Why 500 aged care homes could face care minute penalties
Care minute compliance rises, but penalties hit hundreds of homes
- Improvement: 65% of homes now meet care minute and RN targets
- Compliance gap: Nearly one-third still fall short
- Financial hit: Up to $33 per resident per day in penalties for ~500 homes
- Ongoing pressure: Workforce shortages and rigid targets impacting viability
More aged care homes than ever are meeting the Government’s mandatory care minute targets, yet hundreds still fall short despite financial penalties.
From 1 April 2026, non-specialist residential aged care operators in MM1 have faced financial penalties for non-compliance with mandatory care minute targets in the December 2025 quarter.
For all aged care homes that reported, only 65% met both care minute and RN targets in the period. The result is nearly double the findings of 12 months earlier, but means nearly one in three do not comply.
For MM1 (metro) aged care homes, which could face the penalties, the compliance rate was 68%.
Our calculations suggest the result means close to 500 aged care homes could face a funding reduction, which could be as much as $33.41 per resident per day.
NWAU cut
Mandatory care minute targets were introduced on 1 October 2023, when the Government required aged care homes to achieve an average of 200 total direct care minutes and 40 RN direct care minutes per resident per day.
A year later, from 1 October 2024, the targets increased to 215 direct care minutes and 44 RN minutes. However, financial pressures and recruitment challenges held rates of compliance with both targets below 50%.
To improve rates of compliance, in December 2024, the Government announced changes to AN-ACC funding for metropolitan aged care homes.
From 1 April 2026, non-specialist MM1 operators have had their National Weighted Activity Unit (NWAU) weighting adjusted according to a sliding scale determined by compliance with the mandatory care minute targets.
Targets stall innovation: peaks
Earlier this year, Ageing Australia CEO Tom Symondson told The Weekly SOURCE that aged care beds could close due to the unfunded cost of complying with care minute targets.
The peak body for aged care providers 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," he said.
Alex Lynch, Director of Aged and Community Care at Catholic Health Australia, told The Weekly SOURCE that homes with high rates of supported residents should 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 UTS Ageing Research Collaborative (UARC) has reported that care minutes targets are a handbrake on productivity and constrain aged care operators when it comes to innovative models of care.
“Government specification of the quantum of care minutes to be used as inputs has constrained providers’ abilities to be in the models of care they adopt to achieve the desired outcome of higher quality care,” it has stated.
As aged care operators move to increased compliance with the mandatory care minute targets, margins have eroded, and operators are forced to employ higher-cost labour, such as agency staff and overtime, amid workforce shortages.
The residential aged care sector is estimated to be short of 22,000 direct care workers this financial year.
Some operators may be prepared to wear the penalties and still come out ahead financially, UARC Chair Professor Mike Woods wrote in the mid-year 2024-25 UARC report.
The Government is conducting a virtual nursing trial, with a two-year pilot concluding in 2027, which could provide a future alternative to help homes meet care minute targets.
You can view the care minutes dashboard here.
