The 6 most urgent challenges for NDIS providers in 2025

NDIS providers are at a pivotal moment, where survival alone is no longer enough.

The 2025 landscape reveals a sector under extraordinary pressure. Providers are being asked to deliver more with less: more compliance, more documentation, more oversight—on top of rising wage costs, funding volatility, and a patchwork regulatory environment that changes faster than most can adapt to.

Here, we unpack the six most urgent challenges - as identified by providers themselves - and why acting on them now is essential for long-term sustainability.

1. Financial viability: A system stretched to breaking point

More than 67% of providers are operating at a loss. Liquidity is drying up. Temporary financial buffers like the TTP (Temporary Transformation Payment) have disappeared. Compliance costs are rising, yet the NDIS pricing model assumes margins as low as 2%, leaving no room for deviation without dipping into reserves.

StewartBrown’s 2024 benchmark data suggests some providers are selling assets to cover shortfalls, a symptom of a system where survival depends not on impact, but on how tightly you can run your books.

Without stronger cost control and efficiency measures, providers will face tough decisions about scaling back services, restructuring, or shutting down operations altogether.

2. Compliance overload: More rules, less clarity

2024 saw over $1.6 million in fines issued across the sector. But compliance is no longer just about doing the right thing; it’s about proving it. Manual systems, fragmented spreadsheets, and inconsistent governance are leaving even high-quality providers vulnerable.

For many providers, compliance has become a never-ending game of ‘gotcha’. 60% of respondents cited regulatory change as their top risk in 2025.

At the same time, the growing gap between registered and unregistered providers is creating a two-speed market, where those absorbing compliance costs are at a competitive disadvantage.

“Registered providers are absorbing 4–6% of their revenue in compliance costs, while unregistered providers face none of the same requirements,” said Cameron Hare, CEO of Claro Aged Care and Disability Services.

3. Workforce pressure: When 81.5% of revenue goes to payroll

Staffing remains the largest single cost—and the biggest operational pain point. Wage pressures, high turnover, burnout, and rostering inefficiencies mean that even with adequate headcount, many providers struggle to deploy resources efficiently.

Every inefficient shift and unnecessary overtime hour is money lost. 81.5% of provider revenue now goes to workforce costs, leaving little margin for innovation or investment.

4. Digital transformation: Risk and opportunity

NDIS providers are now high-risk targets for cybercrime, yet many still rely on outdated systems. With increased use of cloud systems and participant data stored online, the risk of breaches - and the regulatory penalties that follow - is growing.

“You can’t make evidence-based decisions to combat fraud or improve compliance using antiquated systems,” said Louise Glanville, NDIS Commissioner, at the 2024 NDS Executive Leaders Conference.

The rollout of the NDIA’s PACE system and broader digital reforms have made data access and real-time reporting more essential than ever. More than half of providers still lack real-time visibility into their operational performance, with limited access to digital dashboards or business intelligence tools.

5. Quality under strain: When cost-cutting hits care

Maintaining service quality amid financial constraints is a growing concern. Providers are being forced to choose between cutting costs or preserving standards, especially where individualised care involves higher staffing ratios, more experienced workers, or complex support plans.

But ticking compliance boxes doesn’t guarantee better participant outcomes. Successful providers are moving from compliance-driven operations to data-driven quality frameworks, measuring real participant outcomes—not just audit readiness.

6. Strategic growth: when mergers are survival, not scale

26% of providers are considering a merger, up significantly from previous years. But size does not equal stability. As StewartBrown notes, larger providers are just as likely to report losses as smaller ones.

Scaling too quickly without fixing internal inefficiencies will only create more problems. Mergers may offer short-term relief, but they bring their own risks - from integration costs to inherited liabilities.

Why 2025 demands a different kind of strategy

NDIS providers aren’t just businesses - they’re community anchors. But the pressures of 2025 require a new operating model: one built on visibility, risk management, and proactive decision-making.

As Drova Co-Founder Rachel Riley puts it: “You can’t control what you can’t see. Right now, too many providers are operating in the dark or looking for a quick win. The providers who thrive in 2025 will be those who stop reacting and start planning.”

2024 was about survival. 2025 must be about sustainability.

Learn how to turn these challenges into opportunities with Drova’s solution-packed NDIS Provider Outlook Report 2025, and get in touch to find out how we can help you achieve a sustainable surplus.