In Australia, aged care sector expenditure is projected to grow from $18.6B in 2017/2018 to $23.6B by 2021/2022. So, other than increased government funding, how can providers become more efficient and therefore more profitable, without compromising the quality of care? .

The Aged Care Financial Performance Survey, Sector Report for the 2018 Financial Year by accounting and benchmarking firm StewartBrown, suggested that the financial performance of the Australian aged care sector is experiencing ‘significant challenges’. The sector is facing a continued decline in profitability – across both residential care and home care – and thus affecting the long-term financial sustainability of the industry.

According to StewartBrown “A continuation of this decline or even just maintaining the results will potentially place a number of residential care facilities in a financially vulnerable position which could impact on the organisation’s sustainability.”

StewartBrown senior partner, Grant Corderoy recently told the ABC, “The funding model is a combination of Government funding, which provides 70 per cent of the revenue, and funding income from the resident, or consumer, which is the remaining 30 per cent. Looking at the package together, I think it’s moved into an area where it’s financially unsustainable.”

Particularly in the area of residential aged care, how much can be charged for care is limited by a Government formula – the maximum being around $51 per day. The emerging issue is that new aged care recipients are older and often require more expensive care than in years gone by. Many providers are saying that the Government contribution does not match the increase in costs they are incurring. Add to this the billions of dollars the industry is needing to invest in new facilities to try and meet growing demand and the problem becomes abundantly clear.

While the need to secure additional government funding is undeniable, there are other ways that providers can streamline operations and reduce costs in the interim.

Reducing inefficiencies, eliminating double (or triple) handling of customer queries, and stabilising the retention of high-quality staff can aid in a provider’s profitability. Additionally, automating and streamlining certain processes such as communication can decrease costs, without compromising on the quality of care. Adopting new technology may incur an initial switching cost but over the long-term, the savings, business sustainability and the benefits are apparent.

For needed investment in the sector to occur, the industry must be financially sustainable, and this is going to require all stakeholders to engage in seeking out ongoing, efficient, effective and robust solutions to operational (and funding) business models.

As we approach the end of the financial year and start to set budget expectations for the new financial year, better systems and processes should be at the fore of all strategic and budgetary considerations. A move towards a more profitable residential aged care or home care service is absolutely possible, today and into the future.

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  1. Aged Care Financial Performance Survey | StewartBrown [Internet]. 2018. Available from:—ACFPS-Sector-Report-June-2018.pdf 
  2. Aged care ‘financially unsustainable’ as industry braces for further hit from the royal commission | ABC [Internet]. 2020 Available from: