With just 12 months until care minutes are formally linked to AN-ACC funding, the aged care sector must start advocating for urgent solutions now before operators face even greater financial strain.
In our latest issue of SATURDAY, we featured a series of CEO political wishlists published in The Weekly SOURCE in the lead-up to the 3 May Federal Election.
At the top of many lists? A post-election policy review of mandated care minutes.
Despite their intent introduced as a recommendation of the Royal Commission – care minutes are falling short, particularly in regional settings.
One standalone rural operator told us this week they’ve operated at a loss for two consecutive years. While they fully support the wage increases for staff, the AN-ACC funding model simply doesn’t match the true cost of delivering care – let alone meeting mandated care minutes.
And this isn’t just a regional issue. One major operator shared that their organisation has consistently exceeded care minute targets this year – yet they are now tracking 15% behind budget, largely due to the need to staff for full occupancy.
That financial pressure is only set to increase.
Funding reform is urgently needed
As previously reported, from April 2026 the Government will tie AN-ACC funding to the delivery of mandated care minutes, starting with metro providers, using data from the October 2025 quarter.
Managing Director and CEO
Arrow Advisory Group
Providers who fall short of these targets will be financially penalised.
Steven Hughes, the Executive Director of Financial Shepherd Aged Care Consulting, shared the above table on LinkedIn this week, illustrating the proposed funding matrix and its impact on RN minutes.
As the table shows, providers face a lose-lose scenario: lose funding if they understaff but fail to be compensated if they exceed targets.
In some cases, operators could see their funding reduced but make a saving on their labour expenses.
“Even still, the introduction of the CMS [Care Minute Supplement] is damaging as it bleeds funds from an already revenue starved industry,” Steven wrote.
Shalain Singh, Managing Director and CEO of Arrow Advisory Group, warns that without fundamental reform to the funding model, the current system could backfire, penalising even high-performing operators and worsening workforce burnout.
“Smart labour management will be critical, but structural changes are needed to align policy with reality,” he told us.
The Department’s own data shows that just 45% of providers are currently meeting both their total and RN care minute targets.
Meanwhile, StewartBrown has flagged that residential aged care operators are likely to see worsening financial results in 2025 as they move to comply with care minute requirements and absorb the Fair Work Commission’s mandated wage increases.
Are we really prepared to let the sector slide back into widespread financial losses?
There has to be a better way.
Stay tuned for more in the next edition of SATURDAY.