Will Your Systems Make or Break You?

With new Government funding reforms including the National Disability Insurance Scheme being introduced, the Not for Profit sector is now required to have more transparency and accountability. Finance sustainability consultant Mark Sheldon-Stemm outlines why it’s important to get NFP systems ready for change.

The way funding is provided to the social sector is changing with a greater level of transparency and accountability being required by service providers.

This direction is being driven by a general philosophy of consumer empowerment and governments need to reduce the cost of services.

Consumer Empowerment

The various services being offered to consumers across the whole social sector (for example, aged care, disability and mental health) are undergoing reform from being services provided to the consumer to services being offered to the consumer, where they have the choice of what services they want (often referred to as Consumer Directed Care).

This reform will challenge many current service providers in how they “market” themselves to the consumers.

Cost Reduction of Services

Governments of all types understand that the demand for services will grow in the future (for a number of reasons), their resources are finite and any service has to be provided at a cost that is competitive and transparent.

The introduction of a consumer empowerment model of services is one way of introducing competition and transparency so governments can make sure they are able to see the costs and service providers can fully account for what is spent.

The government’s bottom line is – “the best bang for the buck” and if a service provider cannot show this then their funding is likely to be moved to someone who can show “value for money”.

Where are your systems at?

Therefore, if consumers decide what their money is spent on and the government is after value for money, how does a service provider make sure they can track their service costs and remain sustainable into the future?

Systems, such as care, customer management and accounting often operate independently with any reporting across the whole business relying upon staff combining information and informing different parts of the service on how they are performing.

Unfortunately, the future of consumer directed care and its transparency will test these systems. The care system may show how many hours should be charged to consumers, but a financial system is necessary to match this.

The requirement to keep individual budgets and costs for each consumer and to report these there is no margin for error.

What is not charged to a consumer today is a loss the service provider will have to absorb, as the old “pooled” system of funding will be a luxury of the past.

So how do service provider’s systems stand up to the new requirements? Will they be able to keep track of every dollar they spend and will their systems make sure that these costs are fully recovered?

This is the challenge because if they don’t then there is no room for any undercharging to be reclaimed.

Their systems (care, customer and accounting) must be able to work across the whole business.

The challenge for every service provider is to look at their systems, carry out an audit on their capabilities and be prepared for the new world of service delivery. If they don’t then they are unlikely to be part of the future world of service provision.

As part of a Victorian Government initiative, I have developed a tool (in conjunction with Australian Multicultural Community Services) called – CDC – Strategies for Success which can be used across the whole business. The tool, and the training for it, is available to service providers.  

About the author: Mark Sheldon-Stemm is a consultant focused on the financial sustainability of the social sector and he works with clients to assist them to remain financially viable and strong into the future. He is a co-founder of a national suicide prevention program and has qualifications in commerce, computer science, psychology, sociology and economics.