The financial sustainability of aged care services is under increasing scrutiny. The Aged Care Act 2024 introduces new funding arrangements, enhanced transparency obligations, and higher expectations around the management of both public and private funds.

For board members and executives, keeping the organisation financially stable while ensuring quality, person-centred care is a huge challenge in the context of sweeping regulatory changes.

Key Funding Changes in the New Aged Care Act

The Act introduces significant reforms, including:

• AN-ACC replaces ACFI as the individual care funding model, focusing on individual acuity.
• Providers must report care minutes delivered in return for funding.
• There is now mandatory public reporting of financial performance.
• Spending thresholds are set for care, administration, and other categories.
  

In addition to these reforms, the Aged Care Act 2024 introduces updated Financial and Prudential Standards, commencing 1 November 2025. These three new Standards: Liquidity, Financial and Prudential Management, and Investment, replace the existing four and apply to all registered providers, including home care, for the first time.

The changes mandate that providers maintain a minimum level of liquidity, implement strong financial governance systems, and manage investments (including refundable deposits) with care and oversight. Boards will be expected to demonstrate how these Standards are being met, both for compliance purposes and to ensure continuity of high-quality care.

Boards and executives should:

• Understand how AN-ACC drives funding flows and use it to inform budgeting.
• Monitor spending alignment with both compliance and consumer expectations.
• Forecast changes in individual needs using AN-ACC as a planning tool.
  

Financial Accountability and Transparency

Effective financial governance in aged care now demands full transparency at the board level. Under the new Act, providers must submit detailed annual financial reports and declarations that clearly show how funds are allocated across care services and operational costs.

The reports can be audited by both the ACQSC and independent financial reviewers. Regularly reviewing financial dashboards and benchmarking is essential at the board level to provide confidence in decision-making and ensure care outcomes are not compromised. Transparency also includes communicating decisions to individuals and families, especially where changes affect service delivery.

Balancing Care Quality with Financial Viability

Achieving both high-quality care and financial sustainability depends on strategic, value-based spending. Boards should consider:

• Investing in preventive health programs to reduce long-term costs.
• Using digital technologies (e.g. automated rostering, e-medication) to increase efficiency.
• Aligning budgets with individual feedback to support person-centred care.
• Focusing on effective workforce planning to optimise care hours.
  

Boards should shift from cost-cutting to outcome-oriented investment, spending less and smarter.

Understanding the Cost of Care

Boards must develop fluency in the actual cost of delivering aged care services. Beyond simple accounting, this means identifying the unit cost of care minutes, spotting inefficiencies, and evaluating the return on investment for specific care initiatives. Standard board reports should evolve to include metrics such as cost-per-individual-per-day and comparisons with sector benchmarks. Most critically, these figures should be linked to measurable outcomes, such as improved quality of life or reduced hospital transfers, allowing boards to assess what is spent and the impact it achieves.

Building Financial Literacy at Board Level

Regardless of background, every board member must now understand aged care funding and governance. To build financial capability, boards can:

• Deliver annual financial governance training to all directors.
• Use scenario-based exercises to explore different financial models and risks.
• Provide plain-English summaries in board papers to enhance accessibility.
• Invite external experts to review financial assumptions and provide sector insights.

This shared literacy ensures stronger oversight and better-informed decisions.

Planning for Long-Term Financial Resilience

Sustainable aged care requires more than quarterly balance sheets. Boards must adopt a long-term view, accounting for capital investment, future wage growth, regulatory change, and emergency preparedness. Scenario planning—such as modelling the impact of a pandemic or technology outage—can help providers test their resilience.

Boards could consider establishing a dedicated financial sustainability subcommittee to explore funding diversification, plan for long-term trends, and mitigate potential risks.

Risks of Financial Misalignment

Boards that fail to align financial governance with quality care face significant risks, including:

• Loss of consumer trust if changes are made without consultation or clarity.
• Regulatory sanctions if care minutes or reporting requirements are unmet.
• Workforce disengagement occurs when cost decisions damage morale or team culture.
• Loss of autonomy if financial distress results in forced sale, merger, or intervention.
  

Key question: Are we funding what matters most—and doing so in a sustainable way?

Exploring Alternative Revenue Streams

Improving financial sustainability and viability over the long term may mean that governing bodies investigate other income streams that align with the organisation’s mission. These might include:

• Optional room upgrades, such as premium accommodation or concierge-style services, might be considered.
  
• Collaborative partnerships, including work with universities, local councils, or health services, can enable shared infrastructure, co-located services, or joint initiatives that benefit individuals and the broader community, such as workforce placements.
  
• Philanthropic and grant funding is another avenue; many aged care organisations access project-based funding for initiatives such as ARIA grants.
  

Every new opportunity should be considered carefully. Consideration should be given for its financial benefits and how well the initiative reflects the organisation’s purpose, meets legal obligations, and maintains a rights-based model of care for all individuals.

This guide acknowledges the challenges aged care providers are navigating and offers a constructive opportunity to think differently, exploring sustainable, forward-thinking approaches within a safe and regulated framework.