There are many thoughts and considerations when it comes to thinking about the federal budget.
Thoughts in the care sector turn once again to the National Disability Insurance Scheme, and its promise to shake up the care and disability sector.
Ultimately the goal is better care outcomes for those living with a disability. But with the degree of change required, there is a question over whether care providers have the resources to adapt and manage change while remaining sustainable and without compromising on care outcomes in the short term.
Under the NDIS, we will see purchasing power more vested in the hands of the consumer, with funding transitioning for those still on services provided by block funding to care providers in favour of a consumer-led ‘portable funding’ model.
For the sector, the shift towards a consumer-based model mandates the need for an overhaul in strategy and scrutiny over the future business model. Service delivery will need to become more cost sensitive and responsive to consumer preferences.
Care providers we talk to are all facing many of the same decisions:
- Which services should we provide?
- How do we market ourselves and communicate our value proposition?
- How can we become more efficient in order to be sustainable?
These considerations had significantly less relevance under the existing funding model and therefore care providers may not have the capabilities or experience to address these issues.
For some organisations remaining sustainable may mean growing volume while looking for operational efficiencies, while for other providers there may be no other option but to merge with another organisation or be acquired. Certainly consolidation within the industry is expected.
Many providers look to engage consultants through this change period but in an environment of tightening funding and lower volume for some, budgets will be stretched before consultants are even considered.
When the government wants to drive change in a sector, its first action is usually to slash spending in that sector. The sector’s first response is denial, and calls for the government to fund the sector again. Then, slowly, the sector realises the need to adapt its service delivery and this is where innovation occurs and efficiency and productivity gains can be made.
So in the lag period between the initial cut to government funding and companies being forced to innovate to stay profitable, one runs the risk of compromised quality of services, or innovation being undertaken in a haphazard and insufficiently strategic way.
While the overall level of funding in the disability sector will increase under NDIS, care providers are being asked to do more with less and with choice in the hands of the consumer, some organisations will experience significant decreases in their funding.
The danger is that without the appropriate funding to manage the transition, some organisations will fail, resulting in an immediate loss of jobs and services, and a longer term draining of industry expertise.
This outcome would be particularly devastating for the care sector, where we could even see the opposite of the government’s desired end-state, better quality care that is more responsive to the individual, compromised in the short-to-mid-term.
There are effective ways to support industry sectors going through major change. The automotive sector is a great example, with the exit of the three car manufacturers over the next 2 years, Australian based parts suppliers are facing a similar or perhaps greater scale of change in order to survive.
The Victorian Government however, has recognised the importance of these manufacturing businesses to the economy and is investing in their transition funding; those who demonstrate strong business cases can access further funding to facilitate strategic planning and to execute new products, entry into new markets, or other initiatives.
This allows for innovation while also cutting the overall level of government support to the auto industry, and hopefully minimising job losses and distress to local, state and national economies.
While the disability sector is not in the dire position of the car manufacturing industry, the supported transition approach has merit, and it’s one for the federal government to consider in the upcoming budget.
Currently there are federal and state training courses aimed at getting care and disability sector clients up to speed with the new funding environment, but this does not address the core problem for providers right now – realigning their services based on consumer demand, marketing their services effectively and driving efficiency for sustainability.
Making grants available for activities related to innovation in service delivery, strategic planning and transition will help mitigate against the prospect of care and disability organisations floundering in a new environment in the short term.
The care and disability sector is not a wealthy one, and it provides services and support to some of the most in-need Australians. If ever there was an industry that the government needed to recognise and support, its disability and care services.