The requirement for capital funding by service providers is likely to be ongoing given the continuing nature of service reforms and the manner in which fixed asset lose value. Given this ongoing requirement, the establishment of preferred funding models should be accompanied by the formal acknowledgement by the Department that a capital pool will be available to meet warranted capital investment requirements.
The size of the capital pool does not need to be predefined, given that infrastructure replacement can occur on a periodic, irregular basis. However, the formal existence of the capital pool approach needs acknowledgment in order to provide an incentive to the service sectors to approach capital planning in a more formalised manner. To encourage this more rigorous approach, the Department may also publish rules regarding access to the pool. For example, the pool may be opened for applications in two set periods in each year; this would have the benefit of encouraging orderly and rigorous development of applications and benefit the Department as it would assist the prioritisation of spending when needed.
The quantum of the pool at this date is not known. It is assumed, however, that the draw down of the capital pool should be of the same order of previous capital investment made by the Department in sector infrastructure.
ABCD
11. Next steps
The following table summaries the key transition steps for each of the services types covered by the Disability, Family Support, and Out of Home Care service sectors. The required tasks, levels of priority, timeframes and parties responsible for the tasks are identified. Priority is defined as:
Short term Within the next 6 – 12 months Medium term Within the next 12 - 18 months
Long term Within the next 18 months to three years Table 6 - Summary of transition steps (Source: KPMG)
Task Details Priority
Communication and education
Undertake broad communication and information provision
Develop briefing papers and communiqués to provide information to the sector, key industry bodies and other key stakeholders to provide information about the new funding arrangements and the transitioning arrangements.
Short term
Finalising elements of resource allocation and pricing model
Establish capacity in the Department to manage funding reform
Identify staff to implement new funding model.
Consider knowledge and skills required to implement, support and monitor effective change and undertake training and development as required.
ABCD
Task Details Priority
Identify funding pot to enable short-term
transitioning to new pricing structures
Quantify funding shortfall that will be present in the short term as a result of providing additional funding to organisations being ‘uplifted’ before savings are realised from other organisations moving to lower funding.
Negotiate with government to identify funding to cover short-term shortfall.
Short term
Acknowledge capital funding pool and finalise arrangements for capital funding
Formally acknowledge the existence of a capital pool approach.
Develop rules regarding access to the pool and communicate this to the sector.
Identify quantum of capital pool, based on previous capital investment made by the department in sector infrastructure.
Update service specifications to align to agreed capital funding approach.
Medium term
Preliminary preparation for transition to new funding model
Identify available budget for in-scope services7
Confirm resource allocation, based on population-based allocation, including appropriate adjustment for rurality and socio-economic factors, potential limited requirement (refer to Report 1: page 107, section 9.6).
Short term
7
Specifically, the services that are the subject of this Resource Allocation and Unit Pricing Framework: Disability Services, Family Support Services, Out of Home care Services; and Community Gateway Services.
ABCD
Task Details Priority
Map existing services to required service system model8
Identify current service system model required, based on demand, level and type of need, and current evidence based practice (i.e. what do we want our service system to look like?).
Map current service model against required service model (e.g. do the current services provide the types and level of service that we want, to meet demand, and are there any gaps or duplications?).
Identify organisations current delivering in-scope services and map their current delivery (types of service, target client group and levels of activity) against required service model.
Medium term
Supporting organisations to transition to new model
8
ABCD
Task Details Priority
Assess ‘as-is’ status of each organisation delivering in- scope services
Meet with individual organisations to9:
Discuss implication of the new model.
Confirm service(s), target client group(s), location and coverage of service(s) (e.g. regional / statewide), units and level of service(s) and levels of activity currently purchased10.
Confirm total current funding per organisation.
Identify organisations requiring additional support and facilitate this support if required. This might include organisations that:
− require support to interpret their current funding allocation and costs − are likely to have a significant amount of funding rationalised under the new
pricing model
− need support to define the service model and/or who may need to revise their service model.
Short term (block funded services particularly services transitioning on fixed funds and negotiated service volume)
to Medium term (other services)
Develop transition plans for each organisation
Where necessary, negotiate required changes to service provision (i.e. service activity, level and units) and/or to service model (e.g. client group, service practice used).
Negotiate new funding, based on Resource Allocation and Pricing Framework, for each organisation. This will include considering new unit pricing and block
Per above
9
Note that not all organisations provided this information through surveys for this project. 10
ABCD
Task Details Priority
funding for each service provided by each organisation.
Agree transition plan with the organisation, based on nature and degree of change in funding.
Formalise new arrangements
Update service specifications, as required, to incorporate changes to service activity and level and to establish key service quality measures.
Update contracts/ funding agreements, as required, to incorporate changes to funding and mechanisms to monitor progress against agreed funding transitions (e.g. achievement of cost savings over time period specified in transition plan).
Per above
Enabling implementation and long term tasks Consider and incorporate
future indexed labour cost
Seek input from NDS Executive as to final mandated rates of pay (when final MEA is in place) and index labour cost appropriately, for future funding.
Medium to long term
Agree timeframe for review/ revalidation of unit prices
Identify date for revalidation of pricing and resource allocation to consider required changes to funding as a result of a) population changes that impact of resource allocation and b) emerging evidence based practice that impacts on service models.