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<strong>DES</strong> REPORT<br />

Disability Employment Services - <strong>Hivetec</strong> Paper<br />

hivetec.com.au<br />

1300 195 225<br />

JULY 2017


KEY STATISTICS<br />

INTRODUCTION<br />

& CONTEXT<br />

Roberts Consulting was<br />

commissioned by <strong>Hivetec</strong> to<br />

undertake a review of the<br />

recently published Disability<br />

Employment Services Reform<br />

(2018) Industry Information<br />

Paper.<br />

The purpose is to provide<br />

detailed analysis regarding<br />

the impact of the proposed<br />

changes on the <strong>DES</strong> provider<br />

network from 2018 and<br />

beyond.<br />

Disability Employment<br />

Services (<strong>DES</strong>) is the Australian<br />

Government’s specialised<br />

employment service for people<br />

whose disability is assessed as the<br />

main impediment to them gaining<br />

employment. It plays an important<br />

role in improving the social and<br />

economic participation of people<br />

with disability.<br />

ANNUAL<br />

PARTICIPANTS IN <strong>DES</strong><br />

180,000+<br />

<strong>DES</strong> PROVIDERS WHO<br />

ARE ALSO JOBACTIVE<br />

PROVIDERS<br />

28<br />

COMMENCEMENT<br />

PER MONTH APPROX<br />

7,900<br />

<strong>DES</strong> PROVIDERS IN TOTAL<br />

119<br />

INCREASE IN <strong>DES</strong><br />

PARTICIPANT LAST 6 YEARS<br />

70%<br />

<strong>DES</strong> SITES THAT ARE ALSO<br />

JOBACTIVE<br />

411<br />

<strong>DES</strong> SITES THAT<br />

DELIVER BOTH <strong>DES</strong>-<br />

DMS AND <strong>DES</strong>-ESS<br />

573


IMPROVING THE PERFORMANCE OF THE <strong>DES</strong> PROGRAM<br />

Over the next four<br />

years, the Australian<br />

Government will be<br />

investing more than $3<br />

billion in (<strong>DES</strong>) Services<br />

and its associated<br />

supports to help people<br />

with a disability find,<br />

secure and keep a job.<br />

IMPROVEMENTS<br />

The Government has been working with the sector to find ways to improve the performance of<br />

the <strong>DES</strong> program over an extended period. They argue that more people with disability should<br />

achieve the social, emotional and financial benefits that work brings.<br />

Currently <strong>DES</strong> provision is delivered by a range of providers (119) in total, these providers<br />

are a range of for profit and not for profit entities. Services are delivered from almost<br />

(2000) sites across (110) Employment Service Areas. More remote services are delivered<br />

under the Premier and Cabinet contracts via the Community Development (CDP) program.<br />

<strong>DES</strong> has two uncapped demand-driven programs, <strong>DES</strong>-Disability Management Service (<strong>DES</strong>-DMS) and<br />

<strong>DES</strong>-Employment Support Service (<strong>DES</strong>-ESS).<br />

<strong>DES</strong>-DMS<br />

Provides services to eligible job seekers with<br />

disability, injury or health condition who need<br />

assistance to find a job and occasional support in<br />

the workplace to keep a job.<br />

<strong>DES</strong>-ESS<br />

Provides assistance to eligible job seekers with<br />

permanent disability to find a job and who need<br />

regular, ongoing support in the workplace to keep<br />

a job.<br />

1<br />

ESAs do not currently include more remote areas of Australia. Services in remote areas are currently managed via the Department of Premier and Cabinet’s Community<br />

Development Program (CDP).<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

3


<strong>DES</strong><br />

COMBINED<br />

Combined, both programs deliver a suite of employment services to people with disability,<br />

injury or health condition who are looking for work in the open labour market. Referrals to the<br />

program are dominated by Centrelink accounting for almost 91% of all transfers, further 8%<br />

are sought via self-attachments known as direct registration and the remaining 1% is gathered<br />

via Work Assist (previously Jobs In Jeopardy). Over 180,000 people around Australia use <strong>DES</strong><br />

services every year. The market currently engages approx. 93,000 commencements per year,<br />

generating approximately 50,000 job placements. Disappointingly not everyone who gets a<br />

job through the current <strong>DES</strong> systems stays in employment, the long-term outcome rates have<br />

declined over recent years.<br />

The role of <strong>DES</strong> providers is clear, to provide tailored assistance to participants to find<br />

sustainable employment. To do this they are expected to build lasting linkages and develop<br />

local relationships with employers, assisting them to negotiate the complex web of financial<br />

products and incentives they can obtain. Participant skills development is equally critical as<br />

is connecting participants with ancillary support services. Ancillary services in this context<br />

are designed to meet some specific medical needs for an individual focused on their return<br />

to work. Such services can and often include psychologists and or other support services<br />

targeted at the individuals need in overcoming physical or mental disability.<br />

Participants in <strong>DES</strong> programs crucially must also satisfy the governments mutual obligation<br />

agenda. People on some types of income support are required to actively look for work to<br />

“justify” their assistance payments to the electorate. Providers are tasked with policing the<br />

conditionality.<br />

However, unemployment for People with Disability is an intricate network of causes and<br />

consequences which require a range of responses. This support should be tailored to each<br />

individual and their experience. Providers will need to become more skilled at tailoring support<br />

to the individuals by aligning the job outcomes with their goals and ambitions.<br />

4


TRANSFORMATION MARKETPLACE<br />

The 2018 <strong>DES</strong> Discussion Paper<br />

The 2018 <strong>DES</strong> discussion paper represents a transformational market, persistent key<br />

themes have been raised as deficient in the current system over an extended period, and 2018 will display<br />

significant change to the provider network.<br />

The six primary areas targeted at improving <strong>DES</strong>, applicable to both <strong>DES</strong>-Disability Management Services<br />

(<strong>DES</strong>-DMS) and <strong>DES</strong>-Employment Support Services (<strong>DES</strong>-ESS), are outlined below:<br />

Increasing participant<br />

choice and control<br />

in the services they<br />

need<br />

Driving greater<br />

competition and<br />

contestability in <strong>DES</strong><br />

Aligning incentives<br />

to support better<br />

outcomes<br />

PAGE 08<br />

PAGE 10<br />

PAGE 12<br />

Improving the gateway<br />

and assessment<br />

process for <strong>DES</strong><br />

participants<br />

PAGE 14<br />

Better targeted<br />

assistance in the<br />

workplace<br />

PAGE 15<br />

Improved Employer<br />

engagement,<br />

Education and<br />

ongoing relationships<br />

PAGE 17<br />

These changes aim to build on the strengths of the current system while<br />

maintaining stability for participants, employers and providers.<br />

hivetec.com.au<br />

5


HOW PROVIDERS WILL<br />

LIKELY NEED TO OPERATE<br />

<strong>DES</strong> SERVICES POST 2018<br />

REFORMS<br />

The 2018 reforms will cause substantial upheaval for the sector, with significant regulatory<br />

and payment transformation declared.<br />

The market is being pushed towards a more demand driven service delivery model with<br />

greater risk burdens on the provider base.<br />

6


Key Statistics<br />

Funding Envelope $800M (PA)<br />

Businesses #119<br />

Annual Indexation 1 July 2019<br />

Life Cycle Stage Transformational<br />

Revenue Volatility Medium<br />

Competition Level High & Increasing<br />

Capital Intensity Increasing<br />

Concentration Level Increasing<br />

Regulation Level High<br />

Technology Change Medium<br />

Barriers to Entry Reducing<br />

Industry Globalisation Med<br />

The summary tables that follow highlight the key themes for further investigation and are useful<br />

in broadening our knowledge in this complex shifting policy area.<br />

We have outlined the policy shift, and how the current model will transform under the new<br />

structure. Finally, we offer insight into how the changes will affect the provider base, via a<br />

(SWOT) analysis.<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

7


INCREASING PARTICIPANT CHOICE AND CONTROL IN THE SERVICES<br />

THEY NEED<br />

Current Model<br />

Participants have limited information about<br />

providers to inform their choice<br />

Limited participant control in the job planning<br />

process.<br />

Limited choice of provider: management of<br />

referrals limits participants’ choice of provider.<br />

Provider directed service<br />

Participants face restrictions on changing<br />

providers at will.<br />

Changes Proposed<br />

Increased participant control of services<br />

Participants to choose their provider and to change their<br />

provider if unsatisfied, with funding following the participant.<br />

Participants having more say in their Job Plans and better<br />

information to empower participants during service planning.<br />

Increased choice of providers<br />

Relaxed ESA boundaries to enable choice of provider.<br />

Greater information for participants about providers and the<br />

services they offer, and others’ experiences of providers.<br />

Implications<br />

1. Participants will be able to choose their <strong>DES</strong> Provider, and change their <strong>DES</strong> Provider, up to 5 times in any 2 year<br />

period. Participant choice will be supported by more detailed information about <strong>DES</strong> Providers’ services and<br />

performance including likely changes to the publication of Star Ratings, and a relaxation of ESA boundaries for<br />

Participants.<br />

2. The new model also allows for greater use of technology based service delivery, for example, attending<br />

appointments via videoconference. <strong>DES</strong> Providers will need to be equipped to offer this type of innovation<br />

in service, whilst ensuring that Participants meet any evidentiary requirements for attendance and mutual<br />

obligation.<br />

3. Participants may also have the option to ‘unbundle’ their services, e.g. to seek Job Brokering from one Provider<br />

and In-Work Support from another. This level of flexibility may see some Providers becoming specialists in a<br />

particular area of <strong>DES</strong> service provision or specialist provider spinoffs could evolve.<br />

4. Initially, Participants may stay with their current <strong>DES</strong> Provider. However, as Participants’ awareness of choice<br />

and options begins to develop, customer demand for higher quality Providers and innovative, specialist services<br />

is likely to grow.<br />

To attract clients and retain or grow market share, <strong>DES</strong> Providers will need to be in a position to effectively<br />

market their suite of services, adapt their service offering to meet customer needs, and demonstrate results.<br />

8


KEY CONSIDERATIONS<br />

:-)<br />

FRIENDLINESS OF SERVICE<br />

In order to attract Participants, <strong>DES</strong> Providers will need to place a greater emphasis on customer<br />

service skills such as communication, friendliness and attentiveness to individual needs.<br />

Customer service skills targeted to the needs of the individual will be highly valued by consumers and<br />

therefore service providers as the model evolves<br />

CUSTOMISE<br />

DATA CAPTURE<br />

Customisable work flow management software<br />

which ensures that correct processes are followed<br />

and enables smoother outcome tracking will be<br />

critical for <strong>DES</strong> Providers as outcome payments<br />

make up a larger proportion of income.<br />

Data capture software that is less onerous<br />

than the Government’s ESS web platform, and<br />

supports a higher level of customer service and<br />

engagement, is likely to be viewed as a value add<br />

for <strong>DES</strong> Providers.<br />

VIDEO-CONFERENCING<br />

TECHNOLOGY<br />

Video-conferencing and video interviewing or<br />

similar technology will play a greater role in how<br />

services are delivered. Linking these facilities<br />

to the central CRM may be beneficial for <strong>DES</strong><br />

Providers.<br />

<strong>DES</strong> Providers will need to offer access to<br />

technology and equip Participants with the<br />

necessary technological skills to meet the demands<br />

of the modern labour market. Adopting MWS<br />

and its functions can support the development of<br />

these skills.<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

9


DRIVING GREATER COMPETITION AND CONTESTABILITY IN <strong>DES</strong><br />

Current Model<br />

(Market Share Approach)<br />

Heavily regulated provider market<br />

Customer flow is allocated on a market share<br />

arrangement and coordinated by Centrelink<br />

Difficult for new providers to enter <strong>DES</strong> market<br />

during the 5-year term of the Deed.<br />

High barrier to entry and long term security<br />

High performing providers restricted in<br />

expanding business to new and existing<br />

markets during the 5-year Deed term<br />

Providers have a relatively stable cashflow<br />

forecast and stable business environment<br />

Margins are high 20%+<br />

Changes Proposed<br />

(Open Market Principles)<br />

More flexible provider market<br />

<strong>DES</strong> Provider Panel to make it easier for existing providers to<br />

expand and for new providers to enter <strong>DES</strong> market.<br />

Market share restrictions lifted so successful providers can grow.<br />

Lower barriers to entry with lower security, numerous providers<br />

issued licences to operate in each ESA<br />

The flow/volume of jobseekers engaging with a provider will be<br />

more market driven.<br />

Providers will have uncertain cashflow forecasts with little or no<br />

reduction in fixed costs.<br />

Providers will have more competition and increased uncertainty<br />

(Amplified Risk & greater need to engage, retain and deliver on<br />

participant’s expectations)<br />

Margins lower than 7-9% expected<br />

Implications<br />

1. Five-year licenses for <strong>DES</strong> will be issued using an ‘approved provider panel’ system, which replaces market<br />

share allocation. The approved provider panel will streamline entry to new ESAs for high-performing Providers<br />

and also enable new entrants to apply for licenses during the five year term.<br />

2. Once approved to operate in an ESA, Providers will be free to promote their services and attract Participants<br />

in a contestable market. Participants will be able to switch Providers and seek more suitable, quality services<br />

outside ESA boundaries, meaning service revenue for Providers will be much less predictable.<br />

3. Despite the lack of guaranteed market share, ESA coverage will remain a key procurement factor for <strong>DES</strong>.<br />

Providers will need to be able to demonstrate that they can deliver services across the entire ESA, e.g. through<br />

a combination of full time, part time and outreach services. This increases risk for Providers, particularly those<br />

that do not have other contracts to support infrastructure.<br />

4. It is anticipated that Providers will likely favour delivery locations on, or near, ESA boundaries to attract<br />

Participants from adjacent ESAs without increasing fixed costs.<br />

10


KEY CONSIDERATIONS<br />

MARKETING<br />

RETENTION<br />

Over the next 12 months, existing <strong>DES</strong> Providers<br />

who wish to continue under the new model,<br />

will need to focus on retaining their customer<br />

base. This means a focus on internal marketing<br />

programs targeting existing <strong>DES</strong> Participants.<br />

GUIDELINES<br />

In a contestable market with consumer choice,<br />

systems which support customer retention will<br />

be valuable to <strong>DES</strong> Providers. The introduction<br />

of addition functionality such as customised<br />

letter templates (Is switching right for you? Talk<br />

to us first.) and other documentation to support<br />

ongoing customer contact. <strong>DES</strong> Draft Deed details<br />

will be required in order to explore these options<br />

further, expected August.<br />

<strong>DES</strong> Providers will benefit from being able to reliably implement processes and guidelines, and maintain<br />

a consistent standard of customer service for Participants across their business. Providers would benefit<br />

from customisable workflow process mapping focused on crucial points in the job seeker engagement<br />

sequence. For example, an ‘Initial Engagement Workflow’ that captures all the essential customer servicing<br />

preferences.<br />

STRATEGIES<br />

Marketing strategies targeting both potential new Participants and employers will also be<br />

critical. We see significant upside for Providers who are able to leverage relationships with<br />

large employers proven to recruit <strong>DES</strong> clients, eg. Bunnings Warehouse. Additional system<br />

functionality which supports marketing and service promotion to these key groups would be<br />

favorable to providers.<br />

a. Number of employers visit conducted this month<br />

b. Number of interviews arranged this week<br />

c. Average time to placement<br />

d. The average salary of placed participants<br />

e. Key stats on caseload mobility<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

11


ALIGNING INCENTIVES TO SUPPORT BETTER OUTCOMES<br />

Current Model<br />

Funding Ratios:<br />

60% Service fees /40% outcome fees<br />

Reward is based on higher mix of service fees and a<br />

smaller proportion based on outcome fees.<br />

Unintended consequences “creaming & parking”: the<br />

current funding model encourages providers to focus<br />

on easier-to-place job seekers, rather than more difficult<br />

to place job seekers.<br />

Current funding model may encourage poor jobmatching<br />

and a focus on short term outcomes.<br />

Funding is not linked to participants through pro-rated<br />

fees.<br />

Changes Proposed<br />

Funding Ratios:<br />

50% Service fees / 50% outcome fees<br />

Reward will be more outcome focused; payment for<br />

service activity and payment for results are equally<br />

apportioned<br />

Risk adjusted funding model with competition and<br />

contestability - Pricing Mechanism/Reward and<br />

Performance<br />

Risk-adjusted payments based on key difficulty markers<br />

Risk-adjusted outcome fees should lead to more<br />

investment in hard-to-place job seekers.<br />

Funding will be linked to individual participants through<br />

pro-rating service fees when/if a participant changes<br />

provider.<br />

Implications<br />

1. In the current environment, many <strong>DES</strong> Providers operate on a loosely defined ‘aggregate cost’ business<br />

models. Broadly, this is determined based on total service fees for the Provider’s market share of clients plus<br />

an estimated percentage of outcome payments for a small proportion of clients. The aggregate cost approach<br />

masks the true cost of service delivery for <strong>DES</strong> Providers and the cost of delivering a full outcome to a specific<br />

individual. Under the new funding arrangements – with non-guaranteed market share, pro-rated service fees,<br />

and 50% outcome payments – the aggregate cost model is no longer feasible for <strong>DES</strong> Providers.<br />

2. The new funding model rebalances payment ratios equally between service fees and outcome fees. In effect,<br />

a further 10% of current guaranteed income will now be contingent on performance. Increasing the PbR<br />

(Payment by results) aspect of the contract at 50% of total.<br />

3. Payments are also based on a Participant risk adjusted funding model; <strong>DES</strong> Providers will receive higher<br />

payments for placing those job seekers deemed ‘hardest to place’. This is designed to encourage greater focus<br />

on hard-to-place job seekers, but presents a significant cash flow risk for <strong>DES</strong> Providers.<br />

4. Other changes to the payment model will also impact Provider cash flows, increase costs, and tend to amplify<br />

risk. In particular:<br />

• Service Fees will be paid to <strong>DES</strong> Providers on a pro-rata basis and will be linked to individual<br />

Participants. If a Participant chooses to switch Providers, the balance of the Service Fee will be<br />

transferred to the new Provider.<br />

• The traditional ‘job-start’ fee will be replaced by a 4 week outcome payment, to ensure that<br />

Participants start a job well. Further payments will then be available after 13, 26 and 52 weeks<br />

of employment. Effective Administrative processes will be critical to ensure outcome payment<br />

tracking.<br />

12


KEY CONSIDERATIONS<br />

OPERATING MODELS<br />

Progressive <strong>DES</strong> Providers will need to establish an activity based costing model that tracks all of the inputs<br />

required to generate a sustained job placement for Participants in each stream. Technology which can<br />

help to track workflows, costs and expenditures at the individual level will be of significant benefit to <strong>DES</strong><br />

Providers in this environment.<br />

IT<br />

INSIGHTS<br />

<strong>DES</strong> Providers will need IT systems which can<br />

support them to manage and track outcome<br />

claims over an extended period. System providers<br />

should be clear about how the product will meet<br />

this need.<br />

System functionality which delivers actionable<br />

insights from workflow patterns is likely to be of<br />

value to Providers. For example, if a previous claim<br />

from an employer required payslip verification,<br />

an active prompt that flags this early will help to<br />

prevent future delays to cash flow.<br />

FUNDING SHIFT<br />

1 JULY 2019<br />

The removal of guaranteed market share and<br />

the funding shift towards outcome payments<br />

on a sliding scale, may affect willingness to pay<br />

block fees for software. <strong>DES</strong> Providers will need<br />

to introduce variable servicing arrangements for<br />

job seekers in Streams 1 to 5, which reflect the<br />

investment and return offered for each client<br />

group.<br />

Funding indexation will be applied from 1 July<br />

2019.<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

13


IMPROVING THE GATEWAY AND ASSESSMENT PROCESS FOR <strong>DES</strong><br />

PARTICIPANTS<br />

Current Model<br />

Weaknesses with assessment process noted<br />

Concerns around the effectiveness and efficiency of<br />

ESAts and Job Capacity Assessments (JCAs).<br />

Changes Proposed<br />

Improved assessment process<br />

Current assessment process is under review<br />

Implications<br />

1. Employment Services Assessment (ESAt): changes to ESAts are not part of the reforms commencing on 1 July<br />

2018. However, a review of assessments will be undertaken, in consultation with the sector, which may result<br />

in changes being introduced from 2019 as the new <strong>DES</strong> program becomes established.<br />

2. The National Panel of Assessors (NPA) provides a range of assessment services to meet the needs of people<br />

with disability in the workplace. Existing NPA contracts will be extended from 30 June 2017 to 30 June 2018,<br />

and a new NPA will be established in 2018 through an application process.<br />

KEY CONSIDERATIONS<br />

CASELOAD<br />

INSIGHTS<br />

Current pricing model is based on active caseload,<br />

we know that approximately 90,000 individuals<br />

are actively engaged in <strong>DES</strong> at any one time with a<br />

churn factor of approx. (2:1) over a rolling twelvemonth<br />

period.<br />

Considerable volumes of individuals not receiving<br />

<strong>DES</strong> services could become eligible e.g. some could<br />

be eligible under NDIS employment supports, in<br />

total its estimated that approx. 250,000 eligible<br />

participants don’t presently consume the <strong>DES</strong><br />

service, with most sitting at the (0-14) hour work<br />

capacity assessment. (DHS Administrative Date –<br />

Provider Briefing June 2017)<br />

14


BETTER TARGETED ASSISTANCE IN THE WORKPLACE<br />

Current Model<br />

Poorly targeted Ongoing Support<br />

Incentive structure does not align with ongoing support<br />

needs of participants.<br />

Changes Proposed<br />

More effective Ongoing Support<br />

Introduction of fee for service and benchmark hours to<br />

better target Ongoing Support.<br />

Implications<br />

1. Work Assist will replace the current Jobs in Jeopardy services. Work Assist Service providers will be<br />

compensated on a fee for service basis to aid people with disability already in work who need support to<br />

remain in their job.<br />

2. The weekly minimum work hours for a <strong>DES</strong> participant to maintain eligibility for Ongoing Support will be eight<br />

hours a week. This change brings consistent eligibility criteria for Ongoing Support across the whole <strong>DES</strong><br />

program.<br />

3. <strong>DES</strong> Providers will need to develop stronger linkages with stakeholders, including community and health<br />

services and Registered Training Organisations, to provider effective Ongoing Support services.<br />

hivetec.com.au<br />

15


LONGER-TERM CONNECTIONS<br />

KEY CONSIDERATIONS<br />

ENGAGE<br />

PORTAL<br />

With a greater need to engage and maintain longerterm<br />

connection with Participants and employers,<br />

<strong>DES</strong> Providers will need to invest a share of their<br />

potential future income on increased contact,<br />

understanding and visibility with employers.<br />

PARTICIPANTS<br />

In Work Support has traditionally focused on the<br />

Participant. However, our view is that support<br />

initiatives should be further geared towards<br />

supporting the employer. Investment is required<br />

to focus attention on developing an employer<br />

portal/gateway.<br />

IT SUPPORT<br />

Effective ongoing contact must be tailored to<br />

the Participant’s needs and the industry of<br />

employment. Ongoing support is particularly<br />

critical for assisting clients with mental health<br />

issues to maintain employment. Although this<br />

group represents 35% of the total <strong>DES</strong> case load,<br />

the industry invests a relatively small proportion of<br />

funds in effectively meeting their needs.<br />

This should be packaged in a convenient and easily<br />

accessible format for employers and participant<br />

alike. This aspect could benefit from innovation<br />

and demands close provider, employer and IT<br />

support service collaboration as new contracts<br />

develop.<br />

HELP & SUPPORT<br />

Post placement supports will need more<br />

attention from <strong>DES</strong> Providers in order to achieve<br />

outcome payments. Tools such as integration<br />

of placed candidate details with staff member<br />

diaries could be valuable to <strong>DES</strong> Providers and<br />

help do deliver more efficient post-placement<br />

support.<br />

16


IMPROVED EMPLOYER ENGAGEMENT, EDUCATION AND ONGOING<br />

RELATIONSHIPS<br />

Current Model<br />

Limited employer awareness and incentives<br />

Limited employer awareness or understanding of <strong>DES</strong><br />

and hiring people with disability.<br />

Some employers unwilling to employ people with<br />

disability.<br />

Education Outcomes are payable where a participant<br />

completes a semester of a Qualifying Education Course<br />

at Certificate II or above<br />

Changes Proposed<br />

Improved employer awareness and incentives<br />

Better communications with employers about benefits of<br />

hiring people with disability.<br />

Trialling of employer-nominated initiatives.<br />

Education Outcomes are payable where a participant<br />

completes a semester of a Qualifying Education Course<br />

at Certificate III or above<br />

Implications<br />

1. <strong>DES</strong> Providers must build stronger relationships with employers to understand their skills and labour needs and<br />

match suitable Participants to vacancies. Providers will also need to streamline employer access to financial<br />

support and incentives for workplace adjustments, disability awareness training and development of workplace<br />

policies and practices that break down barriers to employment.<br />

2. In-Work support for employees and employers will need to be offered for as long as required. It is likely that<br />

<strong>DES</strong> Providers will need to look at innovative approaches to In-Work support in order to secure longer-term<br />

outcome payments.<br />

3. Participants will need to complete a Certificate III level course (rather than Certificate II) in order to trigger an<br />

Education Outcome payment claim for <strong>DES</strong> Providers. This is designed to ensure that education and training<br />

is better targeted towards attaining employment. <strong>DES</strong> Providers may also need to invest additional resources<br />

to support Participants through Certificate III courses, in order to secure payments. Many providers presently<br />

generate approx. 30% of all outcomes from education results, with many not moving to employment after. This<br />

will now be far harder to achieve, placing further risk on the income generating ability. Cert II activity will now be<br />

outcome investment outlay, to date this investment mindset has been lethargic in the industry<br />

KEY CONSIDERATIONS<br />

ANALYSIS<br />

DATA<br />

Provider would benefit from the identification<br />

of sustainable outcomes that had incentives<br />

influences on the result. Detecting the influence<br />

of subsidies and or other interventions can<br />

help future outcomes and lasting relationships.<br />

Such analysis would be highly advantageous to<br />

providers.<br />

Not all employers respond to servicing and<br />

initiatives in the same way. Often several<br />

engagements with an employer in a short period<br />

can result in counter-productive result. This data<br />

at the ESA level would be very helpful for providers,<br />

they could categorise employers so they remain<br />

both responsive and courteous.<br />

hivetec.com.au<br />

17


PROVIDER PERSPECTIVE SWOT<br />

Strengths<br />

Weakness<br />

Low cost tender round for incumbent at 3* or above<br />

Retain distinction between DMS and ESS services yet<br />

via single contract<br />

Consumer choice, empowering participant to move<br />

between ESA boundaries<br />

Provider growth encourage when delivering above<br />

market performance<br />

Higher outcome payment for certain clients<br />

Low prescribed servicing requirement, room for<br />

innovation<br />

Poor provider removed form market after 4 qtrs of<br />

under performance<br />

No market share allocation<br />

Funding reduced from 60/40 to 50/50 PbR<br />

New cost of sale requirement<br />

Reduced barriers to entry for new entrants<br />

Consumer switching, with cash transferring with<br />

individual<br />

More panel # in each ESA (Increased competition for<br />

participants)<br />

Provider outcome payment stretched over 52 weeks<br />

Greater visibility on past performance<br />

3-month service fees upfront<br />

Lower work capacity requirement for full outcomes<br />

Opportunities<br />

Threats<br />

Innovation in service delivery<br />

Strong entry level jobs growth from NDIS & care<br />

sector<br />

Existing infrastructure can be leveraged for <strong>DES</strong><br />

Softening employer perception around mental health<br />

Low interest rate environment<br />

The use of outside service providers to perform<br />

various non-core activities<br />

New entrants competing for participants<br />

Less predictable cashflow<br />

Risk adjusted funding requires different servicing<br />

requirements /costing per stream<br />

Longer PbR risk 4: 52 weeks<br />

Longer ROI window for providers<br />

Loss of supporting contracts underpinning<br />

infrastructure costs<br />

Less possible external funding availability<br />

Education outcome increased from CII to CIII,<br />

affecting performance<br />

18


BLUE SKY THINKING<br />

TIME & EFFORT<br />

• Jobseekers needing time and high levels of effort and investment to compete in the mainstream labour market will<br />

now be rewarded at a higher rate, provider will need a variable servicing arrangement to reflect the adjustment in<br />

effort/time and risk of outcome being achieved. Support providers should recognise this shift in (PbR) contracting<br />

terms and share some of the increased risk providers face.<br />

• Implement an ESA specific Employers CRM pre-populated with contact details, locations and company classed as<br />

Disability Friendly or Disability Aware would be highly treasured.<br />

• Improvements in the availability of technology and innovation in service delivery is key. Providers will likely seek to<br />

deliver subsequent contacts in a less costly manner, for example video conferencing, iphone, email or instant chat. The<br />

challenge of remote servicing is accessibility for the participant and recording of the activity in a system. The use of<br />

voice to text capability and transcription for the new wave of customer interaction would be alluring.<br />

• Introducing a Unique Student Identifier (USI) linking tab will be useful for providers. Some <strong>DES</strong> participants could be<br />

eligible for other government training incentives. Such support asists the provider in upskilling participants at little or<br />

no additional cost.<br />

Disability Employment Services <strong>Hivetec</strong> Paper<br />

19


CONCLUSIONS<br />

The changes proposed<br />

are wide-ranging, the most<br />

significant being increased<br />

consumer influence on provider<br />

choice and the increased<br />

weighting of outcome payments<br />

on total provider revenue.<br />

New providers must attract their own referrals from Centrelink. Should volumes come in lower than<br />

projected, the new providers’ ability to recover fixed costs through (PbR) revenue is immediately limited,<br />

and the economics of a programme can be fundamentally undermined.<br />

We conclude that market forces are unlikely to have a major affect at the initial spill. Unless government<br />

amends the pre-offering slightly and bids a small market share provision to new entrants, whom we feel<br />

will be reluctant to start delivering services until they have minimum viable caseloads.<br />

History tells us that <strong>DES</strong> clients are likely to exhibit a high degree of inertia when switching to an<br />

alternative supplier, we have seen such behaviour in prior <strong>DES</strong> contracts and more recently in the NDIS<br />

consumer choice environment.<br />

Over time as more individuals embrace choice and variety, <strong>DES</strong> participants are likely to be attracted to<br />

the following five pull factors when exercising choice:<br />

1. Ease of accessibility. (“status quo bias”)<br />

2. Prior/existing consumer experience (people interaction & digital interaction).<br />

3. Delivery branding.<br />

4. Organisational values and culture.<br />

5. Most lenient in meeting mutual obligation requirements if known by participant.<br />

Current proposed structure heavily favours incumbents, especially those with overlapping contracts and<br />

existing infrastructure in situ. From July 2018, likely after a good six-to-twelve months’ larger providers<br />

will have some vulnerability to customers switching in search of more personalised or specialist services<br />

in the form of new and more engaging delivery platforms, if these new providers can bridge the funding<br />

black hole of outcome based contracts.<br />

20


NOTES...<br />

hivetec.com.au<br />

21


MARKETING & ARTWORK BY<br />

marketingbiz.com.au<br />

REPORT GENERATED BY ROBERTS CONSULTING<br />

robertsconsulting.com.au

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