opportunity for an applied market stewardship approach — to analyse the current supplier market, the nature of the products and demand, to define addressable categories and determine appropriate market settings.
- Co-designed with stakeholders, we found there is a case for regulation or sourcing of some categories to protect service standards where they are important, or to realise scale benefits, while others can likely be managed hands off.
- Intermediaries/plan implementation
- The agency is taking action to understand and address observable gaps in the plan implementation market which is constraining exercise of choice. The agency is consulting widely and aims to ensure participants have options that assist them to implement their plan and connect with providers.
- Early childhood, and early intervention
- Early childhood early intervention lessons have informed the agency’s approach in new trial sites.
- The agency is partnering with experts to understand and test choices, preferences, responses to information and the evidence base on outcomes.
- This is high impact stewardship in a market that has the potential to be high impact for the scheme.
The experience in trial, market engagement and the strategy work done to date have provided some powerful market lessons and insights that we are drawing on as we prepare for full scheme.
The agency is focused on getting out and talking to people with disability, future NDIS participants, their families, existing and potential new suppliers of supports and services in order to get a better understanding of the perspectives, plans, questions and anxieties of the scheme, NDIS markets and stakeholders.
Only by being outward facing can we hope to deliver transition in as smooth a way as possible, and put in place foundations for a strong future NDIS and marketplace.
The lessons so far
Tackling the supply challenges starts with engaging and supporting existing disability service providers to achieve a smooth as possible transition to the NDIS.
It is important that social capital is considered and preserved where possible in this growth process. In many markets we see interest and capacity from new suppliers, from adjacent and mainstream sectors, but they require clarity on the “rules of engagement” and some visibility of their potential customers’ needs to respond in full.
Information acts as a critical lubricant for the market, enabling participants to exercise real choice and for providers to have confidence in the commercial opportunity and to see where the demand is. But, at the moment, this is missing in the market for disability services — which is observably impacting on participant experiences in trial and on providers’ ability to be consumer facing.
Now that the NSW bilateral agreement has been signed, including agreement on regional roll-out, the agency is working together with NSW counterparts to analyse local markets. The agency is also in active communication with providers (existing and potential) to build their understanding and readiness for the scheme.
One of the underpinning principles of the NDIS is the insurance approach that provides for a focus and investment on outcomes over a person’s lifetime. The agency has developed Reference Packages and an Outcomes Framework as core tools to enable the application of these insurance principles. The NDIS Outcomes Framework will monitor the progress of participants and their families and carers in key life domains.
We are conscious that the NDIS and the NDIS marketplace will take time to develop (probably over 10 years), and that it will be imperfect. We also know that, in some areas and for some types of services there may always be a need for direct government intervention.
The mark of quality market stewardship will be the speed with which these imperfections or unintended consequences are identified and understood, the effectiveness and maturity of the response, and the confidence that the market stakeholders maintain throughout.
And success for the scheme is when Annie does understand her options and confidently exercises her choice to achieve her goals.
This is an edited speech delivered to IPAA 2015 national conference on October 15 in Sydney. Esther Kerr-Smith is also presenting this week at the NDIS New World: Disability in the 21st Century conference in Brisbane.