Financial sustainability is fast becoming one of the most pressing issues providers must consider as the industry adjusts to the new Aged Care Act.
It’s about building financially stable, operationally efficient services that can withstand ongoing pressures—especially as rising costs and regulatory reforms come into effect.
At the 2024 Aged & Community Care Providers Association (ACCPA) conference, sustainability was a major theme. Financial sustainability even warranted its own dedicated program stream, highlighting just how urgent this issue has become. With the new Aged Care Act changes on the way, providers will need to make deliberate decisions to ensure they can continue to deliver high-quality care well beyond 2025.
A sector under pressure: Why sustainability matters now
Financial challenges are mounting across home and residential care. At AlayaCare, we’re increasingly being told about the difficulties providers are facing in running a business as operational costs increase.
The 2025 01 StewartBrown Aged Care Financial Performance Survey (30 September 2024) reinforces this:
- Home care providers are estimated to lose $5.27 per client per day in care management revenue when the 10% cap on care management fees is implemented —dropping from $15.22 to $9.95 per client per day
- To maintain their current operating surplus, home care providers will need to increase their margin on service delivery to above 32% from 13.6%
- In residential aged care, 59% of homes operated at a loss for the three month period ending September 2024
- Residential homes experienced an average operating loss of $8.45 per bed day, equivalent to $2,895 per bed per year
These figures paint a clear picture. Without action, the viability of many services is at risk.
Sustainability first: Setting the standard for 2025
In 2025, sustainability is about securing the future of home and residential care. Providers who take a proactive approach to efficiency, resource management and financial stability will be best positioned to thrive.
Sustainable care delivery in 2025 will focus on:
- Optimising resource management to reduce waste and control costs
- Leveraging technology to streamline processes and improve efficiency
- Diversifying revenue streams to create greater financial stability
- Focusing on staff and client satisfaction to improve retention and support long-term success
This approach isn’t just about compliance or meeting funding requirements. It’s about creating services that are resilient, adaptable and able to deliver consistent, high-quality care to clients and residents.
The impact on home and residential care providers
For both home care and residential providers, the shift towards sustainability is no longer optional. In 2025, financially sustainable practices will bring:
- Enhanced efficiency: Reducing waste and optimising processes to lower costs and maximise resources
- Financial resilience: Diversified income streams and smarter operations that help withstand funding changes and cost pressures
- Improved outcomes: A focus on client and staff satisfaction that supports better care and higher retention
- A competitive edge: Providers who embed sustainability into their operations will be better placed to navigate reforms and meet growing demand
Leading with responsibility and vision
As aged care evolves, sustainability will be front and centre in every decision providers make. This is not just about balancing the books; it’s about ensuring that clients, residents and their families can rely on high-quality, compassionate care, today and in the future.
By embracing this approach with purpose and foresight, providers can safeguard their services, support their people and continue to deliver exceptional care.
This is the third part of a series by Annette Hili on transitioning to a new Aged Care Act.
Part One: How residential and home care providers can navigate the Aged Care Act in 2025
Part Two: Residential care, digital transformation & a focus on security
Have your say on this topic with our Poll: “Do you agree that financial sustainability will be a pressing issue for aged care providers? Yes or No?
Yes. Quicker movement to invest and incorporate digital health in residential and aged care will ultimately be a cost and bureaucratic saver.
Yes. Employing more ENs not RNs
Yes. Allied health professionals are key players and need to be earning a living wage in order to sustain their services. Target those in private practice for ensuring adequate remuneration through Medicare (For example, as an OT who did further training to be a lymphoedema therapist in private practice, I was not able to earn above $50,000 a year despite exhausting myself putting in 80 hours a week. This situation persisted whether my services were home based or clinic based.) NOT sustainable.
Yes. A review of provider cost structure.
Yes. restructuring of the sector to eliminate wasted overhead costs and more funding for tech enabled care at home.
Yes. Ensure government either provides enough funding, especially for dementia care, or relaxes its regulations. ENs instead of RNS