Australia’s new Support at Home program is placing significant financial pressure on home care providers, with operating margins falling to what analysts describe as “unsustainable” levels just months after the reforms began.
A new report from StewartBrown found the average operating margin for home care providers dropped to 1.7% in the six months to December 2025, down from 4.5% in September 2025 and 4.4% for the full 2024-25 financial year.
The report, based on data from 86,324 home care packages representing 29% of the sector, is the first major financial snapshot since the Support at Home program replaced Home Care Packages in November 2025.
StewartBrown said the sector’s earnings had deteriorated sharply as providers adjusted to major funding and pricing reforms, including the removal of package management fees, caps on care management charges and new claiming rules.
The report found year-to-date EBITDA had fallen to just $760 per client per annum, with the December quarter recording an even lower $632 per client per annum.
“YTD Dec-25 EBITDA of $760 pcpa is a low point and at this level it is not investable.”
StewartBrown warned that all key financial trends were negative, pointing to declining service volumes, shrinking margins and pricing levels that were insufficient to offset lost revenue streams under the new model.
The report found total revenue declined from $88.84 per client day in September 2025 to $85.65 per client day by December 2025, while direct service revenue increases failed to compensate for steep declines in care management and package management income.
Package utilisation also fell to 85.2%, down from 89.6% in the first three months of the financial year, suggesting older Australians were using less of their allocated funding under the new system.
At the same time, unspent funds continued to rise, reaching an average of $15,310 per client in December 2025.
The report said the decline in utilisation may be linked to the rollout of interim packages, which provide only 60% of a participant’s full package value until permanent funding becomes available.
StewartBrown also suggested participant co-contributions may be influencing how consumers use services under the new arrangements.
The analysis found providers had lifted prices significantly in an attempt to recover lost revenue from abolished package management fees, travel charges and reduced care management income. Median service price increases between the old Home Care Packages system and Support at Home averaged 38%.
Despite those increases, StewartBrown said providers were still struggling to cover overheads as service volumes declined.
The report also highlighted growing pressure on smaller providers, finding organisations now likely need more than 1,000 packages to achieve or exceed average sector financial performance under Support at Home.
StewartBrown said it was still too early to draw firm conclusions because the December 2025 survey only captured two months of Support at Home data, but early indicators suggested the program was “less profitable for providers and this will need to be monitored closely”.
