The number of residential aged care operators has fallen to 707 – nearly 60 fewer than two years ago – as the latest Quarterly Financial Snapshot (QFS) from the Department of Health, Disability and Ageing shows rising compliance costs continuing to squeeze margins.
The Q4 2024-25 report confirms the long-expected decline in profitability tied to increased adherence to care minute targets. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell $2.19 per resident per day (prpd) from the previous year to $42.73 prpd, while margins eased one percentage point to 8.0%.
At the same time, average care minutes rose by 11.16 minutes prpd to 218.87 minutes, and the share of facilities meeting both Registered Nurse and overall care minute targets jumped from 40.5% to 54.2%.
Revenue grew strongly – AN-ACC funding climbed $0.8 billion year-on-year, from $5.1 billion in Q4 2023–24 to $5.9 billion – but higher staffing costs and the 24/7 RN requirement more than offset those gains. According to the Department, “increasing acuity of resident needs” also contributed to higher expenditure.
The Department expects further margin erosion as financial penalties for non-compliance take effect.
“The Department anticipates seeing continued increases in expenses as a result of increased direct care staff time to meet care minute targets,” the report states, noting that funding will soon be linked directly to delivered minutes for non-specialised metropolitan providers.
Despite falling EBITDA, net profit before tax nearly doubled to $16.04 prpd – reflecting lower amortisation costs as bed licences continue to be written down.
While earning more revenue, higher costs and fewer operators signal the sector is under pressure.
The Government often cites care minute targets as a cornerstone of its reform agenda, claiming they are improving care quality.
But with operator numbers falling, profitability under strain, and investability weakening, the question remains: are the reforms designed to lift standards also tightening the aged care bed shortage that’s leaving thousands of older Australians stuck in hospital?
You can read the full QFS report here.
