The State of NDIS Provider Failure in Australia
A Sector Analysis of Business Closures, Financial Stress, and Market Sustainability
Author: Joe Paradza
Date: 2026
Sector: Disability Services / Allied Health / Social Care
There is currently no single official national dataset that tracks how many National Disability Insurance Scheme (NDIS) providers collapse, fail, or exit the market each year. Unlike general business insolvency statistics published by ASIC or the Australian Bureau of Statistics, the NDIS ecosystem lacks a centralised, transparent reporting mechanism for provider business failure.
However, a synthesis of industry surveys, peak body reports, financial stress indicators, and restructuring data reveals a clear and consistent pattern:
A substantial proportion of NDIS providers are operating at a loss, considering closure, or exiting the market entirely.
While precise annual failure rates are not formally published, the available evidence suggests that NDIS provider failure is not a marginal issue but a systemic structural risk within the scheme.
1. The Data Gap: Why Official Failure Statistics Do Not Exist
Neither the NDIS Quality and Safeguards Commission nor the National Disability Insurance Agency publish:
Annual counts of provider closures
Insolvency rates by provider type
Exit rates from the NDIS market
Financial viability dashboards
Regulatory reporting focuses on:
Compliance
Participant safety
Provider registration status
Quality assurance
Business sustainability is not a tracked performance metric of the NDIS system.
As a result, provider collapse is only visible indirectly through:
Industry surveys
Peak body reports
Insolvency data from the healthcare sector
Media investigations
Professional services restructuring data
2. Financial Distress: The Leading Indicator of Collapse
The strongest available proxy for provider failure is financial performance.
2.1 Providers Operating at a Loss
According to sector surveys conducted by National Disability Services (NDS):
Year | % of Providers Reporting a Loss |
|---|---|
2021–22 | 22% |
2022–23 | 34% |
2023–24 | ~40% (estimate) |
2024–25 | 34–55% (discipline-specific surveys) |
In allied health sub-sectors (especially occupational therapy, psychology, and speech pathology), more than half of small providers report being unprofitable.
This is an extraordinary figure by any industry standard. In most sectors:
A sustained loss rate above 15–20% indicates market failure.
The NDIS is operating at double to triple that risk threshold.
3. Providers Considering Closure
Multiple national surveys indicate that:
Between 60% and 75% of NDIS providers have actively considered exiting the market.
Key drivers:
Price caps below cost of delivery
Workforce shortages
Admin burden
Audit and compliance costs
Cash flow volatility
Unpaid or delayed claims
Participant churn risk
This does not mean all will close — but it indicates extraordinarily high market fragility.
In economic terms, the NDIS provider market is currently in a state of:
Chronic financial precarity rather than sustainable equilibrium.
4. Insolvency and Actual Closures
Because there is no NDIS-specific insolvency registry, analysts rely on healthcare sector restructuring data.
Professional services firms and industry commentators estimate:
A 60–65% increase in insolvencies across healthcare and disability services in recent years
Approximately 300–400 NDIS-linked businesses closing or entering administration annually (indicative estimate)
This includes:
Sole trader therapy practices
Small allied health clinics
Support coordination businesses
SIL/STA providers
Not-for-profit disability organisations
Several large and mid-sized providers have also exited the NDIS entirely, citing:
Unsustainable funding models
Inability to recruit staff
Compliance costs exceeding revenue growth
5. Structural Causes of Provider Failure
The failure rate is not due to poor business skills alone. It is primarily system-driven.
5.1 Price Caps Below Cost
NDIS pricing often fails to account for:
Travel time
Supervision
Non-billable admin
Clinical governance
Audit costs
Insurance
Recruitment overhead
5.2 Workforce Economics
Labour costs have risen faster than indexation:
Therapists now command 20–35% higher salaries
NDIS price increases have not matched real wage growth
5.3 Compliance Inflation
Mandatory:
Audits
Quality frameworks
Safeguards
Reporting systems
These disproportionately impact small providers.
5.4 Cash Flow Risk
Claims rejections
Plan changes
Participant disengagement
Payment delays
For small providers, two bad months can trigger insolvency.
6. Estimated Market Failure Rate (Indicative)
While not officially published, a reasonable industry synthesis suggests:
Metric | Conservative Estimate |
|---|---|
Providers exiting NDIS annually | 5–10% |
Providers operating at loss | 30–50% |
Providers at serious financial risk | 50–70% |
Insolvency or forced closure | 300–400 per year |
Providers considering exit | 60–75% |
This positions the NDIS as:
One of the highest-risk regulated service markets in Australia.
7. Implications for the NDIS System
7.1 For Participants
Reduced choice
Longer wait times
Rural service deserts
Therapy discontinuity
7.2 For Government
Market instability
Emergency provider bailouts
Increasing provider concentration
Loss of small community services
7.3 For Investors and Founders
The NDIS is not a “safe healthcare market”.
It is:
Highly regulated
Politically volatile
Margin constrained
Workforce dependent
Cash flow fragile
8. Conclusion
There is no official annual statistic for how many NDIS businesses collapse or fail.
However, all credible industry evidence points to the same conclusion:
NDIS provider failure is widespread, systemic, and structurally embedded in the current funding and regulatory model.
Financial distress levels in the NDIS sector would be considered unsustainable in any private industry.
The NDIS provider market is not experiencing isolated business failures — it is experiencing chronic structural attrition.
Without major reform to:
Pricing models
Workforce funding
Compliance frameworks
Cash flow mechanisms
The NDIS will continue to lose providers faster than it can replace them especially in allied health and regional services.
“The NDIS does not have a provider performance problem — it has a provider sustainability problem. Current evidence suggests that between one-third and one-half of providers are financially unviable, with hundreds exiting the market each year. This is not a business cycle issue. It is a structural system failure.”
When Care Cost More - Untold Story of Running an NDIS Business
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References
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https://www.aihw.gov.au/reports/disability/ndis-provider-market-data
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https://www.abs.gov.au/statistics/economy/business-indicators/counts-australian-businesses
National Disability Services. (2023). State of the disability sector report 2023. NDS.
https://nds.org.au/resources/state-of-the-disability-sector-report-2023
National Disability Services. (2024). State of the disability sector report 2024. NDS.
https://nds.org.au/resources/state-of-the-disability-sector-report-2024
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https://nds.org.au/resources/financial-sustainability-disability-providers
National Disability Insurance Agency. (2024). NDIS quarterly report to disability ministers Q4 2023–24. Australian Government.
https://www.ndis.gov.au/about-us/publications/quarterly-reports
NDIS Quality and Safeguards Commission. (2024). NDIS workforce and provider compliance overview. Australian Government.
https://www.ndiscommission.gov.au/resources
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https://www.pc.gov.au/inquiries/completed/ndis-review
Deloitte Access Economics. (2023). NDIS market sustainability and workforce challenges. Deloitte.
https://www2.deloitte.com/au/en/insights/economy/ndis-market.html
KordaMentha. (2024). Healthcare and disability services insolvency trends. KordaMentha Restructuring.
https://kordamentha.com/insights/healthcare-insolvency-trends
Australian Financial Security Authority. (2024). Personal and business insolvency statistics. AFSA.
https://www.afsa.gov.au/statistics
The Guardian. (2024). Not-for-profit disability providers warn of closures under NDIS price caps. The Guardian Australia.
https://www.theguardian.com/australia-news
