Across Australia’s allied health sector, one of the most noticeable shifts in recent years has been the increasing number of clinicians opting to work as sole traders or independent contractors. For many practitioners, this path offers legitimate and attractive benefits: autonomy, flexible scheduling, control over caseloads, and the potential to capture a greater share of the fee for service.

However, while this model can make sense for individual clinicians—particularly those with established networks and the business savvy to manage administrative and compliance burden—it also raises deeper systemic questions. When a growing cohort of sole traders’ expectations of hourly rates is equivalent to the industry service rates, this makes it impossible for larger companies to employment their services. The long-term knock-on effects on workforce stability, service quality, and organisational viability become impossible to ignore.

Sector Pressures: Workforce Shortages and Rising Demand

Australia’s allied health workforce has expanded significantly over the past decade; data from the Australian Institute of Health and Welfare shows allied health professions grew by around 67% between 2013 and 2022—well above the average for other registered health professions. But even with this growth, shortages persist, particularly for certain professions and in regional areas. More than 4 in 5 health occupations, including allied health, were listed as in shortage in 2023 labour market data, with low fill rates and limited suitable applicants per vacancy.

At the same time, demand for allied health services continues to climb. The enormous growth of the National Disability Insurance Scheme (NDIS) has been a major driver of sector employment—reportedly accounting for a large share of recent job creation in social assistance and health roles.

This combination—rising demand amid constrained supply—has resulted in increased competition for clinicians, and placed upward pressure on wages, contractor rates and employment costs, and in some organisations pushed them to breaking point.

Sole Traders: Context and Consequences

Estimates suggest a significant portion of NDIS allied health services are delivered by sole traders. One industry commentary notes that up to half of NDIS providers may be sole operators, drawn by the simplicity of entry and the flexibility of independent practice. This must be understood within the broader context:

Why Sole Trading Can Appeal

• Flexibility and autonomy: Sole traders can negotiate their own schedules, choose clients, and avoid organisational constraints.

• Higher potential earnings: Charging fees at market or scheme rates without team overhead can seem more financially attractive—particularly in a labour market where employment wages are perceived to lag behind sector demand.

• Low barriers to entry: As one sector analyst points out, clinicians can begin operating with minimal setup—often just a business number and vehicle—which can seem far simpler than navigating organisational structures.

• Avoid compliance, admin & marketing costs: Many practitioners seek to align themselves with larger organisations in a means to avoid the heavy compliance burden under the NDIS and Support at Home program. This allows them to operate leanly and maximise profits.

Systemic Challenges and Hidden Cost Allocation

While sole trading offers autonomy and flexibility, it is important to recognise that subcontracting within larger allied health organisations is a fundamentally different commercial arrangement to independent service delivery. When operating as a subcontractor, the organisation continues to carry a significant proportion of the operational, financial, and regulatory burden.

Key considerations include:

• Compliance and governance responsibilities:
  Organisations remain accountable for regulatory compliance, including NDIS registration, quality and safeguarding frameworks, audit readiness, clinical governance, and emerging obligations under the new Aged Care Act and Support at Home program. These obligations apply regardless of delivery model and carry material cost and risk.
• Administrative and operational overheads:
  Even where clinicians are subcontracted, organisations typically manage marketing, referral relationships, client intake, scheduling, billing, record management, data security, incident and complaints handling, and reporting. These activities are essential to service continuity and are not eliminated through subcontracting.
• Risk, continuity, and margin requirements:
  Organisations absorb demand volatility, cancellations, workforce gaps, and reputational risk, while maintaining continuity of care for clients and funders. A sustainable operating margin is not discretionary—it is required to reinvest in compliance systems, supervision, technology, and workforce development.

Realistic pricing expectations in subcontracting models

In this context, expecting payment at or near the full market service rate is not commercially viable. Subcontracting rates must reflect the fact that the organisation continues to provide infrastructure, clients, compliance coverage, and risk management. Sustainable arrangements depend on realistic hourly rate expectations that acknowledge shared value rather than full fee capture.

Market response and workflow sustainability

Where subcontractor rate expectations consistently exceed what organisations can sustain, workflow availability will inevitably contract. In response, larger providers are increasingly likely to revert to internal employment models, where costs, productivity, and compliance can be more predictably managed. In such scenarios, high-cost subcontracting arrangements become less attractive, and the volume of available subcontracted work is likely to decline.

Seen in this light, subcontracting works best as a balanced partnership. When pricing aligns with the true distribution of cost, risk, and responsibility, it can offer flexibility for clinicians and resilience for organisations—both of which are essential in a sector already operating under significant pressure.

A Note of Caution: Commercial Reality Cuts Both Ways

Subcontracting relationships rely on mutual benefit and commercial realism. When rate expectations become disconnected from the underlying cost and risk borne by the organisation, those relationships inevitably come under strain.

If subcontracting arrangements are no longer viable, organisations will respond rationally—by reducing subcontractor reliance, shifting to internal staffing models, or narrowing service scope. For sole traders, this can mean reduced workflow, less consistent referrals, and increased exposure to market volatility, all of which directly impact business sustainability.

Importantly, this dynamic also has broader implications for service delivery. Larger organisations often play a critical role in maintaining access, continuity, and coverage—particularly for complex clients, regional areas, and programs with high compliance requirements. When subcontracting models collapse under pricing pressure, it is not only individual businesses that are affected, but the capacity of the system to deliver timely and coordinated care.

In this context, sustainable subcontracting is not about maximising short-term individual gain. It requires measured, realistic pricing that recognises the value of organisational infrastructure, client access, and shared risk. When these relationships are undermined, everyone loses—clinicians, organisations, and ultimately the people who rely on allied health services.

Conclusion

The rise of sole traders in allied health reflects genuine shifts in workforce preferences and market dynamics. Yet, when the expectation of independent earnings approaches organisational charge-out rates—without recognising structural differences and added responsibilities—it places further strain on an already tight labour market and fragile sector infrastructure.

Supporting clinician autonomy is important, but so too is ensuring stable, sustainable employment pathways, high-quality service delivery, and equitable access for people who rely on allied health services. Achieving this balance will require thoughtful reform—not just rhetoric—so that the sector can thrive collectively rather than fracture under competitive pressure.