Not-for-profit disability services that support some of the most vulnerable Australians are being forced to close and exit the national disability insurance scheme because of untenably low price caps for NDIS services, one of the architects of the scheme has warned.
“For some years, many of us in the sector have been telling the National Disability Insurance Agency that flaws in their pricing are contributing to not-for-profit registered providers of disability services going broke,” warned Martin Laverty, who is now the CEO of not-for-profit disability provider Aruma.
Laverty’s warning came as figures, released by Ability Roundtable, found that registered not-for-profit providers had sustained a median operating loss of nearly 4% in the last financial year, on top of 2% losses each year for the four years prior – totalling losses of about 12% for the last five years.
“No one will turn up to work every day only to lose 4% of their income,” Laverty said.
“Not-for-profits are not involved in the disability sector for the sake of money, but making breakeven is essential for our services to be sustained into the future.”
The report found providers had on average just three weeks of operating cash on hand and that many had exited the NDIS in recent months, including Centacare Brisbane, Anglicare WA, Momentum Collective, MS Society SA and Annecto.
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“Our assessment suggests the not-for-profit disability sector is not close to market failure, it’s in failure right now,” said Garry Simpson, the chief operating officer of the Ability Roundtable – a platform that supports registered NDIS providers.
Other large providers have been given state government bailouts, such as Bedford, which received $38m in federal and South Australian government bailouts to stay afloat, a move Laverty said was the right call, as Bedford was “too big to fail”.
“However, that’s an ambulance at bottom of cliff strategy … Instead, let’s stop registered not-for-profits from falling off the financial cliff in the first place,” he said.
The report found the losses were due to a six-year freeze on the hourly rate the NDIA pays for support and therapies, and that disability service providers were set to face even more dire financial losses in the next financial year, after the NDIA announced cuts to the hourly cost of some therapies from June 2025.
“There’s not been one increase in therapy for six years … not even CPI increases to therapy prices,” said Simpson. “And that’s only going to get worse in 2025-26 with the actual reduction in price.”
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A spokesperson for the NDIS said: “NDIS price limits are set with the aim of striking a balance between maintaining a strong market of diverse, high-quality providers and ensuring participants get value for money when using their plans.
“We want to make sure that the price of therapies paid by people with a disability is in line with the cost of other government services, so they aren’t paying higher prices than other Australians.
“Each year, the provider market continues to grow, and NDIA assesses current price limits to ensure they continue to support participant outcomes and provider sustainability and identifies where change may be needed.”
Simpson and Laverty called on the NDIA to introduce a two-tiered hourly rate, with a higher rate paid to registered NDIS providers. Just 6% of NDIS service providers are registered.
Laverty said the NDIA needed to “urgently correct the NDIS price formula to shift incentives away from the 94% of providers to stabilise the registered not-for-profits who are doing the majority of the more complex NDIS work for participants who need it.”
