The current state of ILO

Many in the NDIS have considered Individualised Living Options (ILO) as the source of community integration that the scheme initially promised. 

In most cases, ILO creates a fundamental re-orienting of the accommodation arrangement where people can truly experience their communities and social inclusion.

However, the data continues to demonstrate that ILO still represents a vanishingly small amount of accommodation payments, and the growth is limited in both a rate and absolute sense. In this article, we review the ILO market from a data-driven perspective.

The data doesn’t lie

Firstly, with our focus on the stats, we accumulated several NDIS data sets that finally allow us to understand the trajectory of the ILO market. 

In a previous article, we calculated what full-scale ILO maturity would look like if we achieved Western Australian (WA) rates nationally. However, it appears that it will take some time before we get there.

ILO Exploration and Design grew from 522 participants purchasing in December 2021, to 684 in March 2022. This is a 31% growth rate, which when annualised is quite impressive. 

However, this Exploration and Design activity only translated to an additional 41 customers purchasing the ILO support model between quarters (9%, 473 to 514). This number is quite concerning as it is indicative of a relatively high Exploration and Design failure rate. 

At Empathia Group, we’ve been concerned about this issue since the original inception of ILO. At this growth rate, it will take a further 6 years before we achieve the WA rate nationally. 

Of course, the scheme would need to maintain this rate at scale, which doesn’t appear possible given the limited host and co-resident sourcing infrastructure in the sector. We believe that significant interventions in this space will be needed to achieve ILO saturation consistent with customer demand.

It should be noted that the NDIS data sets are annualised, so we can’t make inferences about the success rate between quarters and what the average Exploration and Design time is. Still, we can make some inferences about the relative success rates between states. 

The Exploration and Design data demonstrates that there has been substantial growth in this area in the quarter. New South Wales (NSW) has experienced significant growth in this support area, with WA also enjoying substantial increases. 

The “success” metric is highly confounded, but we’re attempting to capture “how much of last quarter’s Exploration and Design activity translated into actual increases in support model purchases”. This will be heavily affected by the timing in the annualised data (some people may still be using the same Exploration and Design package across quarters), and support model increases originated in prior quarters. But what we see is quite interesting:

There are material differences between the size of the Exploration and Design cohorts and the actual increase in support model purchases. Interestingly, WA continues to maintain the highest “success rate”, which likely reflects their existing host and co-resident matching infrastructure, which we believe is a major limiting factor in newer markets. 

WA experienced the most significant growth in an absolute sense, but this reflected a lower rate of growth given the considerable denominator. However, given that WA accounts for only 10% of the national accommodation spending, they still have a decisive edge in the ILO market. This difference demonstrates a real demand for ILO products, and they simply aren’t provided at the scale required for the national market.

We find it concerning that WA contributed 45% to the ILO Support Model growth between quarters, with exceedingly marginal amounts found in the populous states nationally.

Our view is that this data demonstrates that ILO isn’t growing at a rate that can deliver this brilliant solution to community living at the rate customers expect. 

As far as we can tell, there isn’t much difference between the WA folk and the rest of Australians (although some in WA will dispute this point), and the higher saturation in WA reflects genuine demand for what we consider to be an outstanding product.

Queensland (QLD) and NSW need to up their game when it comes to ILO, even though Victoria (VIC) and South Australia (SA) aren’t performing much better. 

Incredible client outcomes are possible

In the coming weeks, we will provide you with two brilliant ILO success stories from a small but exceptional NSW provider. Indeed, while this provider is relatively small, their dynamic team managed two extremely successful ILO implementations that have created excellent social and community improvements and delivered genuine improvements to quality-of-life outcomes for these customers.

This provider did not possess extensive infrastructure and was still able to deploy this product using a combination based on a solid commitment to their customers and a willingness to learn. We are yet to identify major barriers to ILO other than the will of providers. 

An important detail to note in these cases is that both models utilised the “co-resident” model, which we initially expected to have lower uptake than the “host” model. While the current data format doesn’t allow us to identify different purchase patterns, we aim to generate our own data to inform you about the ILO models’ relative success rates.

The key takeaway

We find it interesting that despite a worsening environment for Supported Independent Living (SIL) providers, our modelling and work with customers demonstrates that ILO is viable for providers and attractive for both hosts and co-residents. 

Indeed, ILO can give providers access to scaling effects that are excluded under the unit rate-based attendant care models. Given that 1. ILO works 2. Customers want it, and 3. Providers can offer it sustainably; we’re eager to work with providers to assist them in deploying this excellent solution.

If you enjoyed our analysis or have your own view about the major barriers to entering the ILO market, we’d love to hear your thoughts.

As always, if you’d like to explore working with us, don’t hesitate to reach out