Chair of the Board of The Junction Works
2017 marks the first full year of the National Disability Insurance Scheme (NDIS) for The Junction Works. After a number of years spent forecasting and planning for the scheme, now is an appropriate time to reflect on its actual impact, as well as some of the challenges and implications for organisational governance in the wider sector.
At the industry level a range of challenges have arisen for not-for-profit providers grappling with the complexities of transitioning to a more commercial operation (albeit within a managed market) required by the business model of the National Disability Insurance Agency (NDIA). We are already witnessing a rationalisation of the industry: through providers curtailing the range of services they offer, or exiting the industry altogether; smaller, more vulnerable organisations merging with larger providers in an effort to realise economies of scale or to access the capital required to restructure; and the intervention of the private sector into more lucrative parts of the scheme. This rationalisation process has a long tail, with the promise that the industry will look very different into the future.
Strategically The Junction Works has positioned itself by proactively taking on the NDIS opportunity, realigning our service mix to remain financially sustainable under the new system, developing new business models and exploring partnerships with a range of likeminded entities and individuals, all while retaining our strong client focus and high quality of care.
I believe that The Junction Works is in a strong position to be able to pursue opportunities that will enable us to further our Mission and expand our services to meet the needs of current and future clients.
At the operational level, the most challenging aspect of the NDIS for not-for-profit providers, including The Junction Works, is understanding and implementing the new commercial rules of business. Moving from a single funding source in ADHC, which paid for services in advance of delivery, to a system of fee-for-service paid on invoice is only part of the challenge. Changing an organisational mindset to one that appreciates the relationship between the (currently regulated) price of disability supports and the cost of service, and grasps the notions of unitary costing and profit margin, is also required.
A further operational challenge relates to NDIS price setting by the National Disability Insurance Agency (NDIA), which is in the unusual position of being both price regulator and purchaser. As noted by the Productivity Commission1, in an effort to force industry efficiency, certain NDIS prices have been set deliberately low. For The Junction Works this has meant being vigilant about producing procedural and commercial efficiencies. We have done this through expanding our capability in business and systems analytics, and encouraging the development of new and flexible ways of providing supports. We continue to remain vigilant about the cost of administration under the NDIA’s clunky procedures and much maligned on-line payment control system.
I am pleased to report that over the past twelve months The Junction Works has been able to expand our services and offer new services that meet the needs and demands of local families, particularly children and young people requiring skill development, therapy services and recreational programs. I acknowledge and thank TJW staff for stepping up to the challenges of NDIS, and adapting to ongoing change while continuing to make a positive impact on the lives of the people we support.
Just as the NDIS has required new business skills and capability at the operational level, it places new demands on the skills and knowledge of Boards. More than ever, not-for-profit Boards are required to engage in good governance, take a sound, systematic approach to decision making, and clearly articulate a strategic direction that responds to the external environment and serves the organisation’s purpose. In part, this requires seeking and digesting critical information needed to enable Directors to make decisions about key risks and opportunities. Under the NDIS, it also requires a more commercial orientation, strong strategic leadership and robust communication between the Board and Management.
I believe The Junction Works holds these proficiencies.
The Board, Executive and Employees of The Junction Works are excited about the organisation’s future. We look forward to working closely over the coming year with all of our stakeholders - clients and families, donors and supporters, volunteers and staff - to ensure we continue to create new possibilities in people’s lives.
Chair of the Board of The Junction Works