Ansell warns aged care reset as system hits its limits
Ansell Strategic has warned aged care providers are entering a period of reset as the system hits capacity and financial headroom tightens.
Its latest 20-page Board Pack points to a sector under sustained pressure, with demand continuing to outstrip supply, funding increases being absorbed by rising costs, and performance increasingly assessed in real time.
A system at its limits
The data is stark. Residential aged care occupancy is now approaching 94%, effectively full, while development continues to lag demand.
Australia needs around 8,900 new beds each year, yet current projections suggest only 1,700-4,000 beds will come online annually, widening the gap between demand and supply.
At the same time, more than 3,000 older Australians remain in hospital waiting for aged care, while in home care more than 235,000 people are either awaiting a Support at Home package or an assessment, with wait times stretching up to 11 months (see graph pictured top).
Funding up, capacity down
While funding is rising, reinvestment capacity remains limited.
Sector revenue increased 11.7% over the past year, but expenses grew by 11.1%, driven largely by labour costs, which rose 12.7%.
As a result, earnings remain well below the $55-$60 per resident per day benchmark considered necessary to support new investment. See below.
At the same time, providers are being pushed to increase care delivery to meet mandated care minutes – with penalties for metro homes that miss targets commencing this month – adding further cost pressure, yet around 40% of homes were still not meeting targets in Q1 FY26.
Compliance moves to real time
The operating model is also shifting, with risk-based regulation and the new Aged Care Act moving the sector away from periodic compliance towards continuous performance.
“Compliance is no longer episodic, it must be demonstrated in real time,” Ansell writes.
Alongside this, the report notes that the regulator is increasingly focusing on organisation-wide governance and clinical oversight, rather than viewing issues as isolated to individual homes.
“Strong clinical governance is no longer something that lives in a policy manual; it must be evident at the point of care,” said Ansell Senior Operations Consultant, Caroline Kiriga.
The reset
The report’s conclusion is clear.
“The aged care sector has moved beyond incremental change and into a period of structural reset,” it states.
In that environment, the margin for strategic error is narrowing – and for boards, the question is no longer whether change is coming, but how they respond.
You can download the report here.
