The NDIS is changing the landscape of the NFP sector. Do you know how these changes are going to affect the future operations of your organisation?
The launch of the National Disability Insurance Scheme (NDIS) represents one of the biggest funding shifts the not-for-profit (NFP) sector has seen, with block funding giving way to a model where clients have far more control over the services they use.
While the change will only be rolled out nationally in July 2016, savvy NFPs aren't waiting for it - they are planning ahead, seeking advice from experts and re-evaluating their internal processes to meet this new challenge.
The new reporting landscape
NFP organisations are already looking to revise their processes to match thereporting requirements that will come in under the NDIS. These require service providers to maintain robust reporting structures and meet strict registration standards.
Fundamental to this shift is the need for a unit cost (per service) calculation that reflects the value of the service to be delivered and the requirements of the community.
This also needs to be underpinned by thorough billing and accounting processes - providers will have to track where a service is being provided, the cost associated with that service and the appropriate margin. Invoicing, cashflow and debtor management all then become critical aspects of service delivery and organisational sustainability – where many NFPs have had less need to worry about these factors in the past.
How are NFPs preparing for the NDIS?
NFPs should see the NDIS as a great opportunity to improve their services, and those who approach the change with this attitude will be well-placed to make it a positive force within their operations. Under block funding, service limitations existed, whereas the NDIS will create a broader service base under a model that is intended to empower and provide choice to the service user.
Providers must now emphasise their core resources and capabilities – or those aspects that create the opportunity to focus and utilise their strengths. This might involve recovery frameworks, a shift to preventative care or other service options that meet the needs of the community. Whatever the capabilities, these form part of a unique value proposition that underpins both strategy and actions for the organisation.
For those NFPs keen to change their mindset and lay the foundations now for their future under the NDIS, this has to start at the top and reassess the core purpose for which the organisation exists. This has to be both a psychological and structural shift in order to meet a changing market and deliver on the organisation’s reason for being.
To make this shift in thinking, NFPs will need to ask themselves some core questions about how they will operate in this new environment, such as;
- What services are we going to provide?
- Who are our target service users?
- What systems need to underpin our offerings? This has to consider the entire organisation, right down to frontline rostering, billing and quality oversight.
- Are there any opportunities for streamlining, especially in the back office?
- Is there a chance to outsource or share a back office and reporting function with another organisation?
- Are we equipped and ready to deal with a changing environment and the unknowns of a new market?
We are now witnessing NFPs asking these questions and becoming far more focused on the needs and key decisions of the end-user in preparation for the shift to the NDIS.
Finding a new niche capability
Answering these questions requires organisations to think about what their service can offer to 'customers' who now have a choice about what services they use. This process should involve the whole organisation, but it begins with senior leaders and should take into account the nature of the service, and the organisation’s strategy and plans for the future.
While many NFPs may decide this means greater specialisation in order to own a certain market, this path it certainly not the only option. Organisations that already benefit from scale in their operations may opt to diversify the range of services they offer, complementing core functions with a broader offering (greater choice) in order to meet the needs of the community.
For many organisations, assessing the landscape and selecting the right course (business model and funding model option) under the NDIS will require an outside perspective from an expert. This can help them determine where their niche will sit within the new operating landscape and how they will thrive in a changing environment.
Seeking outside help should also be complemented by engaging with the people already using the service. Start by asking current users what they like about the service and ‘take their pulse’ on what needs to shift in the future. The emotional connection between providers and their clients is the core of a successful NFP, and understanding just how ‘sticky’ your relationships with clients are will go a long way in assisting you to prepare for a major structural shift.
Organisational flexibility the goal for non-profits
Under this new system, the demand for organisational flexibility in the NFP sector is going to be immense; with the regulatory environment itself still guaranteed to shift and evolve as the program reaches more people. Whilst the NDIS represents a major change in reporting requirements for NFPs, it is very difficult to say just how the standards and expectations of administrators and government will evolve in the next 12 months. As the trial sites have shown, it is only through implementation that regulators will find the most appropriate path and an acceptable reporting standard.
Building flexibility into an organisation requires dedicated thinking about the long-term financial position of the NFP itself. A defined strategic plan is critical and consideration must be given to the organisation’s expansion plans, risk appetite, major capital expenditure and resource base – on at least a 3 – 5 year time horizon.
What's the next step?
For any NFP seeking to adjust its services to meet these new funding conditions, the first step is to address the resources you need to set and execute on strategy – do they exist in-house, or do you need to engage externally? Knowing how to position an NFP for a change of this nature whilst maintaining client base and financial sustainability is a delicate balance, and leaders within the sector should seek to connect with each other and those independent advisors best positioned to assist.
I'd like to offer NFPs who are interested a one hour complimentary discussion session to help review, prepare or refine your transition strategy. For more information about the NDIS and preparing for change, please connect with me or email [email protected].