In this guest post, Bret Duckers, Partner at aged care advisory firm FicusBridge, explores upcoming funding reforms, compliance challenges, and demographic shifts, highlighting the need for aged care providers to act swiftly on care delivery, financial planning, and operational optimisation.
FicusBridge, the newly merged entity, brings together extensive expertise in funding and AN-ACC management and deep experience in governance, operations, reporting, and a range of other services designed to support aged care providers in delivering improved care.
The Australian aged care sector stands at a pivotal moment of transformation. The government has invested billions in increased funding through the AN-ACC model compared to the previous ACFI system, but this comes with heightened accountability. Recent compliance audits have revealed that approximately 40% of facilities aren’t meeting their mandatory care minute requirements, prompting immediate regulatory action.
This compliance challenge now intersects with a significant funding reform scheduled for April 2026. The government has announced that metropolitan (MM1) facilities – representing 60% of all aged care providers – will face basic care tariff reductions unless they meet their care minute targets. This reform aims to ensure that increased funding translates directly into care delivery, marking a fundamental shift in how the sector operates.
Metropolitan facilities face potential funding reductions of up to $31.64 per resident per day from April 2026 if care minute targets aren’t met. This determination will be based on performance during the October-December 2025 quarter, making the next nine months crucial for preparation and optimisation. The critical timeline for action breaks the preparation down into distinct recommended phases:
- January-March 2025: Review care minute delivery, optimise AN-ACC classifications, initiate workforce planning
- April-June 2025: Implement roster optimisation, establish recruitment strategies
- July-September 2025: Stabilise care delivery, fine-tune staffing patterns
- October-December 2025: Critical performance period determining 2026 funding
Beyond these operational changes, the sector faces a broader transformation. The incoming generation of residents – predominantly Baby boomers – brings higher service expectations and greater financial sophistication. This demographic shift coincides with significant financial changes, including the increase in maximum RAD (refundable accommodation deposit) limits to $750,000 and an expected shift in payment preferences from RADs to DAPs (daily accommodation payment).
Providers must now focus on three key areas:
First, immediate compliance requirements. The Commission has requested detailed
information about compliance efforts, including documentation of actions taken to
address shortfalls, evidence of recruitment strategies, and operational improvement plans. Importantly, providers can receive reasonable compensation for compliance-related documentation costs.
Second, operational optimisation. This includes implementing real-time care minute monitoring, developing efficient rostering strategies, and building relationships with qualified healthcare professionals. Providers need robust systems to track and manage care delivery while maintaining quality standards.
Third, financial planning. The sector’s evolution demands a review of capital structures, accommodation pricing strategies, and liquidity planning. Providers must prepare for changing payment preferences while maintaining operational stability.
The future model of aged care increasingly resembles hospitality services supported by clinical care.
Success requires balancing compliance requirements with enhanced service delivery and financial sustainability. Providers must maintain appropriate funding claims based on resident acuity while ensuring adequate staffing levels to deliver quality care.
For immediate compliance needs, professional support is available to liaise with the Commission, manage response timelines, collect and validate data, and prepare comprehensive documentation. This assistance can help providers address current requirements while building foundations for future success.
The transformation ahead represents both challenge and opportunity. Providers who act now to optimise their operations while planning for future changes will be best positioned to thrive in this new environment. Success requires careful attention to resident needs, staff capabilities, and financial management.
The path forward demands immediate action on compliance while preparing for broader industry changes. Providers must ensure their systems, staffing, and financial structures align with both current requirements and future expectations. Those who delay risk both compliance issues and financial challenges in the evolving aged care landscape.
The time for action is now. With proper planning and support, providers can navigate these changes successfully, ensuring sustainable operations while delivering quality care for Australia’s ageing population.
