How does the NDIS intend to respond to demand for services and supports?

The National Disability Insurance Scheme is the largest social reform in Australia since the introduction of Medicare in the mid-1970s. The NDIS is not a government-controlled social welfare scheme rather it is intended to be a consumer-controlled marketplace and will have enormous growth potential. The history of the disability sector has been built upon a welfare model in which services have been largely programmatic and NGO service providers have been block funded by governments to deliver these programs.

The NDIS reform will significantly disrupt the existing disability service landscape and models of service that have evolved out of the welfare system. The landscape will be steadily reshaped into a competitive market with competitive business models underpinned by customer driven service provision. The customisation of services is expected to respond to the individual needs and preferences of participants of the scheme as they exercise their purchasing power in the marketplace.

How does the NDIA intend to carry out its role as market steward?

The NDIA has developed a NDIS Market Approach - Statement of Opportunity and Intent where it outlines approaches to the creation of an efficient and sustainable marketplace. The NDIA take responsibility as a market steward to support the development of a new disability marketplace. In their role as market steward, the NDIA seeks to create a level of certainty for the existing market and demonstrate new opportunities to supply to NDIS participants for existing providers and potential new entrants.

The NDIA intend to realise a consumer-driven market that has a diversity of suppliers who can meet participant needs and preferences as they change over time. In the role as market steward, the NDIA specifically seeks to support a mature and sustainable market via:

  • enabling existing and emerging suppliers to mature at an appropriate and sustainable rate;
  • providing an environment for innovation in planning and delivery of supports; and,
  • building strong business integrity systems and processes and capability.

What are the key functions of a market steward?

The key functions that a market steward can undertake to improve the marketplace include[1]

Monitoring: observing the NDIS marketplace and assessing whether it is achieving its outcomes. This will be greatly informed by the data being collected through day‑to‑day operation of the Scheme, which will increasingly use longitudinal data to understand market gaps, market/provider efficacy and to develop responses.
Facilitating: actions that directly influence demand in the NDIS marketplace and indirect actions to improve the functioning of the NDIS marketplace. This includes providing information, setting prices, and developing systems/infrastructure to support market transactions. In addition, facilitating supports diversity of supplier business models.
Commissioning: direct sourcing of supports or establishment of preferred provider arrangements supported by controls and “rules” that must be complied with to participate in the NDIS marketplace.

The NDIA is currently setting and regulating prices for services and supports under the NDIS. An "efficient price" is being used as a driver to build a competitive market for services and supports. Service providers cannot, for example, charge a "gap fee" between their cost and what the NDIA is prepared to pay for supports included in a person's plan. As the market matures, the NDIA will deregulate pricing with the intention to increase competition and stimulate innovation and evolution in the supply of services.

[1] Source - NDIA market Approach Statement

How does the market steward role change as the market develops?

As a market steward, the NDIA will involve itself in supporting the adjustment required by the disability sector to make this transition. Over time the expectation is that the NDIA's role will lessen, the market infrastructure will mature, suppliers will respond to the NDIS operating model, demand will grow, participants will be better equipped to exercise choice and control, and a vibrant, multifaceted and sustainable marketplace meeting the support needs of people with disability, will emerge.

What are the opportunities and growth potential for the market?

There is potential for enormous growth in the market as the NDIS is implemented across Australia. The number of NDIS participants increases substantially over the course of the transition and the corresponding funding for the sector will grow from $8 billion per year to $22 billion per year by 2019-20[1]. Many new opportunities will emerge as investment increases. For example, the NDIA plan to invest $1 billion per annum to be spent on assistive technology. Substantial investment will incentivise new entrants to the disability market and promote competition, efficiency and service options that provide value for money to existing and prospective customers.

[1] Source - diagram sourced directly from NDIA Market Approach Statement

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