A Perth disability services organisation is banking on a diversification strategy to bring it back from the precipice.
Nulsen Group was on the brink of closing 10 of its group homes last year, according to chief executive Gordon Trewern.
The organisation, renamed PeopleKind Group last month, operated two businesses throughout 2021: Outcare, offering reintegration and support services; and Nulsen Disability Services, specialising in providing supported independent living arrangements to people with complex disabilities.
Mr Trewern said the National Disability Insurance Scheme had reduced the plans of some of its supported independent living clients, leaving the organisation to plug shortfalls in funding.
He said the group, which is one of the largest disability providers in the state according to Data & Insights, had accumulated about $5 million in debt over seven years to keep its supported independent living services in operation.
“The board had to make a decision,” Mr Trewern said.
“It got to the point where if they couldn’t stop that bleeding, the future of Nulsen Disability Services as an organisation came pretty close to disappearing.”
The board and leadership decided the only way out was to close 10 group homes, a decision that would leave about 50 people with complex disabilities without a place to live.
The organisation informed its clients and their families and made a last-ditch approach to the state and Commonwealth governments.
“We drew a line in the sand and said, ‘Enough is enough, and this is the end point’,” Mr Trewern said.
“If we don’t fix this, people are going towards the emergency departments because we have nowhere else to put them. We are shutting down and if this continues, we will have to close Nulsen Disability Services.”
Following their interaction with Nulsen, the state and federal governments assembled a team of senior officials to help reinstate some of the reduced funding packages and work through the organisation’s immediate issues.
Mr Trewern said this support, along with unpopular decisions such as making about 50 staff redundant and getting rid of the long-standing Enterprise Bargaining Agreement, helped Nulsen Disability Services return to a breakeven position.
Unlike many of its counterparts in the sector, the group did not choose to apply for JobKeeper.
Similar story
PeopleKind Group’s story has similarities to that of fellow disability services provider Activ Foundation.
In May, news broke that Activ, the largest provider in the state according to Data & Insights, had decided to close seven of its supported workshops, which would leave about 720 people with disability out of work.
The organisation said it was not viable to continue running the worksites as it was losing about $500,000 per month.
After much public attention, the federal government offered Activ a $7.8 million lifeline to keep its supported employment worksites open for another 18 months.
Mr Trewern said his organisation and Activ had been in similar positions and predicted others could follow suit.
“Now that JobKeeper has washed through, we are going to see some market failure over the next three years,” he said.
“Some colleague organisations, they don’t have big balance sheets, they are one or two financial years away from complete extinction because they just don’t have the money to keep running the deficits they are doing.”
These comments align with data from the National Disability Services State of the Disability Sector 2021 report.
It surveyed organisations nationally and found only half of those with a profit in 2021 expected to make a profit in 2022, with some providers noting JobKeeper payments helped them to break even or make an artificial profit.
Mr Trewern conceded in some cases the loss-making positions were due to organisations not adapting quickly enough to the changing funding landscape, instead of the amount of funding.
“There are some organisations that have had their heads in the sand and thought the NDIS would go away and are only now pulling their heads out of the sand,” he said.
Mr Trewern said the team at Nulsen had known the NDIS transition was coming and understood the implications of the new approach, but legacy systems, including its Enterprise Bargaining Agreement, made it difficult to move quickly.
“We didn’t have our heads in the sand but some of the levers could have been pulled sooner rather than later,” he said.
The organisation recently enacted its longstanding plan to diversify, so it can use surpluses in some business areas to counteract losses or breakeven positions in others.
The group added four new business streams, under the parent company called PeopleKind Group, which launched in July.
Melior Positive Behaviour Support, Pillar Support Coordination, SuperYou Therapy and Nesti Housing have been added to PeopleKind’s portfolio of organisations during the past 18 months.
The business streams were chosen due to their demand and profitability, to help support the mission-driven parts of the group.
Mr Trewern said there was significant demand for allied health, which led to the creation of SuperYou Therapy, while Melior Positive Behaviour Support offered services that were not readily available.
The group already provided housing services, but the function has now been separated into a separate entity called Nesti Housing.
He said the funding settings were right for building specialist disability accommodation, allowing the organisation to borrow money and pay it off more easily.
Mr Trewern said the structure left room for the organisation to diversify further in the human services sector.
“We have got Nulsen to a breakeven position and that’s fine, but it’s only fine if we have other parts of the business that can generate income to prop it up,” he said.
