The Australian aged care sector entered the Support at Home era with solid financial foundations, according to the latest Quarterly Financial Snapshot released by the Department of Health, Disability and Ageing.
Covering the three months to 30 September 2025, the last full quarter under the Aged Care Act 1997, the report shows providers largely absorbed substantial wage increases and higher care requirements without significant erosion of margins.
In residential aged care, the sector wide EBITDA margin held at 8.1 per cent, while the net profit before tax margin rose to 2.9 per cent. Four in five providers reported positive EBITDA, up more than six percentage points on the previous year, and 64.5 per cent were profitable on an NPBT basis.
Home care margins were unchanged at 7.6 per cent EBITDA and 7.1 per cent NPBT, despite a 10.1 per cent rise in labour costs.
Care quality also improved. Providers delivered an average of 220.66 care minutes per resident per day, exceeding the 215.85 minute target, and 60 per cent of homes met both total and registered nurse targets, a rise of 5.8 percentage points in a single quarter. Agency staff usage continued to fall, signalling better retention after the Fair Work Commission wage decisions.
These results arrived just weeks before the most significant overhaul of aged care funding and regulation in decades. From 1 November 2025, the new Aged Care Act 2024 and the Support at Home program replaced the old Home Care Package system. Key changes include:
• a shift to pooled care management funding, with 10 per cent of each participant’s quarterly budget automatically allocated to providers and no separate package management fees permitted
• a requirement for providers to build all administration, travel and overhead costs into service prices
• for residential care, a new 2 per cent per annum retention on Refundable Accommodation Deposits and Contributions for new residents, capped at five years
A further change looms from April 2026, when non specialised metropolitan homes risk losing full care minutes supplement funding if they fail to meet targets.
To offset the loss of separate management fees, previously up to 15 per cent for package management and 20 per cent for care management, many providers increased hourly service prices.
An analysis by StewartBrown in February 2026 found median prices across key services had risen 39 per cent since June 2025. Personal care jumped from $80 to $112 per hour, cleaning from $79 to $110, and nursing from $132 to $180.
The same report noted average profit margins of 5.3 per cent across surveyed packages, still below the 9.5 per cent level StewartBrown considers necessary for the sector to attract investment. Smaller providers, defined as those with fewer than 250 packages, were often in negative territory, while larger operators achieved margins around 8 per cent.
The introduction of income tested co payments for non clinical services such as personal care, cleaning, gardening and similar independence and everyday living supports has sparked widespread debate.
Clinical care remains fully government funded, but participants now contribute a percentage of the price for other services depending on income and assets. Full rate pensioners who were already in the system before September 2024 are protected by a no worse off guarantee and pay nothing for clinical care, with lifetime contribution caps in place.
Nevertheless, the changes have drawn sharp criticism. The ABC’s 7.30 program in September 2025 featured older Australians and advocates describing the co payment model as forcing difficult choices. Inspector General of Aged Care Natalie Siegel Brown warned some people were considering forgoing showers or other hygiene support.
Older Women’s Network representative Beverly Baker called it an obscenity to ask people to choose between a shower and a meal. The Greens renewed opposition to the user pays element, while aged care advocates highlighted the risk that higher prices would reduce the volume of services older people could afford, even if their out of pocket costs stayed the same or fell.
Providers, for their part, argue the price adjustments are necessary to maintain service levels after the structural removal of management fees and to meet rising wage and compliance costs. The government has emphasised that it remains the majority funder, that price caps will apply from July 2026, and that safeguards such as the lifetime cap and financial hardship provisions are in place.
The Q1 2025 to 26 snapshot therefore serves as a benchmark, a picture of a sector that had stabilised financially after years of wage pressures and care minute mandates.
The next quarterly reports will be closely watched for signs of how the new funding model is affecting cash flow, service delivery and provider viability, particularly for smaller home care operators and metropolitan residential homes facing the upcoming care minute penalties.
Unspent home care funds stood at $4.2 billion at the end of September 2025 and have carried across into the new program, offering some buffer. Liquidity and capital adequacy ratios had also improved in the pre reform quarter.
The aged care reforms were designed to deliver greater transparency, equity and sustainability. Early evidence shows providers are adapting through price adjustments, but the concerns raised by seniors, advocates and some politicians underscore the importance of monitoring both financial health and real world access to care as the new system beds down.
Future snapshots will reveal whether the sector’s pre reform resilience translates into long term stability under the new rules.
