The percentage of aged care homes in metropolitan areas (MM1) achieving both their total and RN care minute targets leapt 14.8% in the third quarter of 2024-25, according to the Department of Health, Disability and Ageing's latest Sector Performance Report.
In Quarter 3 2024-25 January to March 2025, 48.6% of MM1 providers met both care minute targets, compared with only 33.8% in Q2.
By comparison, 49.6% of aged care homes in regional areas (MM2-MM7) achieved both targets, up from 44.3% in Q2 – an increase of only 5.3 percentage points.
Overall, 49% of aged care homes met both their total and RN care minute targets in Q3 2024-25, up 11.6 percentage points over the quarter.
Most of the increase came from the ability of providers to include EN care minutes in their RN care minute targets from 1 October 2024 (see main image).
The higher rate of compliance in MM1 homes is also likely due to the Government introducing financial penalties for metropolitan providers failing to meet mandatory care minute targets from April 2026 based on data submitted by providers for the December 2025 quarter (Q2 2025-26).
The Aged Care Quality and Safety Commission also announced a crackdown on aged care homes showing an "absence of tangible effort" to achieve care minute targets in December 2024, with 27 homes were issued with 'enforceable undertakings'.
Profitability improved
Residential aged care profitability improved in the third quarter, however the gains could prove to be short-lived as the sector continues moving towards higher rates of compliance with care minutes targets, with wages representing 72% of expenses.
The residential aged care sector recorded EBITDA of $2.4 billion in Q3, or the equivalent of $44.79 per resident per day, up 4% on the year prior.
However, margins were under pressure. The median EBITDA margin fell 0.9 percentage points from Q3 2023-24 to 8.2%.
The 38-page report also referred to the Financial Report on the Australian Aged Care Sector 2023-24, which showed provider profits were higher for homes that more often failed to meet care minute targets, and providers are using care funding to cover losses in hotelling and accommodation results.
Occupancy's steady rise
Government forecasts put the need for additional aged care beds at 10,000 per year over the next 20 years, but the QFS shows Australia's existing aged care homes are increasingly full. Occupancy was up 2.5% over the year to 90.2%. StewartBrown data, which only includes mature homes, showed occupancy was 94.2% for 3Q 2024-25.
Agency expenses are declining
Agency staff costs, which soared when care minute targets were introduced and prior to the FWC wage rises, fell 2.2% over the year to Q3 2024-25 to be 7.5% of total direct care labour costs, and fell 4.7% over two years.