How to be successful with NDIS and CDC
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The document discusses a transformative shift towards consumer-directed care (CDC) models in the context of NDIS, emphasizing the need for organizations to adapt their business operations, expand service offerings, and develop new capabilities to remain competitive. It highlights the importance of balancing two business models—one that consumes funding for direct services and another that generates funding through various sources, including donations and grants. Sustainable financial practices and effective client engagement strategies are essential for successfully transitioning to the CDC framework.
How to be successful with NDIS and CDC
- 1. INTERVENTIO N INTERUPTIO N Consumer Directed Care - a Disruptive Paradigm Shift The impact of NDIS
- 2. Client Organisation Agency Individual NDIA LAC Services A B C Service Catalogue • People • Services • Equipment • Planning Organisation Beneficiary Block Funding Model Consumer Directed Care Model Recommendation Paradigm Shift - Disruption IMPACT • Culture • Capability • Capacity • Cost • Client Programs A B CGovernment & Grants Competitive Provider MarketClosed Provider Market ? In the new paradigm (CDC Model) the provision of services is no longer limited to an organisation. New market entrants, agency and individual resources will also be able to offer their services within a care plan. The relationship with the Local Area Coordinator (LAC) and awareness programs for the Client/Carer will be key to your organisations success and ability to remain competitive. Internal Organisation B Complex Case Management
- 3. • Utilising Partners to extend footprint & offering • Utilising Agency for larger CDC Footprint & Core Services • Current Capacity – Retaining current staff to deliver Core Services In order to increase revenue and sustainability organisations will need to increase both their geographic and services footprint. Taking this steps requires additional resources and capabilities and may be best served through a contracted work force (Agency). Full time staff require overhead and utilisation quotas. Internal staff will be best utilised as team leaders and subject matter experts that ensure the organisation delivers to its quality targets within a safe, accredited and motivated environment, establishing strong and trusted relationships with your clients. Team Lead Agency Individual Partners / Volunteers While the agency approach will ensure the organisation can expand and contract on demand it is essential organisations maintain their people, processes, and standards ensuring quality services are provided in a manner that is safe for the client and staff member. A stepped approach to sustainability Growing the Organisation Changes to roles and responsibilities Requires Internal I n t e r n a l Staff Staff Staff Agency Agency Partners Requires Requires Internal
- 4. Unrelated Related Diversification Unrelated Diversification is a form of diversification when a new or unrelated service is added to penetrate new markets. For example, if an Aged Care provider provides Mental Health Services. In this case there is no direct connection with the company´s existing business - this diversification is classified as unrelated and requires new capabilities. The unrelated diversification can be based on Partnering, Acquisition or internal development of the required Business Capabilities and ICT Enablers. Related Diversification is the most popular distinction between the different types of diversification and is made with regard to how close the field of diversification is to the field of the existing business activities. Related Diversification occurs when the organisation adds to or expands its existing line of services or market segments. In these cases, the company starts providing a new service or penetrates a new market related to its core business activity. Current Services 100 90 80 70 60 50 40 30 20 10 10 20 30 40 50 60 70 80 90 100 ` `` Growing the organisation may mean diversifying into services that are Related or Unrelated to the organisations core capabilities Growth through Diversification
- 5. Board CEO Business Model One (Core) Shared Service Model (Shared) Business Model Two (Support) Operations Manager Corporate Services Funding Manager (Consumes Funding) (Hybrid) (Creates Funding) • CDC Services • Funded Programs • Volunteer Programs • Core Services - Training - Consulting - Advocacy - Research • Strategy • Sales & Marketing • Finance • Human Resources • OH&S • Partner Management • Donations - One-off - Regular • Grants - General - Tied to Outcomes • Sponsorship - Corporate - Community • Ambassadors - Cash - Awareness - Resources - Equipment • Bequests • Events - High Teas - Quiz Nights - Walks/Runs - Reading Challenge - Gala • Volunteer Management • Training Services Business Capabilities People Process Policy Data Information Governance ICT Enablers Applications Operational Corporate Infrastructure Communications Mobility Business Models Under the new Consumer Directed Care (CDC) paradigm you will need to develop business models that provide financial sustainability. This will mean that you may need to manage two (2) separate Business and Funding Models, assisted by a Shared Corporate Service Model. Business Model One : This model is a consumer of revenues to provide our services, driven by the strategic intent of the NFP’s constitution. Business Model Two : This model is a provider of funding for all non CDC and subsidised CDC services within the scope of your strategic intent. Shared Services : Provides the Corporate Services required by both business models. Underpinning this will be the need to transform the Business Capabilities to meet the demands of the new paradigm. New ICT enablers will be needed to support the business and funding models and ensure the NFP remains effective, efficient and agile.
- 6. Who do you need to be? Culture • What is our purpose? • Is our purpose expanding? Capacity • Who and where can we service? • What partnerships do we need? Capability • What is it we actually do? • What else could we do? Cost • Can we supply within market tolerances? • What is our bottom line? Customer • Who are our customers? • How do we reach them How large do you need to be? What capabilities do you need? What do you need to charge? Who should you service? This model is a traditional Sales & Marketing approach that is dependent on 5 critical areas as described to the left. The Organisations Purpose are self imposed restrictions that may leave an organisation with limited client value. Our Purpose Business Model One - Purpose
- 7. Observations • must focus on ensuring that you are delivering services in accordance with your Constitution. It is the reason you exist and your Purpose; • needs to focus on adding value through additional services within your capacity and capability to ensure financial sustainability • will take time to build once the block funding discontinues and will need a full Marketing and Sales campaign to identify and secure a customer base that will equal or exceed the value of the block funding; • will need to look at securing NDIS sales outside current catchment area; • will need to be subsidised in the short term by cash reserves and Funding Model 2 • may require continued subsidy as NDIA drive down cost and drive up eligibility. As you move to the CDC model Block Funding will reduce in phases as NDIS is rolled out. You need to develop alternative funding (Business Model 2) to ensure you have the reserves to manage cash flow until you can build your client base to recover and exceed the removed block funding. Financial sustainability will be a combination of CDC Revenue and Support Funding as Block Funding reduces over time CDC CDC CDC CDC Support Support Support Support Block Block Block Block Block Support CDC For presentation of concept– does not reflect any real data Funding Model One - CDC
- 8. Service Sub Service In Sourced Out Sourced Donations • Regular • One Off Q R R R Grants • General • Tied to Outcome R R R Q Sponsorship • Corporate • Community R R Q Q Ambassador Program CARE R Q Bequests Specific/Non Specific R Q Events Multiple R R Volunteer Management Coaching/Management R R Manager Donations & Community Support Events Sponsorship and Corporate Support Donations Grants Sponsorship Bequests Sponsorship Ambassador Focuses On • Pure Revenue • Sustainability • Delivering Core programs • Subsidising CDC • Advocacy and Awareness • Research & Development • Innovation Analysing what should be insourced and what can be outsourced Business Model Two - Support example only
- 9. Observations • must focus on ensuring that you are generating revenues that can be used to deliver a financial sustainable position; • needs to focus on fund raising and philanthropic activities that do not require a specific outcome that would restrict the use of monies; • will take time and money to build as it requires new business capabilities and ICT enablers; • will need to be in place well before the block funding models transform to CDC; • will require the management of additional volunteer’s and resources with specific skill sets; • will need a combination of internal and external expertise to establish and operate; and • will need to be self sufficient before the first NDIS phase. FM1 NDIS Phase 1 Current Revenues • Grants • Block Funding NDIS Phase 2 FM1 Build Cash reserves Subsidised CDC Increased Reserves This model is achieved through the establishment of Business Model 2. This model is based on the sourcing of funds through sponsorship, donation, and philanthropic activities. The outcomes of the model are: 1. Initially support the funding gap as the NFP ramps up the CDC environment; and 2. Subsidise CDC activities to ensure quality until effective and efficient packages are developed. Funding Gap Quality Assurance Funding Gap Quality Assurance FM2 FM2 Future Revenues Funding Model 1 • CDC • Grants • Core Services Funding Model 2 • Donations • Grants • Sponsorship • Events • Bequests Funding Model Two - Support
- 10. Customer Needs & Influencers NDIS will add complexity through a broader range of influencers to the provision and itemisation of services
- 11. If you overlay your strategy (constitution) over the NDIS services model it provides you with an overview of your obligations. HOWEVER This does not mean you are restricted in the provision of additional services that are within your capabilities and capacity. Mapping to NDIS - Capabilities
- 12. Under CDC the clients will be able to access their required services from multiple providers. Therefore packages will need to deliver a minimum positive $ return per component, at least break even. In this example service (to the right) Component 2 (C2) and Component 4 (C4) of the package are subsidised by the other components in terms of margin. If the client were allowed to only choose component 2 then the organisation would generate a negative return. Package Construction Essential to the successful transition into a CDC model is a package tear down. Like a product tear down, this is the process of deconstructing a package into its core components to understand their inter-relationships, costs and benefits. In this way we can determine the minimum construct of the package to be viable i.e. break even. We can also understand the variants to the package we can develop to diversify in an unrelated or related manner. Product Tear Down C1 16% C2 -5% C3 26% C4 -5% C5 58% Service Component Margin Current capabilities may allow the organisation to diversify in related areas and contribute to ensuring a beyond break even point which provides financial and client value, and ensures financial sustainability allowing the organisation to fulfil its mission.
- 13. Viability $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 Break Even Current capabilities may allow the organisation to diversify in related areas and contribute to ensuring a beyond break even point which provides both financial and client value. New capabilities may be required to ensure new entrants do not reduce the size of the market by focusing on the higher revenue services, leaving the lower revenue services as crumbs for current providers. Package Viability Service/Product Cost With the new paradigm for service delivery being through multiple channels, Organisational, Agency and/or Individual, service packages will need to be constructed so that they are financially viable, effective, efficient and agile to meet the changing client needs. New market entrants are likely to focus on the provision of high end services, those services that return the highest financial value, especially the For Profit organisations entering the NDIS sector. Efficient Effective Agile Current Capability New Entrant Focus
- 14. CDC Transformational Framework Analyse Align Transform Approach · Care Packages (services) · Clients & Beneficiaries · People Skills & Capabilities · Processes & Workflows · Information & Technologies · Business Models · Funding Model · Organisational Strategy · Business Model · Funding Model · ICT Strategy · Staff Skills & Capabilities · Marketing Strategy · Communications Strategy · Business Model · Funding Model · Organisational Structure · Organisational Skills · Organisational Capabilities · ICT enablers Deliverables · Care Package Catalogue · Skills Gap Analysis Report · Client Analysis Report · Process Health Check · Business Function Model · Business Impact Analysis · ICT Gap Analysis · Aligned Care Packages · Client Needs Analysis · Skills & Capability Matrix · Client Journeys · Revised Business Model · Revised Funding Model · Transformation Strategy · Business Case · Case for Investment · Benefits & Management Plan · Change Management Plan · Training Plan · Transformation Roadmap Outcomes I know where I am I know how to change I am ready for NDIS
- 15. For further information on how Sentric could assist your organisation contact us Sentric Pty Ltd Suite 7, Level 1, 20 Collins Street, Melbourne VIC 3000 Phone: +61 3 9650 7745 or +61 3 9005 6092 Fax: +61 3 9923 6487 Email: info@sentric.com.au Join our LinkedIn forum: https://www.linkedin.com/groups/Partnering-NDIS- Success-7050651/about Partnering for NDIS Success