Administrators have taken control of one of the state’s biggest disability therapy service providers and its 14 branches, as a sale of the business is urgently assessed.
Administrators have taken control of one of the state’s biggest disability therapy service providers and its 14 branches, as a sale of the business is urgently assessed.
McGrathNicol administrators Rob Kirman and Rob Brauer have assumed control of Therapy Focus and its assets, after being voluntarily called in by the board and management due to "sustained financial pressures".
Therapy Focus said their financial position was exacerbated by the decision to decrease the National Disability Insurance Scheme pricing for therapy services, which it said came despite increasing demand and the cost of services.
The McGrathNicol practitioners told customers – of whom there are more than 4,000 – there was “sufficient funding available to maintain uninterrupted supply of services.”
Administrators also told the roughly 300 employees across the state that there were sufficient funds to cover wages during the period.
McGrathNicol said it intended to continuing trading Therapy Focus on a business-as-usual basis while it undertakes an urgent assessment to determine the best course of action, including a potential sale of the business or recapitalisation.
“We will be working with all of Therapy Focus’ key stakeholders including employees, customers, state and federal government, and suppliers to secure the best outcome for all parties,” Mr Kirman said.
“With the full support of the company’s board and executive management team, the administrators intend to immediately commence a process for the sale and/or recapitalisation of Therapy Focus with a view to providing long term financial stability.”
Therapy Focus was established in 1988 as a not-for-profit community service organisation and has since expanded into a significant disability therapy services provider in Western Australia.
Its services span occupational therapy, psychology and counselling, speech pathology, physiotherapy to a wide range of age groups.
Therapy Focus has 14 branches across Western Australia, including in Bentley, Butler, Ellenbrook, Joondalup, Osborne Park and beyond.
The more than 25-year old business’ board is steered by chair Fiona Payne and its c-suite team is led by chief executive Alison Kelly.
Therapy Focus said the difficult decision to call in administrators followed comprehensive efforts to improve the sustainability of its operations, including trying to diversify its income and exploring partnerships with other providers.
In July, the federal government's National Disability Insurance Agency introduced significant changes to NDIS pricing, rules and mechanisms for disability support.
The NDIA was aiming for longer-term sustainability by aligning therapy prices with national health benchmarks, with the changes impacting therapy pricing, travel reimbursement, and rural loadings.
But small businesses across the country have expressed fears the reduced pricing would lead to their closure.
In a statement, Ms Payne took aim at NDIS pricing mechanisms.
“Since the introduction of the NDIS in Western Australia in 2016, Therapy Focus has been transforming our organisation to ensure we can provide high-quality therapy services to people with the most complex support needs, using best practice models of intervention,” she said.
“This work to develop a sustainable business model has been unfunded, and required significant draw-downs on our limited equity.
“The most significant impediment to this work has been the inability to match our pricing, which is set by the NDIA, with the cost-of-service delivery. This is compounded by the failure of the pricing for therapy to reflect increased operational costs.”
“Therapy Focus is one of only a handful of large therapy providers operating in the NDIS nationally, and we are no longer able to continue to offset rising operational costs.”
“The most recent change to NDIS therapy pricing, announced in June, was a significant reduction and resulted in a multi-million dollar cut in our revenue with just two weeks’ notice.”
Ms Payne said their focus would be working with McGrathNicol to ensure the wellbeing and support of both their customers and skilled staff.
Creditors will meet on October 21.
