How will allied health NDIS providers survive? Some difficult choices ahead

If you are a private allied health business owner who works with NDIS participants – you should take a look at the Deloitte Access Economics report about NDIS price limits for therapy supports and the Ability Roundtable 2023-24 Annual Price Review Submission about Therapy Supports.  

Both are harrowing reads for occupational therapists, speech pathologists, physiotherapists, social workers, and other allied health businesses. They suggest that most of the bigger, NDIS-registered allied health therapy businesses operate at – or below – break-even point against NDIS price limits. For the 2024-25 financial year, the Ability Roundtable has projected a median loss (net margin) of -14.2% for larger registered providers of therapy supports.  

For registered and unregistered NDIS providers, the real costs of providing therapy supports to participants are often underestimated, including by many allied health business owners. Costs include:

1. staff base wages and salary oncosts (e.g. annual leave, personal leave, public holiday leave, long service leave, and parental leave, superannuation, workers compensation insurance); 
2. costs of supervision, training, professional development, and accreditation;
3. non-billable (but necessary) activity costs, like non-billable client, travel and cancellation time;
4. service delivery overheads, including occupancy costs (e.g. rent and electricity), motor vehicle fleet costs, specialised equipment, IT costs (e.g. laptops and software), and client consumables;
5. non-service level staff costs (e.g. team leader and corporate governance costs);
6. corporate overheads, e.g., IT, finance, human resources and recruitment, insurance, administration, marketing, quality control, and audit and legal expenses; and
7. NDIS and other compliance costs. 

From Deloitte’s report, it appears that many of the bigger registered allied health businesses have a major structural business problem: high (and rising) fixed costs, a limited capacity to reduce variable costs without affecting service quality or access, a limited ability to increase staff productivity without increased turnover, and of course no room to move on prices. 

The Government’s decision to freeze NDIS therapy prices for another year increases financial pressures on allied health providers. To stay in business, allied health providers must (at least) break even. But we face several difficult choices and tradeoffs as we try to get there:

1. We can’t lower wages without losing staff to higher paying opportunities, e.g. in the public sector.
2. We can’t reduce new graduate and early career hiring and support without affecting the future of our professions (onboarding new graduates and building their caseloads requires significant investment and time, which affects average utilisation rates).
3. We can’t ask frontline staff to see more clients without increasing staff burnout and turnover.
4. We can’t cut corners on supervision, education and training without reducing the skills of our workforce and the quality of our therapy services.
5. We can’t recalibrate staffing levels to match fluctuating client demand patterns (e.g. during school holiday periods) without reducing full-time employees and switching to casuals and contractors and reducing continuity of service to some participants.
6. We can’t reduce investments in corporate governance controls without increasing business and client risks, including to safety.
7. We can’t narrow our scope of services (e.g., switching to lower-cost supports or private client work outside the NDIS) without reducing NDIS participant access to our services.

For ethical reasons, many of these options and trade-offs are unacceptable for reputable allied health providers.

In the bleak business environment depicted in the Deloitte and the Ability Roundtable reports, it would be logical for:

1. more registered NDIS allied health providers to deregister, continuing the trend described in the NDIA’s latest Annual Pricing Review;
2. some allied health providers to downsize and to cut investments to reduce costs; 
3. some allied health providers to cease working with participants with complex (higher cost) needs and to reduce (higher cost) in-community services to reduce losses; and 
4. some allied health providers to pivot their businesses to focus on non-NDIS clients to reduce their exposure to NDIS price controls.

Unless allied health NDIS providers find new ways to increase productivity and to re-establish sustainable margins, we may end up with fewer registered allied health providers, fewer larger allied health employers, uneven levels of supervision, training and support for staff across the professions, and fewer options for some NDIS participants to access quality therapy supports.