Why NSW chose Not For Profits to deliver Thriving Kids

NSW has confirmed the Thriving Kids delivery model. Not For Profit (NFP) organisations commissioned by DCJ. Private providers can submit an expression of interest but will only be considered in exceptional circumstances where services aren't available from NFPs.

The reaction from the private practice community has been swift. Open letters to ministers. Social media commentary about bloated NFPs, board stipends and a skilled workforce being locked out. Frustration that the people already delivering early childhood intervention are being sidelined from the model that will replace part of their caseload.

I understand the frustration, and I'll get to why in a moment. I'm writing this for two reasons. First, because understanding why the government made this decision is more useful than being angry about it. Second, because I think the Allied Health sector needs to level up in how it responds to government reform. Data, strategy and calculated positioning will get us further than outrage and defensiveness. I am not endorsing the decision. NFPs carry their own challenges around service delivery, workforce attraction and administrative overhead. But if the sector wants different outcomes, it needs a different approach.

This is structural policy

The first thing to understand is that DCJ's preference for NFPs is not specific to Thriving Kids. It is structural procurement policy that applies across all DCJ-funded human services. DCJ's published position is clear: "DCJ's policy position is to engage not-for-profit organisations as a preference for delivering human services." Private or for-profit providers are engaged only in "limited circumstances" where the required services are "not available from NFP organisations."

This preference extends to subcontracting. Even when a contracted NFP wants to subcontract work to a for-profit provider, DCJ expects them to demonstrate why an NFP wasn't proposed instead. This is the framework that governs child protection, homelessness services, out-of-home care and community support programs across NSW. Thriving Kids is following the same playbook.

Other states have not yet confirmed their delivery models. The national Thriving Kids Advisory Group final report references both commissioned providers and private providers in the model, so how each state implements may differ. But the NSW approach reflects how government has commissioned human services for decades, and the question of why Thriving Kids went to NFPs is really a question about why government commissions NFPs at all.

The buyer's perspective

It helps to look at this from the government's side. DCJ is the buyer. What does the buyer want?

Manageable contract relationships. Commissioning a manageable number of providers across NSW is operationally feasible. Every contract requires onboarding, reporting templates, compliance monitoring, performance reviews and audit. Commissioning hundreds of small practices would require procurement and contract management infrastructure that DCJ does not have and is not resourced to build.

Governance infrastructure. NFPs have boards, constitutions, annual general meetings, financial reporting obligations and public accountability requirements built into their legal structure. These are features government procurement teams value because they provide layers of oversight beyond the contract itself. A sole trader or small partnership typically has no equivalent structural accountability, even if the quality of their clinical work is excellent.

Risk transfer. When government commissions an NFP, that organisation assumes operational responsibility for workforce, service delivery, quality and compliance across a region. If something goes wrong, there is a single contracted entity accountable. With hundreds of individual providers, that accountability is dispersed and difficult to enforce.

Precedent. The community services sector has operated this way for decades. Child protection, homelessness services, out-of-home care, community support programs. All delivered through commissioned NFPs. The expectation that Thriving Kids would be structured differently was always unlikely given the policy settings.

Why everyone is upset

I want to be clear about where the frustration is coming from, because it is understandable. Private practice owners are not upset about Thriving Kids in isolation. They are upset because multiple pressures are converging simultaneously, and the Thriving Kids procurement announcement landed on top of an already difficult few months (with more to come).

Mark Butler's National Press Club address in April confirmed the scale of what is coming. A $13 billion spending blowout. Growth capped at 2% per year over the forward estimates, which is below inflation. Participant numbers projected to fall from 760,000 to around 600,000 by the end of the decade. Budget resets across capacity building daily activities, the NDIS support category where Allied Health therapeutic supports sit. I covered the detail of what Butler's speech means for Allied Health providers when it happened.

Add Thriving Kids on top of that, alongside the shift from FCAs to I-CAN and new framework plans and the prospect of differentiated pricing. For providers carrying fixed costs, employees on contracts and commercial leases, the compound effect is genuinely threatening.

People took real financial risks to build practices in this space. Many did so because governments actively encouraged market growth during the NDIS rollout. Being told that commissioned NFPs are now the preferred delivery model feels like a betrayal. I get it.

The uncomfortable mirror

The question is what to do with that frustration. And this is where I think the sector needs to be honest with itself.

The private practice community's argument is essentially: we deliver better services than NFPs and we should have equal access to these contracts. That may be true for some practices. It is also a claim, and the evidence base for it at a sector level is non-existent.

I work with Allied Health providers every day. Across 90+ providers, including NFPs, private practices and everything in between, many run excellent businesses with strong clinical governance and genuine accountability to their clients. Across the private practice sector specifically, a significant number are not NDIS registered and have no formal clinical governance processes in place. Many do not follow the NDIS price guide. And I've seen providers not even signing service agreements with participants, which is one of the most basic obligations under the NDIS.

When the sector argues it deserves a seat at the commissioning table, it needs to demonstrate the things government values: governance, accountability, reporting infrastructure, outcomes and the ability to deliver at scale. Writing to a minister about how your individual practice has strong governance is a claim. Demonstrating it through documented systems, published outcomes and regulatory compliance is evidence.

There is also a deeper problem with the sector's advocacy position on this issue. The argument that private practices deliver better services than NFPs is widespread, but when you ask for evidence, there is none. The commentary across the sector is almost entirely anecdotal, and anecdotal evidence, however valid the individual experience, is not the kind of evidence that shifts procurement policy. If the private practice sector wants a seat at the table, producing that evidence is the gap that needs filling. I've written previously about why Allied Health advocacy keeps hitting a ceiling when it leads with hardship rather than evidence of value. The Thriving Kids response follows the same pattern.

What constructive engagement looks like

The Allied Health sector already has an adversarial relationship with the NDIA over pricing, regulatory burden and the APR. Extending that "us against them" mentality to NFPs reduces the sector's allies at a time when it can least afford to lose them. Clinicians work at these NFPs. They are represented by the same peak bodies. They face the same workforce pressures. Treating them as the enemy serves nobody.

Combative advocacy gets you labelled as someone who is going to always complain, and it rarely gets you considered as someone who wants to work constructively with government. The alternative is co-design: positioning yourself as a sector that can improve the design of policy, backed by data and research rather than frustration.

What's actually available to private practices

Three realistic pathways worth considering.

Subcontracting. The commissioned NFPs will need clinicians to deliver the Allied Health therapy component of targeted supports. The Advisory Group report is clear that targeted supports should be delivered by professionals trained in disciplines such as occupational therapy, speech pathology, physiotherapy, podiatry, audiology and psychology. Many NFPs will subcontract to meet this need, particularly in areas where they lack workforce coverage. If your practice has documented clinical governance, competitive pricing and the ability to deliver where the NFP can't, this is a genuine pathway. Worth noting that DCJ's policy requires contracted providers to justify any for-profit subcontracting arrangements, so each arrangement needs approval rather than being automatic.

Exceptional circumstances. The EOI process explicitly allows for private providers where NFPs cannot deliver. Realistically, this means thin markets: remote and very remote areas where no NFP has workforce presence, or highly specialised services that are unavailable from NFPs. If that describes your practice, submit an EOI.

Diversification. If Thriving Kids reduces your early childhood caseload, the question is where your next revenue comes from. Support at Home, private fee-for-service, schools and NDIS segments that remain unaffected are all worth exploring.

Where this leaves us

The NSW Thriving Kids delivery model is confirmed. A few things worth taking away from this:

The decision to commission NFPs is structural DCJ procurement policy that has been in place for years. It applies across all DCJ-funded human services. Thriving Kids followed the playbook. Other states may take a different approach.

The frustration across the private practice community is understandable. Multiple pressures are converging and the compound effect is real. But the sector's advocacy response, led by anecdote and outrage rather than evidence, is not going to change procurement policy.

If the private practice sector wants a seat at the table, it needs to produce the data that proves its value, engage constructively with the NFPs that will hold these contracts and position for subcontracting, exceptional circumstances or diversification.

I'll be writing more about Allied Health advocacy as the year goes on, including what constructive engagement with reform actually looks like in practice.