VFM Report 52:  Provision of Disability Services by Nonprofit Organisations

Summary of Findings

A person is regarded as having a disability if that person has a substantial restriction in their capacity to carry on a profession, business or occupation or to participate in social or cultural life by reason of enduring physical, sensory, mental health, or intellectual impairment. An estimated 25,000 people with intellectual disabilities and 40,000 people with physical or sensory disabilities avail of services which are funded by the health services.

The obligation to provide health services to persons with disabilities rests with the State. However, most of these services are provided by nonprofit organisations under arrangements with the Health Service Executive (HSE). In 2004, the State provided funding of ?877m to nonprofit organisations involved in the provision of disability services. Twenty-five of the organisations each received more than ?10m, a further 75 organisations received between ?1m and ?10m. In addition, 683 grants, averaging slightly over ?100,000 were awarded to a range of smaller nonprofit organisations.

This examination focused on the arrangements between the State and the nonprofit sector for the provision of these services and, in particular, on the larger nonprofit organisations. The examination sought to establish

  • how the need for disability services is determined and responded to
  • the service framework within which the nonprofit organisations deliver these services
  • how services actually provided by the nonprofit sector are monitored and evaluated
  • the change management issues arising out of reforms and legislative change impacting on the sector.

Responding to the Needs of Persons with Disabilities

Recent legislative changes make provision for an assessment of personal needs arising out of disabilities and the drawing up of a service statement specifying the services to be provided. However, standards have not yet been set for the administration of those assessments and no mechanism has yet been put in place to capture the data from the service statement.

There are deficiencies in the way data on disabilities is captured and, in particular, the current database on physical and sensory disabilities only captures information on half the people with such disabilities.

However, if the available data is representative it seems that

  • over 60% of persons with intellectual disabilities are awaiting new or enhanced services or will require such services before 2010
  • around half of all physical and sensory disability cases are either not getting the desired level of service or are awaiting assessment.

Consequently, the existing levels of demand and the changes necessary to bring the new legislation into operation pose a considerable challenge to the service and, in particular, in regard to how services from the nonprofit sector might be cost-effectively integrated into the service framework.

Service Framework

The State?s relationship with nonprofit organisations has evolved into one where services to persons with disabilities result from a historical pattern of provision and are largely negotiated rather than the result of contested procurement. The current approach to the funding of nonprofit organisations is based on incremental increases and the cost of new placements. The risk with this approach is that the core funding allocation will over time become weakly linked to levels of identified need and as a result that funding may not always be targeted to areas of greatest need.

From a financial perspective a starting point should be the comparative cost of procuring services through nonprofit organisations compared with the cost of direct provision. No costing system has been established which is capable of yielding costs for directly administered services for persons with different care requirements.

Attention needs to be given both to the formal specification of services in agreements and to relationship building with the aim of effective system operation.

While service agreements operated for all organisations funded directly by the former Eastern Regional Health Authority (ERHA), six former boards (including the three former area boards of the ERHA) did not operate any agreements with disability service providers. The remaining former boards generally, operated service agreements for the larger service providers only.

Service agreements were generally high-level framework documents leaving specific details to be negotiated annually between the parties. Many of the service agreements reviewed as part of this examination, had not been signed for considerable periods after the funding had been provided and service provision commenced.

In the future, while major procurement of services needs to be better specified a distinction needs to be made on the basis of scale. The report suggests levels of monitoring and formality of arrangements based on the nature and scale of services.

Monitoring and Evaluation

The procurement of services from the nonprofit disability sector has not been the subject of evaluation or review within any HSE region or on a national basis. Evaluation of outcomes would be facilitated if desired outcomes were specified in service agreements.

In regard to the monitoring of services provided the health service currently do not have any legislative power to enter nonprofit organisations to check delivery, either in terms of quantity or quality.

Access is important in the context of the verification of service delivery. Two cases noted in the course of the examination highlight this

  • in one organisation a custodial culture had developed largely due to constrained resources
  • in another, the failure to align funding with service requirements resulted in excessive costs.

As part of this examination a review conducted from November 2004 to January 2005 of 42 nonprofit organisations in three former Health Board regions showed that audited financial statements for 2003 had not been provided in 12 cases and that only six reconciliations of funding to reported income had been carried out. In the case of one large organisation which received funding of ?288m over the period 2000-2004 financial statements for four years had not been provided.

Greater transparency in financial reporting would provide assurance regarding the application of funds provided by the State. In the shorter term, the health service will need to establish financial reporting norms and key disclosure requirements in order to obtain satisfactory assurance regarding the use of the funds provided and the management of the related services.

Implementing Change

The State is embarking on a substantial change agenda for delivery of disability services. The transition to the specification of individual needs in service statements, the establishment of comprehensive client databases to record these assessments, as well as the implementation and monitoring of standards, will coincide with significant annual increases in funding for the provision of the services.

At the same time, it is likely that for the foreseeable future nonprofit organisations will continue to provide most disability services. However, the capacity of nonprofit organisations to initiate new services and expand and develop existing ones is constrained and it may be opportune to assess the long-term sustainability of the procurement approach and to examine the consistency between the organisational missions and State service provision intentions.

Any restructuring of the service should be based on clearly articulated agreements setting out the respective roles of the health service, as funder, and the service providers. The capacity of nonprofit organisations to meet the additional requirements relating to the implementation of the standardisation of services, good governance and greater accountability will need to be addressed.