As part of its 2015 Budget, the Federal Government announced that, from 1 February 2017, it would no longer directly fund home aged care package providers. Instead, it will allocate funding direct to consumers of these services. With over 80% of home aged care package providers being Not-For-Profit organisations, this drastically changes the way that these organisations must approach their service provision.
In 1992, the Keating Government created the National Competition Policy Review Committee. The work of that committee was not directly aimed at the NFP sector. But the increased emphasis on competition that grew from it has continued to strongly influence government policy in areas in which not-for-profits traditionally operate.
Increasing competition and the marketplace
The recent Budget announcement confirms a trend that has affected NFPs for almost 25 years; continuing their exposure to increased competition and contestability.
For a range of reasons, we have seen this trend accelerate in recent years. However, the ageing of Australia’s population is a key driver.
Historically, NFPs were funded directly by government and received predictable streams of income. Good management tended to be about complying with program rules and satisfying government expectations. Other NFP providers were seen as colleagues and inter-organisational collaboration was strong. Providers did not have to "win" consumers in a competitive market.
Social reform to deliver better services
The National Disability Insurance Scheme (NDIS) is one of the biggest social reforms in Australia in 40 years. Under the NDIS, disabled people, not disability service providers, will receive their funding directly. Providers will then compete with each other to win work in the disability services market. Their income will be less predictable; collaboration will reduce. Providers will need to develop new skills to compete.
The NDIS model is being applied by Australian governments to more social services, like aged care and mental health. The Competition Policy Review headed by Prof Ian Harper recently released its final report. It said that, "Extending choice and contestability in government provision of human services will help people to meet their individual health needs." It is clear that the competitive approach will apply to more and more health and welfare services delivered by NFPs.
Competition presents many opportunities, but also many challenges. Competition implies that the those who are prepared will thrive, but the unprepared will not. It is critical that not-for-profits continually build greater competitive resilience, even if the exact shape of reform to their specific sectors is yet to emerge.
Where to start
Saward Dawson has a team of specialist consultants that work exclusively on NFP reform. We work with an increasing range of community health, disability, aged care and mental health providers to help prepare them for the demands of competition.
Our long involvement in and support of the not-for-profit sector means we understand how to provide advice that supports providers with their distinctive mission and ethos. Contact Tim Flowers or Jeff Davey for an obligation-free discussion.