2. 228 V.A. Parletta and G. Waghorn / Financial viability of supported employment
a successful return to work for people with SPMI.
The authors recommended more research on how to
improve IPS implementation in countries other than
the USA.
IPS has been implemented in Australia using the
existing systems as much as possible with encour-
aging results. Morris et al. (2014) implemented IPS
practices in a four-site implementation of formal part-
nerships between community mental health teams
and local Disability Employment Service (DES)
providers. They reported an employment commence-
ment proportion of 57% over 12 months, which was
significantly better than the national average for DES
which at that time was 24.5% (DEEWR, 2012).
Waghorn et al. (2014) implemented a four-site ran-
domised controlled trial using similar partnerships
and a control group where clients were offered advo-
cacy support by members of the mental health team
to access other local DES providers. More IPS par-
ticipants commenced employment within 12-months
than controls (42.5% vs. 23.5%).
Australian implementations show how IPS prac-
tices can be developed successfully within existing
service systems. However, performance lags behind
that achieved in the USA and high fidelity is difficult
to attain (Waghorn et al., 2012, 2014). Other than the
expectation of improving outcomes, there are no spe-
cific incentives for adopting evidence-based practices
in the national DES system (Waghorn & Hielscher,
2015). Each DES provider is free to adopt its own
approach to providing assistance to clients, as long
as they meet their contractual requirements, meet the
disability services standards (DSS, 2013; Job Access,
2015), and maintain national average performance or
above.
Anecdotally, Australian DES providers have
expressed concerns about financial viability if they
were to adopt IPS practices. This concern appears
mostly due to the caseload capping at 20 or less which
would immediately reduce service fees per employ-
ment consultant. However the total fees paid for this
program by the Australian Government appear gen-
erous, particularly for those clients with the highest
assistance needs. The fees paid exceed the cost esti-
mates for delivery of IPS in the USA and the UK. For
instance, Latimer et al. (2004) found that the average
annual cost per year per client was $US 2,449. In the
UK, Rinaldi and Perkins (2007) concluded that high
fidelity IPS programs were 6.7 times more financially
efficient than usual vocational rehabilitation services.
In Australia, Chalamat et al. (2005) estimated hypo-
thetical costs at $AUD 8,700 per participant, yet did
not report the real direct costs and actual income
derived from delivering these services to Australians
with SPMI.
There are financial implications for service
providers planning to deliver IPS practices within the
national DES program. If the new approach reduces
cost effectiveness, either through decreased revenue,
or through increased costs, fewer providers may take
the financial risks involved. This in turn could slow
the adoption of evidence-based practices and restrict
theavailabilityofbetteremploymentservicestothose
most in need (Waghorn & Hielscher, 2014). The aim
was to investigate the direct costs and direct revenue
to providers of making the shift from usual DES to
more intensive IPS enhanced employment services,
for clients with mental illnesses.
2. Methods
2.1. Study design
Ethics approval was provided by the Newcastle
University Human Research Ethics Committee. Writ-
ten approval was also obtained to access relevant
Australian Government and ORS records for the pur-
poses of this investigation. The approved study was a
three cohort observational conversion design where
an existing DES service (cohort 1, n = 107) was eval-
uated over 18 months, then converted into an IPS
enhanced service and a new cohort of clients was
evaluated for a further 18 months (cohort 2, n = 68).
Results for both cohorts were then benchmarked to
the most relevant national DES cohort (DSS, 2014a)
with a similar primary disability type and followed
for the same period (cohort 3, n = 15,496).
2.2. Participants
Participants from three cohorts: (1) met national
age and residency requirements for the DES program;
(2) were diagnosed with a mental illness as the pri-
mary health condition; and (3) were not employed
and not in full time education at program commence-
ment. Cohorts one and two were mutually exclusive
with no shared individuals. Cohorts two and three
were also mutually exclusive due to non-overlapping
observational periods. However, it is possible that
some individuals in cohort one were also counted
in cohort three due to the overlapping observational
period, and because cohort three is a whole popu-
lation cohort. This violation of the assumption of
3. V.A. Parletta and G. Waghorn / Financial viability of supported employment 229
mutual exclusion was unlikely to contaminate these
results due to cohort one representing 0.7% of cohort
3, with the maximum overlap less than 0.7%.
Cohort one included all ORS Employment Solu-
tion DES participants who were recorded as having
a mental illness or psychiatric disorder, who com-
menced DES assistance at the Gosford, Woy Woy,
and Lake Haven sites between 1 July 2011 and 30
June 2012. Health and disability information was
obtained from an independent assessment conducted
for each participant by an allied health professional
employed by the Australian Government Department
of Human Services. Each participant in this cohort
(n = 107) was tracked for 18 months, matching the
follow-up periods in the two other cohorts.
Cohort two (n = 68) received IPS enhanced
employment services. All eligible participants from
ORS DES sites (Gosford, Woy Woy and Lake Haven)
were included who had received less than six months
DES assistance at the time of selection to allow track-
ing of up to 18 months. Participants who were already
employed or close to being employed (e.g. had
recently attended a job interview and were awaiting
an outcome) or were enrolled in full-time educa-
tion or vocational training courses, were excluded.
All participants in the trial of IPS-enhanced ser-
vices commenced between 24 February 2013 and 24
August 2013, and were followed for 18 months, mea-
sured at an individual level. The intake and follow-up
periods matched those used in the national DES eval-
uation (DSS, 2014a).
Cohort three consisted of all DES participants who
commenced between 1 July 2010 and 31 December
2010 across Australia with the primary disability type
classified as psychological or psychiatric (n = 15496;
DSS, 2014a). This cohort provided the national per-
formancebenchmarkstocomparetheeffectivenessof
both pre-IPS and IPS enhanced employment services.
2.3. DES funding
The Australian Government utilises a unique blend
of fee-for-service and results-based funding meth-
ods in the national DES program. Contracted DES
providers are paid according to a standardised con-
tract which combines these funding methods. All
payments made to service providers for three sub-
programs under this contract are shown in Table 1.
Providers are paid quarterly service fees at com-
mencement of participation, and quarterly for up
to 18 months, or until the participant commences
employment, when service fees are replaced by
Table 1
Direct payments to DES providers
Direct payments to providers1,2 DMS3 ESS L14 ESS L24
Service fees (1st and 2nd) 1,595 890 1,900
Service fees (3rd to 6th or 8th if DES 715 890 1,900
extended)
Placement fee (job commencement) 770 770 1,540
Pathway 13-week outcome fee5 945 945 1,815
Pathway 13-week bonus fee5,6 189 189 363
Full 13-week outcome fee 2,860 2,860 5,500
Full 13-week bonus fee6 572 572 1,100
Pathway 26-week outcome fee5 1,450 1,450 2,540
Pathway 26-week bonus fee5,6 290 290 508
Full 26-week employment outcome fee 4,400 4,400 7,700
Full 26-week bonus fee6 880 880 1,540
Notes: 1. Adapted from DEEWR, 2012, pp. 94–95. 2. Payments
were in Australian dollars. 3. DMS refers to the Disability Man-
agement Services contract which is intended for people less likely
to need long periods of post employment support. 4. ESS is the
Employment Support Services contract intended for people with
longer term post employment support needs. There were two fund-
ing levels within ESS based on participants’ levels of disability
and disadvantage: Level 1 and Level 2 (DSS, 2014b). 5. Pathway
outcomes applied when participants did not meet all of the require-
ments for a full employment or education milestone payment. 6.
Bonus payments were additional payments to providers for other
specified outcomes including the completion of training followed
by or during employment.
employment commencement and employment mile-
stone payments. Not all employment qualifies for
the employment commencement fee. The hours of
employment must meet the minimum benchmark
hours for that individual which were determined prior
to program commencement by an independent asses-
sor, an allied health professional employed by the
Australian Government Department of Human Ser-
vices. Two employment milestone fees were paid if
employment was maintained at or near an individuals
benchmark hours for 13 weeks, and 26 weeks respec-
tively (DSS, 2013). Only one 13 week and one 26
week milestone fee could be paid for each participant.
Once 18 months of employment assistance
elapsed, all DES participants who were not employed
or not enrolled in formal education were referred to
the Department of Human Services to assess whether
they would benefit from a further six months of
DES participation. If assessed as likely to benefit,
the program was extended and the DES provider
paid a further two service fees if the participant did
not commence employment or education. Otherwise
results based payments applied. If the participant was
assessed as not benefiting from further assistance,
the case was closed and the client exited from the
caseload (DSS, 2013).
4. 230 V.A. Parletta and G. Waghorn / Financial viability of supported employment
Fees paid to DES providers are shown in Table 1.
Funding varied by two program sub-types: Disability
Management Services (DMS) and Employment Sup-
port Services (ESS). The latter included two levels of
case-based funding: ESS Level 1, and ESS Level 2
(DSS, 2014b). A participant was referred to one of
these programs following an Employment Services
Assessment where a Department of Human Services
allied health professional assessed the participant and
their disability (DSS, 2014c). Individuals with a dis-
ability, injury or illness not considered permanent
(lasting two years or more) or with post employment
support needs of six months or less were eligible for
DMS. Individuals with a permanent disability and
a need for ongoing support post employment were
assessed as eligible for ESS (DSS, 2013, 2014c). This
assessment utilised information from general med-
ical practitioners, medical specialists and previous
employment service providers. It also assessed par-
ticipants’ future work capacity (known as benchmark
hours) to be expected on completion of the employ-
ment services intervention.
There were two types of employment milestone
payments: pathway and full. Pathway outcomes were
paid when a participant worked in excess of 66%
of their pre-identified benchmark hours, on average,
across 13 or 26 weeks; or where a participant com-
pleted a semester of an education course of at least
two semesters in duration, and is 22 years or over, or
is between 15 and 21 years and has completed Year 12
(DSS, 2013). A full milestone payment was payable
when a participant worked in excess of their bench-
mark hours, on average across 13 or 26 weeks; or
when a participant completed a semester of an edu-
cation course of at least two semesters in duration,
and was a principal carer, or was under 21 years of
age and had not completed Year 12, or identified as
indigenous (DSS, 2013).
DES providers also received a bonus payment at
13 weeks and 26 weeks if the participant who met
these requirements also (1) completed a Vocational
Education and Training Certificate 2 course or above,
and then obtained employment in a directly related
area within a year of completing the course; or (2)
by completing a traineeship or apprenticeship (DSS,
2013) (see Table 1).
2.4. The interventions
The pre-IPS cohort consisted of 107 DES par-
ticipants receiving services from ORS Employment
Solutions on the Central Coast of NSW at the
Gosford, Woy Woy and Lake Haven sites. The
case management method used by ORS was based
on the vocational rehabilitation model where one
employment consultant assists the participant from
commencement to completion of six months or
longer in employment. This staff member has access
to in house General Medical Practitioners, Psychol-
ogists, Occupational Therapists, Physiotherapists,
Exercise Therapists, Marketers, Industry Trainers,
Job Search Trainers and Recruitment Consultants.
ORS is also a registered training organisation and
runs accredited training in hospitality, administra-
tion, disability services, aged care and retail. All of
these courses and services are available to ORS par-
ticipants. ORS employment consultants also access
low cost community and government resources to
address needs and overcome barriers where suitable.
At ORS, typical caseload sizes were 55 which include
participants in post employment support.
TheIPSenhancedservice(cohorttwo)commenced
on 24 February 2013, and new clients were recruited
directly into this program. Existing participants in the
pre-IPS employment service who met eligibility cri-
teria were moved into the enhanced program at the
time of their next appointment. The IPS enhanced ser-
vice involved the full implementation of six of eight
IPS principles (Drake, Bond, & Becker, 2012, pp. 33-
39): a focus on competitive employment; attention to
participant preferences; personalised benefits coun-
selling;systematicjobdevelopment;rapidjobsearch;
and time-unlimited and individualized support. The
two principles not fully implemented were (1) partic-
ipation based on consumer choice; and (2) vocational
services are integrated with mental health services as
much as possible.
2.5. Measures
Fidelity to IPS principles in cohort two services
was assessed using the 25-item Supported Employ-
ment Fidelity Scale (Bond, Peterson et al., 2012).
A six-monthly internal IPS fidelity assessment was
conducted at each site by each employment consul-
tant in consultation with the local IPS co-ordinator.
External fidelity assessments were conducted by an
independent ORS staff member trained by a Dart-
mouth trained fidelity assessor. Fidelity assessments
were conducted on 24 March 2014 at Gosford and
Woy Woy and 31 March 2014 at Lake Haven. Pre-IPS
(cohort one) fidelity scores were assessed retrospec-
tively by internal assessment using the consensus
method.
5. V.A. Parletta and G. Waghorn / Financial viability of supported employment 231
The focal dependent variable was net revenue per
participant. This was calculated from the provider
perspective using actual direct revenue less actual
direct expenditure. Indirect expenditure such as the
broader costs of running ORS Employment Solu-
tions, including staff recruitment and training, were
not estimated. Direct revenue and direct expenditure
were measured for each participant. Direct expendi-
ture was defined as any money spent on a participant
to assist them to overcome barriers to employment.
There were two types, internal and external. Inter-
nal expenditure was defined as money spent by ORS
using internal resources such as other specialist staff
employed by ORS. External expenditure was defined
as money spent on participants’ bus fares, petrol
cards,trainfares,intervieworworkclothing,personal
protection equipment, external training courses, ORS
wagesubsidiestoemployers,criminalhistorychecks,
and external medical services.
2.6. Staffing
Eleven employment consultants were employed by
ORS at the three Central Coast sites during the pre-
IPS evaluation period. Staff members had caseloads
of up to 55 clients each, including employed par-
ticipants receiving post employment support. Each
staff member reported directly to their site manager
and also received direct assistance from a DES per-
formance improvement specialist whose job was to
manage performance in the DES contracts on the
Central Coast. Four staff members were involved in
the IPS enhancement intervention; two employment
consultants, an IPS coordinator, and a psychologist.
All four staff members remained in place for the
duration of the evaluation.
2.7. Staff training
ORS staff in both interventions completed a range
of generic DES and ORS training programs, in addi-
tion to an intensive six-month face-to-face induction
program. Internal training modules included the fol-
lowing: Disability awareness; Mental health first
aid; Cultural diversity training; Resumes and client
marketing; Preventing and managing behaviours
of concern and workplace incidents; DES com-
pliance; DES post-placement support and ongoing
support; Disability service standards; Quality aware-
ness (e-learning); and Workplace health and safety
(e-learning). The completion of DSS e-learning mod-
ules was mandatory.
Prior to the commencement of the IPS enhanced
intervention, all four staff involved participated in
a one-day training program in which the aims of
the IPS model were discussed, including the way it
would be applied within an ORS setting. The fidelity
checklist was discussed in detail. The Dartmouth
training videos on YouTube provided practical train-
ing about vocational profiles, job development and
dual diagnoses (Dartmouth, 2009). Two employment
consultants, the IPS coordinator, and the researcher
enrolledinandcompletedtheonlinetrainingprogram
facilitated by Dartmouth IPS Supported Employ-
ment Centre (the developers of the IPS approach)
in June 2013. This online program was conducted
by IPS practitioners with substantial field experi-
ence. In addition, each IPS employment consultant
met fortnightly, one to one, with the IPS coordina-
tor to discuss fidelity issues and develop strategies
for participants for whom they were having difficulty
finding suitable employment. Training involved field
excursions in which the IPS supervisor conducted
face-to-face job development and other marketing
activities, to assist in building confidence and skill
levels in each employment consultant. Skill levels
were assessed during a monthly review of employ-
ment outcomes.
The level of training for IPS employment consul-
tants, compared to pre-IPS consultants, was more
intensive with more one on one time with supervi-
sors, consisting of one half day to one full day per
fortnight of training for the duration of the study. The
site manager and the researcher were also available
to provide assistance when needed. They sometimes
attended the review meetings and assisted with par-
ticipant issues. All IPS enhanced intervention staff
continued to participate in all other ORS and DES
training to ensure they remained up to date with con-
tract, compliance and company requirements.
2.8. Data quality
Data quality was actively managed. All records of
activities resulting in service fees and outcome fees
were audited by DSS in face to face monitoring vis-
its, and by external desktop monitoring exercises.
These often involved contact with employers and
participants to verify information. ORS income and
expenditure were audited annually by an independent
auditor. Quality checks were conducted on 10 ran-
dom pre-IPS participants and 10 IPS enhancement
participants to further assess data accuracy. Financial
information was checked by a second staff member.
6. 232 V.A. Parletta and G. Waghorn / Financial viability of supported employment
2.9. Data analysis
The data analysis strategy utilised a range of
descriptive statistics: frequencies, means, standard
deviations and cross tabulations. Statistical signifi-
cance of group differences was examined using Wald
Chi-square, T-tests, and Fisher’s exact test. Multiple
logistic regression was used, when data permitted,
to assess multivariate relationships to the binary
dependent variable. Odds ratios and 95% confidence
intervals were reported. Analyses were conducted
using STATA version 11 (Stata Corp, College Station,
TX, US).
3. Results
3.1. Participant characteristics
In the pre-IPS cohort (n = 107) 46.7% were male,
the mean age was 34.5 years (SD = 13.0), and
18.7% had a severe mental illness (diagnosis of
Schizophrenia or Bipolar Affective Disorder). In the
IPS enhanced cohort (n = 68) 51.5% were male, the
mean age was 30.8 years (SD = 12.8) and 19.1% had
a severe mental illness. Other diagnoses included
Major Depression, Anxiety Disorders, Posttraumatic
Stress Disorder, Personality Disorder and Substance
Abuse Disorder. Demographic characteristics were
not available for the national DES cohort which con-
sisted of 15,496 participants aged 15 to 64 years
classified as having a primary psychiatric disability,
who commenced in the program anywhere in Aus-
tralia between 1 July 2010 and 31 December 2010.
Attrition was defined as those who exited the pro-
gram before the 18 month follow-up period was
completed without a vocational outcome. Exit rea-
sonsthatcountedtowardattritionwere:transferringto
another provider, relocating to a new area, and choos-
ing to exit early (see Table 2). Attrition marginally
improved following the IPS enhancement (40.2%, or
2.2% per month; vs. 36.7% or 2.0% per month).
3.2. Fidelity to evidence-based supported
employment
Fidelity of the pre-IPS service at all three sites was
measured retrospectively and found to be not sup-
ported employment (score 63/125) for all sites on
the IPS-25 scale (Bond, Peterson, Becker, & Drake,
2012; Drake, Bond, & Becker, 2012; Bond, Becker,
& Drake, 2011). Six months after implementing IPS
principles, the fidelity score increased to fair (85/125)
at all sites, assessed internally by IPS coordinators. At
13 months all three sites reached a good level of IPS
fidelity (Gosford and Woy Woy 108/125; Lake Haven
110/125). This final assessment was conducted by
an external assessor who previously conducted joint
fidelity assessments with a Dartmouth trained IPS
fidelity assessor.
3.3. Evidence-based enhancements and
employment outcomes
The IPS enhanced cohort (all contracts combined)
obtained more employment commencements over
18 months (67.6%, 46/68) than the pre-IPS cohort
(56.1%, 60/107). This was despite the client mix
becoming more challenging, as indicated by fewer
participants allocated to the less intensive DMS
contract, and more participants classified at ESS
funding level two, after enhancement by IPS princi-
ples. In terms of job retention, 26 week employment
milestones favoured IPS enhanced practices over pre-
IPS (25.0 vs. 18.7%) although the difference was
not statistically significant. The IPS enhancement
also exceeded national DES 26 week milestones
(25.0 vs 20.9%). The pre-IPS program was also
effective achieving significantly more employment
commencements (56.1 vs. 39.9%) than the national
DES cohort, and attained similar 26 week milestones
(18.7 vs. 20.9%) where the differences were not sta-
tistically significant.
3.4. Financial implications of IPS enhanced
services
The financial implications of enhancement by
evidence-based practices in supported employment
were examined from two perspectives: the provider
perspective and the Australian Government perspec-
tive. Tables 3–5 show direct revenue and direct
costs comparisons between Pre-IPS services and IPS
enhanced services. Table 5 disaggregates the total
revenue actually received into service fees and out-
come fees, by contract and by program type. Direct
costs to the Australian Government were obtained
from the 2010–2013 evaluation of DES (DSS, 2014a)
per participant, per employment commencement, and
per 26 week employment milestone. These direct
costs represent payments to providers and exclude
the overall departmental administration costs borne
by the Australian Government.
7. V.A. Parletta and G. Waghorn / Financial viability of supported employment 233
Table 2
Program attributes and program attrition
Attribute Pre-IPS (n = 107) IPS (n = 68)
Income support payment type at
commencement of program
Disability Support Pension 23, 21.5 19, 27.9
Other income support
payments1
84, 78.5 49, 72.1
Contract Type DMS2 43, 40.2 6, 8.8
ESS3-Funding Level 1 29, 27.1 32, 47.1
ESS4-Funding Level 2 35, 32.7 30, 44.1
Completed program Completed 18 months of
assistance or exit due to
obtaining a vocational
outcome5
64, 59.8 43, 63.2
Attrition6 Exit for other reasons prior to
18 months with no
vocational outcome
43, 40.2 25, 36.8
Notes: 1. Other income support payments included Newstart Allowance, Parenting Payments, and Youth Allowance. 2.
DMS refers to the Disability Management Services contract. 3. ESS refers to the Employment Support Services contract.
4. There are two funding levels (Level 1 and Level 2) determined by the participant’s assessed level of disability and
disadvantage. 5. Vocational outcome refers to completion of 13 and 26 weeks employment or completion of at least one
semester of a two semester vocational training course. 6. Attrition was defined as the total percentage of participants
who did not complete 18 months of employment assistance and exited without a defined vocational outcome. Attrition
categories included: transferring to another provider, and choosing to exit early.
3.5. Provider net revenue
The IPS enhanced service did not achieve higher
gross revenue overall due to the smaller capped
caseloads in the enhanced program (see Table 3).
However, the IPS enhanced service achieved higher
gross revenue per participant under the same blended
funding structure ($9062) than pre-IPS services
($7514). From this revenue ORS purchased goods
and services to enhance employment prospects.
Examples included short training courses, suitable
work clothing, allied health professional assistance,
wage subsidies to employers, and reimbursement of
transport costs. These costs were higher in the IPS
enhanced program ($2132 per person versus $1353).
Despite increased expenditure, the IPS enhanced pro-
gram generated more net revenue (gross revenue less
direct costs) per participant compared to pre-IPS ser-
vices ($6929 vs. $6161).
Differences in net revenue per participant also
depended on contract type. IPS enhanced services
generated more net revenue for those with the great-
est assistance needs (ESS funding level two) ($10579
vs. $8080) and less net revenue for ESS funding level
one clients compared to pre-IPS services ($3815 vs.
$5786). There was also a slight advantage towards
the IPS enhanced program for DMS clients ($5284
vs. $4853).
Table 4 shows that the pre-IPS service over-
all received more revenue from service fees than
from vocational outcome fees (62.0% vs. 51.3%
for IPS enhanced services). This is an important
result showing that as the government moves towards
results-based funding, the adoption of IPS practices,
particularly for participants classified as funding level
two, represents less financial risk to providers (see
Table 4).
3.6. Australian Government perspective
The mean expenditure on disability employment
services (DES) by the Australian Government per
participant and per employment milestone was cal-
culated using the same estimation method as the
official evaluation (DSS, 2014a, p. 54). This involved
dividing total direct expenditure per contract (service
fees, outcome fees and government paid wage subsi-
dies) by the number of participants who commenced
receiving assistance in each contract to obtain mean
cost per participant. Costs per employment com-
mencement and per 26 week employment milestone
were calculated by dividing the total direct expen-
diture per contract by the number of participants in
each contract who had achieved each particular type
of employment outcome at least once during the eigh-
teen month period.
Table 5 shows that the IPS enhancement cost
more per participant across all contracts compared
to the mean direct costs across all DES providers
(DSS, 2014a). However, the IPS enhancement pro-
gram resulted in the lowest cost per employment
commencement in all contracts, and in the lowest cost
11. V.A. Parletta and G. Waghorn / Financial viability of supported employment 237
per26weekemploymentmilestoneforESSleveltwo,
and for DMS participants. Pre-IPS services achieved
a lower cost per 26 week milestone for ESS Level 1
participants. Thus IPS enhanced services were con-
sistently more cost effective from the government
perspective, for those with more intensive assistance
needs classified as ESS funding level two.
3.7. Correlates of commencing employment
Bivariate and multivariate logistic regression anal-
yses were conducted to assess the simultaneous
effects of independent variables sex, age, funding
level, diagnostic category and service type on job
commencements within 18 months of commenc-
ing supported employment. Both the pre-IPS and
IPS enhancement cohorts were combined to form
a single cohort of 175 participants for these analy-
ses. Whilst no bivariate or multivariate effects were
statistically significant, one result was promising.
Participants in IPS enhanced services had 1.64 times
greater odds (CI 0.87–3.09 unadjusted), and 1.88
times (CI 0.95–3.76 adjusted) greater odds respec-
tively for commencing employment than participants
in pre-IPS services.
4. Discussion
The IPS enhancement was more effective than the
Pre-IPS service, and was more effective than the
national average of DES provider performance for
clients with a psychological or psychiatric disability.
These findings were expected based on the strength
of evidence for IPS as the most effective intervention
to assist participants with severe and persistent men-
tal illness to obtain and sustain employment (Bond,
2004; Bond et al., 2008, 2012; Kinoshita et al., 2013;
Marshall et al., 2014). Bond et al. (2012) in a review
of 16 RCTs, found that IPS achieved more job com-
mencements (58.9% vs. 23.2%) than control services.
This investigation achieved comparable job com-
mencements of 67.7%. However, the lack of a formal
agreement with mental health services and the inclu-
sion of people with participation obligations had the
side effect of reducing the severity and complexity of
the diagnostic mix. The expected effect of this would
be to inflate vocational outcomes compared to a typi-
cal IPS supported employment service assisting only
clients of a community mental health service.
Implementation of IPS principles remains chal-
lenging in the Australian service delivery context.
Two previous multi-site studies have utilised a co-
location arrangement where a DES provider supports
one or more of their staff members to work on site
at the community mental health centre for four days
per week (Morris et al., 2014; Waghorn et al., 2012).
Yet establishing co-location is the beginning rather
than the end point of service integration. Despite
the potential advantages of co-location, Morris et al.
(2014) reported that these were not realised at all sites
after 12 months because some fidelity items remained
low at the completion of the study. This investiga-
tion showed that it was possible to achieve good
supported employment fidelity within 13 months
in an environment different to that in which IPS
was originally intended. However, not being able
to implement a formal co-location relationship with
local community mental health services had a down-
side. This was that proportionally fewer clients of
the mental health service, with more severe psychi-
atric disabilities, who are the intended clients of an
IPS service, obtained access to the IPS enhanced
service.
A standard DES service was developed from a
low fidelity score of 63 to a score in the good range
(100–114) over 13 months. The biggest improve-
ments in specific practices were in collaboration
between employment specialists and Government
stakeholders, and use of work incentives planning,
and obtaining executive team support. Both employ-
ment consultants reported that it took time to adjust
to the different practices expected in IPS compared
to usual office based roles. The biggest difference
reported was the requirement to conduct marketing
activities in person with employers, as opposed to
relying on the services of specialist marketing staff or
office based marketing using mail, email and phone.
The second biggest adjustment involved the amount
of time spent out of the office and the discipline
required to make this time productive.
Unlike in other Australian IPS studies such as Mor-
ris et al. (2014), attrition did not appear related to
fidelity scores. Both the pre-IPS and the IPS enhanced
cohorts had relatively high attrition of 40.2% and
36.7% respectively over 18 months. This was more
than the attrition in both national contracts (DMS
24%, ESS 32%) over 18 months (DSS, 2014a, p.63).
A possible explanation for high attrition could be lim-
ited adoption of assertive outreach practices. All sites
achieved an assertive outreach fidelity score of 2/5 at
13 months. Better outreach practices and more active
follow up of non-attendance could help prevent early
exits.
12. 238 V.A. Parletta and G. Waghorn / Financial viability of supported employment
4.1. Financial viability of IPS-enhanced services
Anecdotally, some DES providers expressed reluc-
tance to adopt IPS principles through fears of reduced
financial viability compared to DES services as usual.
This is due to expectations that capped caseloads
lead to less revenue in a system where fee for ser-
vice payments are blended with results based funding
(Waghorn et al., 2012; DEA, 2013). Other DES
providers also perceive clients with SPMI as a more
challenging subgroup for attaining employment mile-
stones. IPS enhanced services require caseloads to be
capped at 20 active clients per employment consul-
tant. Whereas, ORS DES services as usual are typical
of most providers by allowing larger caseloads of up
to 55 clients per employment consultant. This can be
an advantage when service fees provide the greatest
contribution to revenue and when the diagnostic mix
of clients allows for less intensive services. However,
this study shows that IPS enhancements are finan-
cially viable on a per client basis, particularly when
the service is appropriately targeted to ESS fund-
ing level two participants. DES providers who have
standard caseloads of 40 clients or less per employ-
ment consultant are unlikely to experience an overall
reduction in net revenue, even if the current empha-
sis on service fees is retained by the funding system.
However, an important caution is that indirect costs
such as staff training were not measured in this study.
Training costs for IPS staff are likely to be higher
than for non-IPS staff in the first year, meaning that
any financial advantage of implementing IPS may not
accrue until the second year of implementation.
TheAustralianGovernmenthasexpressedaninter-
est in moving towards a greater use of results-based
funding to replace the current mix of service fees and
outcome fees. In this context, adopting IPS practices
targeted to those most in need of intensive services,
promises to reduce the business risk by increasing
financial viability as the government increases the
proportion of results-based funding.
4.2. Limitations
One important limitation was the research design.
Randomisation was not possible because an exist-
ing service was first evaluated then converted to a
new program with a new cohort of clients. While the
ecological validity of this approach was high, attribut-
ing improved outcomes to the program change was
hindered by the emergence of systematic differences
between cohorts. To counter this reduced internal
validity, systematic between-group differences were
identified and controlled where possible (De Veaux,
Velleman, & Bock, 2011).
Retrospectively evaluating a pre-existing interven-
tion entailed limits to the type of data that could
be examined. Some of the variables collected in
the IPS enhancement intervention were not pre-
viously collected for the pre-IPS services. This
excluded potentially useful comparisons between
interventions involving: employment benchmarks,
intergenerational unemployment, homelessness, lit-
eracy and numeracy, means of transport, living
alone, ex-offender status, indigenous status, comor-
bid intellectual disability, and other health condition
comorbidity.
Another important constraint was the nature of
staff training and supervision provided. This was
delivered by ORS staff who had completed the online
training modules through the Dartmouth Supported
Employment Centre, but who had not personally
received formal training in IPS practices. Two types
of fidelity assessments were used: (1) an independent
fidelity assessment at 13 months was undertaken by a
staffmembertrainedbyaDartmouthtrainedassessor;
and (2) self-assessments of fidelity were conducted
using the Dartmouth fidelity assessment guidelines
applied by consensus between the employment con-
sultant and their supervisor.
Different definitions of mental illness posed prob-
lems for this study. DSS (2014a) used a broad
definition of mental illness as part of their defini-
tion of psychiatric disability that included anxiety and
depressive disorders along with substance abuse and
autisticspectrumdisorders.Inaddition,thevalidityof
themedicalconditioncodesanddiagnosticcategories
in the national DES cohort remains unclear. This is
important, because IPS was specifically designed for
adults with severe and persistent mental illnesses,
which in practice usually means the psychotic dis-
orders and other equivalently severe and complex
cases of mental illness. However, sufficient diag-
nostic information was available through the official
records to compare the client diagnostic mix across
cohorts.
4.3. Implications for service providers
The key implication for Australian DES service
providers is that it is financially viable for some
providers to provide a more intensive IPS approach
within the DES program to a subset of clients with
a psychological or psychiatric disability who have
13. V.A. Parletta and G. Waghorn / Financial viability of supported employment 239
the most psychiatric disability and employment assis-
tance needs (ESS Funding level two). However,
changing existing DES practices to attain good IPS
fidelity can take 12 months or more. The costs of
implementing new IPS practices can be reduced by
usingtheonlinetrainingprogramfromtheDartmouth
SE Centre, Youtube videos and other Dartmouth
resources. Although more costly, it is also possible
to engage external trainers and fidelity experts from
within Australia and New Zealand to conduct face
to face training. The financial advantage to service
providers for adopting IPS principles was shown to
increase if the government increases utilisation of
outcome-based funding.
4.4. Implications for policy makers
The key message for program administrators and
policy makers is that a successful shift to good fidelity
IPS practices benefits the very clients who currently
least benefit from the DES program, namely those
independently assessed as ‘ESS Funding level two’.
This shift also reduces program costs per 26 week
employmentoutcome,themostvaluedandmostchal-
lenging employment outcome examined. Standard
DES services delivered as in the pre-IPS services
examined here, or as reflected in the the national
DES evaluation reports, are less effective and less
cost effective per participant and per employment
outcome attained.
Another implication is that the financial viabil-
ity of delivering more intensive services increases
when participants’ employment related disabilities
and impairments are accurately classified. However,
the sensitivity and specificity of current program
allocations (DMS or ESS) and funding level assess-
ments, remain unknown since to our knowledge,
these properties have never been investigated or
reported. However, anecdotal reports from ORS staff
suggest that false negatives can occur, where partic-
ipants with severe mental illnesses are allocated to
programs and funding levels that imply low assis-
tance needs. False positives are also reported where
people with less severe forms of mental illness are
classified as having high needs for assistance.
It is likely that more can be done to improve
the accuracy of Employment Services assessments
currently conducted by the Department of Human
Services (DSS, 2014c). One way to do this would be
to include a measure of relative severity of psychiatric
disability, informed by variables known to be asso-
ciated with employment status, such as: diagnostic
category (Jonsdottir & Waghorn, 2015), course pat-
tern of illness (Waghorn, Chant, & Whiteford, 2003),
current psychosocial impairments (Waghorn, Saha,
& McGrath, 2014), and prior medical suspensions
due to being too unwell to continue (DSS, 2014a).
Collaborations between program administrators and
external researchers could jointly investigate ways to
measure and improve the accuracy of program type
and funding level assessments.
4.5. Implications for researchers
Further implementation studies are needed to iden-
tify and strengthen the evidence-based practices most
challenging to implement in Australia in this com-
plex service delivery context. Once high fidelity
is achieved, various enhancements could be stud-
ied such as the characteristics of high performing
employment specialists and how this knowledge
could be used to improve staff recruitment and train-
ing. This is important, because the employment
specialist role is critical to program success and staff
turnoverintheindustrycanbehigh,particularlywhen
easier office based roles are available.
The impact of wage subsidies on job retention
could also be studied as it is a form of support pro-
vided to employers that has become widespread in
Australia. However, limited information is available
about whether wage subsidies contribute to program
effectiveness or not. More employer centred research
is also needed to understand why some employers
and not others engage with this program, and how
employer interest can be sustained. Finally, further
research into job retention is needed because this
remains an outstanding issue for IPS as it does for
all forms of vocational rehabilitation for people with
SPMI.
Although the focus of this study has been on
implementing evidence-based practices in Supported
Employment for people with psychiatric disabili-
ties in the Australian context, the issues identified
may generalize to a wide range of contexts and sys-
tems. It is likely that similar issues also hinder the
adoption of best practices identified in other disabil-
ity populations, such as employment first principles
(ODDS, 2008) and quality indicators for Supported
Employment (Wehman, Revell, & Brooke, 2003).
For instance, large caseloads can be inadvertently
induced by funding systems that do not specifically
encourage the intensive, client-centred and highly
individualised type of service needed to be effec-
tive. Hence, this line of investigation may have useful
14. 240 V.A. Parletta and G. Waghorn / Financial viability of supported employment
applications to other disability populations in a range
countries, settings and systems.
5. Conclusions
IPS enhanced employment services were most
financially beneficial when applied to participants
classified as ESS Funding Level two. The results
suggest that all DES providers assisting people with
psychological or psychiatric disabilities could benefit
fromdevelopingacapabilitytodelivermoreintensive
evidence-based practices such as IPS. This benefit is
likely to increase as the government moves to greater
reliance on results based funding. Although some
clients with less severe mental illnesses may not need
more intensive services, specific IPS practices such
as assertive outreach may be immediately beneficial
to all clients by reducing attrition which has an added
negative impact on employment outcomes.
Conflict of interest
This report is derived from a Doctor of Business
Administration thesis submitted by the first author to
the University of Newcastle in March 2015. There
are no conflicts of interest to declare. The contribu-
tions of author GW were funded by QCMHR with
a supplementary contribution for student supervision
by the University of Newcastle.
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