Aged care sector analysis and report 2026

The government has committed ongoing support to the aged care workforce, allocating $2.5 billion over five years to meet the increased wage costs of aged care nurses across all aged care programs. There is also an ongoing $291.6 million commitment to aged care reforms over five years. Learn more: Federal Budget 2025 | Breakdown & analysis.

The Support at Home program is a major reform in Australia’s aged care system. It is designed to offer more personalised, flexible, and timely support, helping people remain independent in their homes for longer.

The introduction of Support at Home in November 2025 replaces the HCP and Short-Term Restorative Care programs, with plans to transition the Commonwealth Home Support Program after 1 July 2027.

The program is expected to reshape the market in 2026 as the new program and funding model stabilise. Providers will need to reassess their service mix, operating structures, and compliance settings in line with the revised registration categories and regulatory expectations.

KPMG anticipates a period of adjustment, with some smaller providers exiting the market, while medium sized organisations and more strategic operators focus on growth to strengthen their competitive positioning.

The financial performance of residential aged care providers improved significantly, with total income rising 28.9%. This improvement is driven by an increase in revenue per resident per day, which exceeded the corresponding rise in expenses. However, accommodation performance continues to present a financial challenge for providers.

The demand for Support at Home continues to grow significantly, leading to delays for many older people between assessment and receiving an HCP. The National Priority System waitlist grew to 96,709 people waiting for an HCP at their approved level as of 30 June 2025, a 41% increase from the previous year.

In the residential aged care sector, 196,313 people were accessing permanent residential aged care, an increase of 3.4% from FY24. A sharp fall of 15.5% in unoccupied places pushed the average occupancy up to 89.9%, pointing to growing pressure on bed availability with only marginal gains (+0.4%) in the number of places.

Providers can reduce administrative burden and improve service quality by embedding automation, digital integration and AI into their operating models. This includes using intelligent scheduling tools, automated billing and compliance workflows, virtual care models, and enhanced data and reporting analytics to support decision making. Together, these technologies streamline back office functions, improve the experience of both consumers and workers, and reduce cost and complexity.

The HCP market expanded with 14 new providers joining the sector. In contrast, residential aged care saw a net decline of -0.9%, with the number of providers falling from 642 in FY24 to 636 in FY25. This reflects a longer-term trend with fewer providers overall and an increasing concentration of places among the largest operators.