Care minute penalties from 1 April could force bed closures
Two peak bodies are warning more aged care beds could close as a result of financial penalties being introduced this week.
From 1 April 2026, non-specialised aged care homes operating in metro areas will face reductions in their AN-ACC funding if they fail to meet mandatory care minute targets.
Yet data for the September 2025 quarter, the last quarter before penalties for non-compliance apply, shows only 61% of metropolitan aged care homes met both targets. By our back-of-envelope calculations, this equates to about 650 metro homes.
Damned if you do, damned if you don't
Ageing Australia CEO Tom Symondson argued that the financial penalties are a “blunt instrument”.
“[Care minutes] don’t take into account small variations from day to day or week to week, meaning providers must roster above 100% to avoid being fined, which they are not funded for,” he said.
With 60% of aged care homes reporting deficits, according to StewartBrown, complying with the targets also imposes a financial heavy penalty, Tom said.
“For some providers, meeting care minute targets can be extremely expensive as it often requires use of agency staff,” he said.
Operators are effectively “damned if they do and damned if they don’t.”
In the context of Australia’s severe shortage of aged care beds, the financial penalties only add pressure on the system.
Some providers are “at risk of closing beds due to the unfunded cost of meeting minutes targets,” Tom added. “Providers are extremely concerned.”
Ageing Australia says it supports policy settings that provide “more flexible, innovative care” enabling operators to deliver “outcomes tailored to each individual, rather than blunt, one size fits all policies.”
Penalties a viability risk
Alex Lynch, Director of Aged and Community Care at Catholic Health Australia, also supported a more flexible approach.
“The sector is managing multiple, concurrent changes, including AN-ACC adjustments, shifts in subsidy weightings, and evolving supplement arrangements, all of which require complex operational responses,” he told The Weekly SOURCE.
“Providers need sufficient flexibility and lead time to implement staffing and rostering changes, particularly at a time when financial sustainability remains under significant pressure.”
While all Catholic Health Australia homes aim to comply with the care minutes targets, Alex called for homes with high rates of supported residents to be protected from the financial penalties.
“Without appropriate flexibility and safeguards, these services face increased viability risks, potentially leading to withdrawal from communities that rely heavily on them,” he said.
The shortage of aged care nurses makes it challenging to meet the care minute targets, especially in regional areas, Alex said. Catholic Health Australia has proposed the Government subsidise nurses’ rent and co-develop affordable housing for workers.
