SDA represents significant value for money for the investment by the NDIA
By Greg Barry, SDA Services Founder and Principal Consultant
The recent Specialist Disability Accommodation Pricing Review 2022-23 helpfully confirmed the NDIA’s view for this:
SDA is also a crucial support as it helps with Scheme sustainability. SDA is only meant to be included in a participant’s plan if it represents value for money compared to costs of supports that would be required if SDA was not included in the plan. That is, SDA is a capital investment by the Scheme that is intended to reduce the lifetime support costs of an individual. Investment in SDA is, over the long term, intended to lower costs in the Scheme.[1]
Background and concerns which gave rise to the work
Since 4th quarter 2020, we’ve seen a high percentage of NDIA SDA decisions which state that the support does not represent Value for Money (“VFM”). This conclusion is articulated by NDIA when either:
● finding a participant ineligible for SDA, or,
● refusing the SDA building type (including living arrangement) and/or SDA design category which the participant was seeking.
When the latter occurs, the SDA decision has always approved a lower cost SDA than the scenario a participant had sought.
Considerations for SDA VFM conclusions are prescribed by Legislation in these words - “whether there are comparable supports which would achieve the same outcome at a substantially lower cost”.
Language Adopted by NDIA Decision Makers
Since 4th quarter 2020, we’ve seen language adopted for SDA decisions which adjusts this language. The word same is excluded and the word similar is substituted in its place. The word substantially is removed altogether leaving just lower instead of substantially lower. This departure from the language which the legislation mandates, invalidly lowers the notional bar for decision makers to conclude that SDA does not represent Value for Money.
SDA Services advocating for participants
We wrote to the former CEO highlighting this practice and we’ve raised the issue in many individual participants’ review submissions to no apparent avail. We’re concerned for participants who aren’t able to be alert to this.
We were also separately concerned that we had insufficient mathematical acumen and data to assert case by case calculations of the combined costs of SDA and other NDIS supports. The NDIA refusal decisions which reference Value for Money have never in our experiences provided any maths or data to justify negative VFM conclusions.
Journey to Building the Model
Jason Bretz joined our team and was tasked to create a financial modelling framework, based on his maths and economics background, for comparing the likely relative costs of the following scenarios:
1. Individuals’ preferred SDA outcome: their ideal home suitable for their needs.
2. Individuals’ non-preferred SDA outcome: NDIA Decision that doesn’t align with their preferences.
3. Non-SDA scenarios: e.g. home modifications, public and social housing, private rentals, family homes.
The model was built for case by case 20 year analyses and it scored matters such as:
● Support Models’ relative efficiencies,
● Savings from assistive technologies in SDA,
● How SDA can better enable informal supports,
● Informal supports burnout in SDA and non-SDA scenarios,
● Costs of repetitive home modifications for non-SDA scenarios.
Four People From the Same Family Who Live with Disability
The first report which Jason undertook was for four people who live with disability and who are members of the same family. Jason’s conclusion for them was that savings to the scheme would exceed $7M over 20 years (compared to non-SDA scenarios) if SDA was provided for a place where those family members could co-reside and where other persons might continue to provide highly valuable informal supports.
Advancing the Financial Modelling Framework
Tavis Bancroft then joined our team bringing his experience in Actuarial Science which complemented Jason’s expertise in Maths and Economics. Jason and Tavis further advanced the financial modelling framework and started to undertake multiple Value for Money Assessment reports. They engaged with a Professor of Actuarial Science from an Australian University Business School who undertook (with contributions from students) an arm’s length peer review of their work. That review occurred between May and November 2022 and resulted in a very positive validating outcome for Jason and Tavis’s work.
Survey and the Outcomes Achieved
Financial modelling inputs were being derived from conclusions in Occupational Therapists’ reports as well as participants’ and carers’ very relevant lived experiences together with facts and data gleaned from our subjective engagements with participants. When we considered what might be other cogent evidence it occurred to us that there were already a significant number of people who had been living in SDA dwellings for some time, in some cases for years.
We decided to independently commission a survey of those participants’ SDA lived experiences to compare their prior experiences with their SDA experiences through multiple lenses. So, in March 2022 we engaged Orima Research’s Tamara Reinisch (https://orima.com.au/) to independently conduct a survey. Following a period of 4 months collaboration with Tamara and her colleagues the survey went out. Our avenues for distributing it included very helpful assistance from members of the SDA Alliance.
In March 2023 the survey results landed with 115 responders. That was by far the highest number of participant survey responders in the SDA space. A summary of the survey results can be found here. [1] You’ll see that the results were highly favourable for SDA from both quantitative and qualitative perspectives. For NDIA decision making quantitative evidence is very relevant to VFM and qualitative is similarly relevant to Effective and Beneficial “E&B”.
Our original objective was to glean just quantitative data to inform our VFM financial modelling, so the qualitative data we received was a happy bonus which informs a separate body of work, which is the necessary analysis of whether SDA is E&B (a prerequisite to participants’ SDA eligibility).
Next Research Project
As a next step from all of that we’re undertaking a larger research project in collaboration with an Australian University. That project will explore how well the SDA Design Category Improved Livability “IL” sits with the SDA Needs Requirement.
The Needs Requirement mandates that for a participant to be SDA eligible SDA must manifest BFM for the NDIS and be E&B when compared to alternate mainstream housing scenarios.
Comparisons of Improved Livability with mainstream housing are far more nuanced than for the other SDA design categories for reasons including that accessibility in mainstream housing is trending somewhat positively. The Needs Requirement requires a comparison of other supports alone with combined specialist disability accommodation and other supports.
For this project, the analysis will be wide-ranging around the cost and effectiveness of Improved Livability outcomes compared to a broad range of mainstream housing options. Cohorts of persons whose needs are best met by Improved Livability are particularly broad and complex. Our financial modelling and survey work to date will be helpful contributors for that project.
From a market perspective the most recent SDA Pricing Arrangements have seen a welcome substantial uplift in SDA pricing for IL so the outcome of this research project may assist the market.
Value for Money (VFM) Assessments Data
I should share where our case-by-case VFM financial modelling assessments data is at.
Our Value for Money team members have now undertaken 263 VFM assessments. They comprise 64 complete reports and 199 desktop assessments.
72.5 percent of those assessments conclude, through that 20-year lens and considering the costs of all supports combined, that participants’ preferred SDA outcomes will produce better bottom-line financial outcomes for the NDIS than non-preferred SDA outcomes or non-SDA outcomes.
The Average Projected Savings Over the Next 20 Years
The average projected 20-year savings to the NDIS from that 72.5 percent above is $926,000 per participant (N 190 participants), which indicates a total NDIS savings of $8.843m per year for that relatively small sample.
Of the 27.5% of assessments (N 72 participants) where a preferred SDA outcome would result not in a decrease in NDIS costs but instead in an overall increase in NDIS costs, 41.5 % of that 27.5% of cases (N 32 participants) showed that those costs increases would be less than a total sum of $250K over 20 years.
Under ceteris paribus conditions, and assuming for example purposes that SDA eligible participants’ support packages (including SDA) would be an average a sum of $350,000 per year that sum would represent an overall saving of less than 3.5%. Though the word substantial is open to interpretation, it is suggested that a 3.5% saving should not be counted as substantially lower. This leaves aside the more challenging issue for the decision maker as whether preferred SDA outcomes would be the same outcome as the comparison for VFM purposes.
It is particularly noteworthy that all of the above issues have been considered without any regard to any likelihood of scheme savings possibly derived from positive wellbeing achieved by and for participants from their residing in their preferred living situation.
Key Takeaways from Value for Money Data
Therefore, the key takeaways from our VFM data thus far are:
● Over 81 % of our assessments see SDA manifest VFM for NDIS when participants achieve SDA approvals for their preferred SDA.
● For 72.5% of assessments the NDIS will save an average $46,300 per year per participant overall when participants achieve SDA approvals for their preferred SDA.
● This work would benefit from research which can measure any associations between participant wellbeing due to residing in their preferred living situation and costs to NDIS of disability supports over time.
Honour our VFM Team
An update on our VFM contributing team members. Tavis was awarded his Master of Actuarial Science late last year and has moved to London to take up an exciting position in his profession. Jason is having a well-earned break and will soon commence an internship with one of the big 4 Accounting practices in Australia. He has agreed to return to us after that! Before Jason left for his European adventure, he introduced us to his friend and colleague Ryan Curby who has pursued similar University studies to Jason. Ryan has joined our team and after receiving training from Jason, Ryan is busy producing our VFM assessment reports.
[1] Specialist Disability Accommodation Pricing Review 2022-23 P. 45