In just three days, the new allocation model for residential aged care places comes into effect, reshaping the field in ways that invite serious reflection for the sector. The federal government’s recent publication, “Places to people: how residential aged care providers can prepare for success in a competitive market”, positions residential aged-care providers squarely in a commercial marketplace.
For those working in the sector, grappling with funding reforms, staffing shortages and regulatory complexity, this is a pivotal moment.
The shift from allocation of places to older Australians selecting a provider and providers being advised to “build their market”, analyse demand by region and connect with home-care and retirement-village providers for referrals reveals a radical change in frame.
It is not the principle of choice that draws criticism. Rather it is the framing. That choice appears to be being translated into competition between providers, for volumes, for referrals and for occupancy. The guiding document released by the Department of Health and Aged Care places significant emphasis on business strategy rather than resident outcomes.
The commercialisation of care?
From the document’s opening lines the tone is clear. Since 1 November 2025, places are assigned to older people approved to access residential care services. Residential aged-care providers will no longer have an allocation of places to provide care, giving them greater control over their business decisions.
The guidance then prompts providers to build their market, update their My Aged Care profile to improve standing in the referral ecosystem, connect with local PHNs and retirement villages as a potential source of referrals, and assess local demand for services, analyse community demographics, existing supply and gaps in the supply of particular services.
Put simply, providers are being urged to act like businesses in a competitive market. That suggestion may appear benign, but in a sector where the residents are among the most vulnerable in our society, the implications are profound.
What this means in practice
For those operating or managing residential services, several key operational risks and questions immediately emerge. Occupancy pressure becomes quality pressure. If success is measured by occupancy levels, stronger financial performance and overall competitiveness, then pressure will mount to fill beds.
The risk here is mismatches between residents’ care needs and the facility’s capability, as has been flagged elsewhere. Providers may lean into admitting those who fill a business model rather than those whose needs align with the facility’s core strengths and staffing ratios.
Referral networks and potential conflicts of interest are another concern. The guidance encourages interaction with local PHNs and retirement villages. While networking is not inherently problematic, it opens up questions around influence, equity of access and impartiality. The document does not address how to guard against incentives, financial or otherwise, that could arise when providers treat referrals as part of growth strategy.
Choice may also translate into provider marketing, not resident empowerment. The language of the document emphasises provider positioning, promoting profile updates, service specialisation and targeting gaps in supply. The resident is cast as a client to attract rather than a citizen to be served. This shift in language is telling.
Smaller and regional providers face heightened challenges. Analyses of the market show consolidation in the sector, increasing average size of providers and decreasing number of independent smaller services.
In a competitive marketplace model, smaller providers with limited marketing or business development capacity may struggle to compete with large, well-capitalised operators. That raises a potential risk of loss of localised, smaller community care homes, with flow-on effects for access in rural or regional settings.
What about resident care and sector purpose?
The problem is not the need to remain viable or to adapt sustainably. Clearly providers must ensure financial sustainability, remain responsive to demand, and align services with evolving demographics. Reports from the industry emphasise this. However the shifting emphasis away from care metrics toward business competition invites some uncomfortable questions.
What message does this send to older Australians and their families? If the provider’s prime focus is on being competitive and building referral streams, where is the visible assurance that the individual resident’s wellbeing, preferences and choice are central?
How does the sector ensure that quality of care, staff time with residents, allied health access and lifestyle service delivery remain core rather than become secondary to marketing occupancy? Will metrics of success become occupancy and profitability rather than resident-centred outcomes such as quality of life, independence, dignity and meaningful engagement?
The reforms around place-allocation were meant to enhance choice and control for older Australians. Yet this guidance appears to shift the focus toward provider strategy. The original intent risks being overshadowed by the logic of a marketplace.
Implications for the leadership of residential services
Given the reforms will commence in three days, the urgency cannot be overstated. Here are some key imperatives for senior leaders, service managers and boards.
Reaffirm your primary mission. Ensure that all strategic and operational plans keep resident care, empowerment and wellbeing at the centre. When business development discussions arise, check they are framed around resident benefit, not simply market share. Audit your referral and network practices. As you engage PHNs, retirement villages, home-care providers and other sources, be explicit about governance, transparency and avoidance of incentives that could skew resident choice.
Review admission criteria through a resident-fit lens. In a more competitive context, boards and leadership must protect against the dilution of admission standards driven by occupancy goals. Maintain service differentiation based on quality, not just size or marketing. As the guidance encourages assessing local demand and adjusting your strategic marketing approach, ensure that you invest in quality improvement, workforce capability, allied health access and the resident voice, not just promotional messaging.
Communicate clearly with residents and families. Amid change, reassure residents and potential residents that your focus remains on their needs, preferences and outcomes. A clear narrative is needed. Yes, we must operate sustainably, but we exist first to serve people. Monitor the competitive landscape, but do not adopt a purely competitive mindset.
Being aware of supply gaps, demographics and market opportunities is sensible, but be cautious of applying purely commercial frameworks like volume versus margin to residential care.
Choice must not become commodification
The shift to a choice-based, market-oriented model in residential aged care is underway. But in the rush to adapt, the risk is that older Australians may become treated as customers rather than citizens, and the logic of competition may overshadow the purpose of care. For those of us in the sector, and especially for those leading residential aged care services, the message is clear.
Adapt to the new environment, yes. But do so without losing sight of what makes aged care meaningful, ethical and human. When documents instruct providers to build the market rather than build trust, then we must ask whether care is being subsumed by commerce.
With reforms commencing in three days, providers cannot afford to wait. The market may be turning, but our duty to residents, their families and their communities must not be compromised.
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CAN’T PAY, CAN’T STAY at home nor in a residential facility
Residential Providers do not have to reserve places, nor accept non fee paying residents That means that fully subsidised residents are and will continue to find places that provide quality residential care. Subsidies for providers to accept fully subsidized residents only kick is if their is a sustained 40% plus of fully subsidised residents over the reporting period. That means that residential care aged providers will need to ensure that their levels for supported residents are above 45-50% to allow for fluctuations in resident mix of fee paying and subsidised. Furthermore, the final incentive to have 40% plus if not as much as the income that can be earned without extra reporting from fee paying residents who are able to pay for extra services.
THE GOVERNMENT CAN’T SAY THEY WEREN’T WARNED, NO SAFETY NETS, PEOPLE UNABLE TO PAY FOR CARE 13 HOURS MAX PER WEEK, RESIDENTIAL HOMES DON’T HAVE TO PROVODE PLACES FOR FULLY SUBSIDISED PENSIONERS.
What does this mean for pensioners who can’t afford co-payments for everyday basic needs such as showing
Non-payment of individual contributions is a reason that home care providers can stop services and cancel contracts and fob off the consumer to Debt Collectors.
Dignity of risk consumers can’t afford showers. Where showering assistance is in the care plan and the consumer declines to have showering assistance for whatever reason. The provider needs to document discussion about why the consumers’ needs a shower. If this consumer still refuses, as is their right the provider needs to document the discussion; provide the consumer with a copy. By doing so providers are not held responsible for neglect, lack of duty of care nor held responsible for not lodging a Serious Incident Response Report.
But that is only the beginning of the nightmare for the pensioner who cannot afford co-payments and/or is funded to receive the in-home care that they need. This pensioner group will struggle to find any home that will accept them as they can’t pay RADs or the full amount for daily care.
The legacy more people are abandoned both emotionally and physically by a two-tier system of cruelty that the Royal Commission into Aged Care Quality and Safety did all their power to prevent.
The next Royal Commission will surely follow a Senate investigation into the actions and outcomes of the Government and the Department of Health policy and due diligence that made this abuse a reality.
At the end of the day, these are businesses. Not too many aged care service providers don’t have a CEO with a finance background. Not a good business structure. It takes more than a calculator to run a good business. Get CEOs with an MBA and sound business knowledge we might have some improvement. Or even decent nurses with business qualifications. Of course at the end of the day it is going to be about profit. It’s how we get there that is important. The only way to really succeed is a service delivery business is through good customer service. Understanding the customer is not something that comes easy when the customer is seen as not having a voice or being important.
Good old fashioned,” the customer is always right.”
In order for that to come into effect, the customer has to be listened to. Service providers do not know how to do that. The new aged care standards are yet another attempt to enforce the need to listen to the customer. The ability for aged care service providers to be smart enough to understand that listening to the customer is a good business model is another story. The regulators capacity to enforce the new standards is also another story.
Truth is, society as a whole is not driven my emotion or the plight of others. If those who do care, can focus on listening to the customer, empowering them (older people) instead of talking about them, we can focus on what the customer needs and feed a good customer service industry that provides the “customer” “valued, older people” with what they pay for, either through funding of other means. Please keep your eye on what is important. Stop diverting the important aspects with words or jargon. Older people are just that, people after a service. They require good customer service so as a society we need to stop dismissing them because they may not talk as loud as they used to. Learn how to understand empowering them and add their voices to customer feedback to drive continuous improvement and good business success
The shift, marketing and commercial focus is not new. Providers have used and continue to use marketing puffery and motherhood statements throughout. Nothing has changed – it has been, is and will be just words. There is no sincerity about their strategies and there is nothing person centred about these organisations especially where managers and staff receive bonus’, yes they receive bonus’ even in so called not for profit organisations!! If there is to be transparency then remove the smoke and mirrors. The cultural shift needs to seismic.
With hundreds of people in hospitals waiting for Aged Care beds – why do any providers need to spend thousands of dollars advertising at all?
Sadly some Aged Care Facilities have always put occupancy and profit first. One such Facility gave incentives to the Care Managers if They saved money, overseas holidays, flowers, chocolates. This is going back over 10 years ago!
This article misses the main change surfacing in Residential Aged Care – there is a growing shortage of RAC accommodation which is getting worse all the time. Australia needs 30,000 more beds in the next 5 years and these are not in the pipeline because Aged Care is not investable.
This means that almost no provider will have to check out the competition or market heavily anymore – without any effort we will have full occupancy, be running waitlists and turning people away. It also means that our hospitals will have around 20% or more of patients who shouldn’t be there anymore and no extra room for people who need hospitalisation.
It will be a great day when all political parties realise the looming crisis for our elderly and our country, and work together on a solution – adequate funding and good care. This will also require State and Federal governments working together. Or am I dreaming?
The publication “Places to people: how residential
aged care providers can prepare for
success in a competitive market” seems to have been written by someone who has no clue about how busy current facilities are. They have no need to chase people to come to their facility. They are inundated with requests and generally those enquiring are put on a waiting list. How can the government get it consistently so wrong?