Not-for-profit disability services are closing due to untenably low price caps, NDIS architect warns | National disability insurance scheme

Not-for-profit disability services supporting some of the most vulnerable Australians are being forced to close the national disability insurance scheme and exit the scheme because of untenably low price caps for NDIS services, one of the scheme’s architects has warned.

“Many of us in the industry have been telling the National Disability Insurance Corporation for several years that flaws in their pricing are contributing to the collapse of registered not-for-profit providers of disability services,” warned Martin Laverty, now CEO of not-for-profit disability provider Aruma.

Laverty’s warning came with figures released by the Talent Roundtable; found that registered non-profit providers experienced average operating losses of approximately 4% in the last fiscal year, on top of losses of 2% each year in the previous four years; This meant a loss of approximately 12% in the last five years.

“No one is going to come to work every day and lose 4 percent of their income,” Laverty said.

“Not-for-profit organizations do not get involved in the disability sector for the sake of money, but it is essential to reach break-even so that our services can be sustained in the future.”

The report found providers had on average just three weeks’ worth of operating money on hand, and many, including Centacare Brisbane, Anglicare WA, Momentum Collective, MS Society SA and Annecto, had exited the NDIS in recent months.

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“Our assessment shows that the not-for-profit disability sector is not close to market failure, it is currently failing,” said Garry Simpson, chief operating officer of the Ability Roundtable, a platform that supports registered NDIS providers.

Other major providers such as Bedford were also given state government bailouts; To stay afloat, Bedford received a $38 million bailout from the federal and South Australian government; Laverty said the move was the right call as Bedford was “too big to fail”.

“But this is an ambulance strategy at the bottom of the cliff… Instead, let’s stop registered nonprofits from falling off the fiscal 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 supports and therapies, and that disability service providers will face even more severe financial losses in the next financial year after the NDIA announced cuts to the hourly costs of some therapies from June 2025.

“There hasn’t been a single increase in therapy in six years… not even a CPI increase in therapy prices,” Simpson said. “And this will get worse with the real decline in price in 2025-26.”

An NDIS spokesperson said: “NDIS price limits have been set to strike a balance between maintaining a strong market of diverse, high-quality providers and ensuring participants receive value for money when using their plans.

“We want to make sure the prices of therapy paid by disabled people are in line with the costs of other government services, so they don’t pay higher prices than other Australians.

“Each year, the provider market continues to grow and the NDIA evaluates current price caps and identifies where changes may be needed to ensure they continue to support participant outcomes and provider sustainability.”

Simpson and Laverty called on the NDIA to introduce a two-tiered hourly rate, under which registered NDIS providers would be paid a higher rate. Only 6% of NDIS providers are registered.

Laverty said the NDIA “urgently needs to fix the NDIS price formula to shift incentives away from the 94% of providers to stabilize registered not-for-profit organizations that do much of the more complex NDIS work for participants in need.”