Small allied health practices could become collateral damage in NDIS reforms

Thousands of small healthcare-related businesses are at risk of being left behind as major changes to the NDIS and the rollout of the Thriving Kids program take place. The Council of Small Businesses of Australia and Allied Health Professions Australia are calling on the government to intervene and provide support to help these providers make a smooth transition.

A business built around a system that is now changing

Many occupational therapists, speech therapists, physiotherapists, psychologists and other allied health professionals have opened private practices as the NDIS expanded, investing in premises, hiring doctors and building businesses around the existing system. As members transition out of the NDIS and new service models for Thriving Kids take shape, COSBOA CEO Sky Cappuccio says the impact on these businesses and the communities they serve needs to be addressed directly.

“These are not faceless service providers. These are small business owners who have spent years building practices, hiring people and investing in their communities,” Cappuccio said. “Many have built their businesses in response to the system created by governments. Now this system is changing significantly, and some are facing another serious restructuring, and not without failure.”

AHPA chief executive Bronwyn Morris-Donovan says the organization shares COSBOA’s concerns about how the sector will cope with this shift. “We absolutely support the goal of creating a sustainable disability support system where Australians who need related health care can access the services they need when they need them,” Morris-Donovan said. “We call on governments to provide a clear plan for allied health workers and small businesses affected by these changes, including practical measures to help the sector remain resilient throughout the transition period. Allied health providers are critical to the delivery of essential health and disability services across Australia, and many small practices operate across multiple government programs and funding streams, including the NDIS.”

Recent ASIC data shows that pressure is building across the sector even before reforms have fully begun. The number of companies entering external management for the first time in the health and social care sector increased from 160 in 2022-23 to 481 in 2024-25, representing an increase of around 200 per cent and the largest increase of any industry division. Among allied health services in particular, the number of initial insolvency claims increased from 17 to 68 over the same period, an increase of 300 percent, while the number of other social care services increased from 18 to 126, an increase of 600 percent.

What industry bodies require

COSBOA and AHPA are calling on the government to provide targeted transition support, including clear information and guidance, tools to improve business resilience, and assistance to businesses that need to restructure as a result of the reforms. “There are government programs to help businesses respond to shocks and major structural changes. Allied health businesses impacted by these reforms must proactively connect with appropriate advice, tools and support, rather than being left alone in the transition,” Cappuccio said.

Both organizations also want government research to identify which businesses and communities are most at risk, and ensure small and private providers are included in the development of Thriving Kids commissioning models. “This study will provide the government with the information needed to realistically assess where displaced allied health workers could work. We can’t just assume that businesses and doctors can just move straight into other sectors like aged care,” Morris-Donovan said.

Regional Impact

About 90 percent of occupational therapists are women, as are the majority of speech-language pathologists and psychologists who hold central positions in pediatric early intervention. Morris-Donovan says the disruption may be felt worst outside of major cities. “We are particularly concerned about the disruptive impact of reform in regional and remote communities where one practice can provide services in disability, pediatric, aged care and other areas, and where replacing lost allied health capacity is already difficult.”

Cappuccio says the results of these businesses still depend on decisions the government has yet to make. “Governments still have choices about how to manage this transition. Private providers need a real place in the development of new service models, with practical support available to businesses that need to restructure. Small businesses shouldn’t be collateral damage from reform because no one stopped to think about what would happen to them.”