Price Review of Out-of-Home Disability Services Report

Commentary from Disability Services Division,
Department of Human Services

Continuing to maintain a vibrant and effective disability support sector is vital to the delivery of this Government’s reform program and to the provision of high quality services to Victorians with a disability.

To this end, the Department of Human Services (DHS) engaged PricewaterhouseCoopers (PwC) in 2008 to undertake an independent review of the current cost of delivering a range of out-of-home disability support services for people with a disability, the key factors driving growth in these costs over time, the strategies being followed by community service organisations to manage these cost pressures, and the scope for further cost control or offsetting in the future.

This work complements measures the Government has already put in place to strengthen the sustainability of Victorian disability service providers, including:

• An additional $9 million in 2008-09 to assist community service organisations to meet the costs of attendant care-related services.
• An additional $3 million in the 2009-10 budget ($12.million over four years) to assist Day Services providers transition to more flexible individualised funding models with a particular emphasis on systems and information technology development.  This builds on funding of $3 million in 2008-09 to support the industry in moving to more self-directed approaches.
• Up to $4 million in business sustainability grants, including specific work with National Disability Services Victoria (NDSV) on the workforce strategy.
• $15 million allocated in 2006-07 to support the sector to upgrade amenities and accommodation standards.
• Cooperatively developing a number of major learning and development initiatives with the sector.
• Providing annual price indexation to service providers through the Department’s service agreement system.
• An increase in the indexation rate for 2009-10 of 3.14 per cent, and capacity-building grants of $2 million each year for three years are also being provided.

While the project was contracted and funded by DHS, the project’s methodology, implementation, identification of issues and subsequent analysis of results were overseen by a Project Reference Group which included seven service providers and representation from NDSV.  NDSV was also funded by the Department to participate in the project and employ its own financial adviser to assist participating agencies to respond to the information requirements of the project.

The Review found that there was a wide variability across the community service sector in service models, business practices and financial data reporting and analysis capability, which made it very difficult for the consultants to draw definitive conclusions regarding reported unit costs at a funded activity level.

The Review concluded that there are real financial pressures on agencies but stopped short of recommending a specific price increase because of a number of factors, including the need for additional work to understand the impact of transport, regulatory compliance and infrastructure costs on service delivery, the variation in reported costs and the limited quality or detail of financial data reported by many agencies.  The Review concluded that the extent of any adjustment to service funding by DHS will vary by service, reflecting the different cost structure and configuration of services across the sector.

The Department will continue to work closely with disability agencies on the range of issues raised by the report. 

•  Price Review of Out-of-Home Disability Services Report (March 2009) (PDF 1.5 mb)
•  Price Review of Out-of-Home Disability Services Report (March 2009) - Appendices (PDF 213.9 kb)

Alternative formats

If you need alternative formats of documents, contact disability.services@dhs.vic.gov.au.