All unregistered NDIS therapy providers will continue to experience real price cap erosion as inflation picks up again, and business conditions and confidence worsen.

As with physiotherapists last year, the NDIA may roll out price limit cuts for some professions and therapies. SLPs may be affected (although it would be unfair).

Large registered providers may succeed in their push for favourable differential pricing. 

In the short-term, price limits will continue to favour low-cost, low overhead therapy providers, like sole traders, who don’t have to pay, supervise or train staff or pay for significant physical space. 

Clinic-based, small providers who employ, train and supervise staff:

more therapy providers will exit the scheme, including some small and mid-tier clinic-based providers.

as a stick, to encourage providers to be cost-efficient; and 

as a carrot, to attract more providers.

The original designers of the NDIS wanted to set price caps that encouraged providers to be cost-efficient.

By 2018, price caps were lifted to attract more providers to the NDIS.

In the years that followed, lots of providers joined the scheme. Pricing policy then shifted back to cost-efficiency.

For half a decade, price limits for many therapy supports were held constant as the NDIA attempted to impose more competitive discipline into the market to put downward pressure on prices. 

In practice, price caps have not worked to drive price competition or service differentiation between providers. 

Most service providers do not compete on price, but charge at or near the cap:

Participant demand for supports is also relatively price-insensitive:

 Many participants are not motivated primarily by price, but by other factors like:

Current settings encourage lower-cost providers, who are more profitable. In some markets, squeezing out higher cost providers might be a good thing. But, under current settings:

Fewer providers means:

many mid-tier providers were just clinging on, using savings and debt to keep the lights on; and  

the provider market was on the brink of major change:

Price caps were frozen for OTs and SLPs. 

Hourly rates for some therapies were cut, including for physiotherapy, podiatry, dietitian services, and, in WA-SA-Tas-NT, psychology. 

Tighter limits were imposed on billable travel time. Some remote and very remote loadings were removed.    

some allied workers out of paediatric therapy into other parts of the care economy (e.g. aged care, hospitals); and

some allied health workers out of the care economy altogether and into other “more productive” parts of the economy.

NDIS reforms to eliminate the early intervention pathway for most kids;

tighter NDIS supports definitions and impairment notices, potentially reducing the scope of services that can be offered to some clients; 

the Thriving Kids model of care, which explicitly rejects clinic-based service delivery models;

State Foundational Supports initiatives, with moves to de-privatise some paediatric services in some states;

the expert committee looking at the evidence base for some therapies, including early intervention services;

increased admin costs associated with funding periods and other reforms;

increased compliance costs, including uncertainty about mandatory registration requirements; and

I-Can assessments replacing some allied health reports for some participants.

Interestingly, if registered providers manage to win a favourable uplift in their price limits, we may see some actual price competition in the therapy market for the first time in the scheme’s history.

If unregistered providers have no option but to charge a lower price than the big registered providers, small providers may as well make the most of it in their marketing. As NDIS plans are cut, this message may resonate with those participants who are focused on value for money. 

Small and medium clinic owners will have to dig deep to find solutions to their current challenges. Within reason, constraints can inspire innovation. We may see some clinic owners offering new and differentiated services to participants in different ways, including to clients who can’t currently access speech pathology services. (We’ve written about this before, and in the context of Thriving Kids.)

Many participants and families will continue to choose their providers based on non-price factors like trust, geography, rapport with the treating clinician, and the provider’s reputation. We can’t control price limits, but we can - and should - focus on improving service-quality factors within our control to deliver evidence-based, safe supports that produce great outcomes for the clients and families we serve.