Providers over-delivering $95m worth of care mins a quarter

Analysis of the Department of Health, Disability and Ageing’s January-March 2026 care minutes data shows the residential aged care sector is being punished financially for delivering too little and burning unrewarded margin when delivering too much, FicusBridge founder Dr Tanvi Dalal tells Australian Ageing Agenda.

The department’s home-level care minutes data shows that 931 of 2,559 aged care homes did not meet their care minute responsibility (36 per cent). This is up from 766 of 2,313 homes – or 33 per cent – the previous quarter, the Australian National Aged Care Classification and care minutes specialist said.

Metropolitan homes (Modified Monash Model 1 category) accounted for the largest single share of non-compliance in raw numbers again, with 562 of 1,646 homes (34 per cent) failing to meet their targets. This is up from 430 non-compliant homes in the October-December 2025 quarter.

But non-compliance is not a sector-wide issue, said Dr Dalal. There are 260 providers nationally with at least one non-compliant home but 15 providers account for half of the homes that did not meet their care minute targets this quarter (475 homes or 51 per cent). One provider is responsible for 141 non-compliant homes, more than the next three largest providers combined, she said.

“This isn’t 931 homes independently struggling,” Dr Dalal said. “It’s a relatively small number of providers carrying a disproportionate share of the national shortfall. For most of the sector, this is a solvable, targeted problem – not a system-wide crisis. But it also means the national number understates just how acute the exposure is for the handful of providers at the top of that list.”

Metro homes missing out on $18m

The number of homes failing to reach their target is not the most important consideration, said Dr Dalal.

“The more useful question, and the one almost nobody is asking, is [about] what it is actually costing the sector to sit on either side of the target – because both sides cost money, and most providers are only tracking one of them,” she said.

The daily care minutes supplement matrix outlines payments of up to $33.41 per resident per day at 100 per cent of both the total care minutes and registered nurse care minutes targets.

When applying this matrix to MM1 homes that did not meet their responsibility this quarter, Dr Dalal said the result is 562 non-compliant MM1 homes collectively losing approximately $197,890 in supplement per day – or $17.8 million for the quarter.

This represents a 65 per cent increase on the approximately $120,000 a day – or $11 million per quarter – that Dr Dalal calculated for the same cohort in the October to December 2025 quarter.

Dr Dalal said the analysis also incorporates the 1 per cent occupancy increase from 92 per cent to 93 per cent.

“This isn’t a rounding error in someone’s budget anymore,” Dr Dalal said. “This is close to $18 million a quarter in Commonwealth funding that the sector is simply not collecting, concentrated overwhelmingly in the country’s largest and most resourced homes. If a facility doesn’t know this number for itself, in real time, it cannot manage it.”

$97m worth of surplus minutes

Meanwhile, 1,799 homes nationally over-delivered total and RN direct care minutes this quarter.

Dr Dalal excluded homes where the figures are likely distorted – such as the 293 homes with 40 or fewer approved beds where minutes per resident per day are structurally volatile and the 77 homes delivering more than 60 minutes per resident per day above target, which she associates with hospital-based or transitional homes where hospital nursing staff appear to be attributed to the aged care service.

That leaves 1,489 homes that have provided genuine, sustained over-delivery. Together they have delivered a combined 20,022 hours of surplus care and RN minutes every day.

Dr Dalal used market-based assumptions of $45 an hour for personal care attendant work and $64 an hour for registered nursing to calculate that this equates to a surplus of just over $1 million a day, or just under $97 million per quarter, in staffing spend that attracts no additional AN-ACC funding or care minutes supplement.

This is because the supplement rate is capped at $33.41 per resident per day once a home reaches 100 per cent of both targets. The AN-ACC funding is designed to pay for 100 per cent of met targets only, leaving surplus minutes unrewarded, she said.

Dr Dalal said the sector talks “endlessly” about the cost of under-delivery because it’s the number the Department of Health, Disability and Ageing publishes.

“Nobody is publishing the other number. Close to $100 million a quarter is being spent nationally on care minutes that do nothing for the home’s supplement revenue. Some of that is clinically necessary and should absolutely continue. But a material portion of it is simply the roster running ahead of the target because nobody is watching the gap close in real time,” she said.

“That is not a compliance problem, and it isn’t an argument to cut care. It is a visibility problem – where most providers can’t see whether that spend is a deliberate clinical decision or the roster quietly running ahead of the target – and it is bigger than the shortfall problem.”

Fix classification before roster rush

Providers must ensure the AN-ACC classification is right rather than chasing the roster to rectify the issue, Dr Dalal said, as there is “always a lag” between fixing the funding side and the care minutes side and “almost nobody uses that lag to their advantage.”

“When a provider reviews a resident’s classification and corrects it to reflect the care actually being delivered, the funding benefit is close to immediate – it is effectively catching the AN-ACC price up to the high-acuity care that is already happening in the building,” Dr Dalal said.

“But the care minute target that flows from that reclassification typically doesn’t move until roughly the following quarter, and gets impacted by resident movements and occupancy. That gap – often in the order of three months – is a runway. It is exactly the time a provider needs to recruit, onboard and roster the additional PCA or RN hours properly, rather than being forced into an expensive scramble the moment a target changes.”

The instinct to address rostering first is an expensive mistake, Dr Dalal said.

The additional staffing needed to close gaps and reach 100 per cent of both targets for the 562 non-compliant MM1 homes would cost an estimated $309,745 a day, or just under $28 million for the quarter, Dr Dalal’s modelling shows.

The supplement those homes stand to recover by meeting their targets is around $197,890 a day, or $17.8 million for the quarter.

In aggregate, Dr Dalal pointed out that closing every gap will cost the sector roughly $111,855 per day – over $10 million for the quarter – more than the supplement it recovers.

System needs to be balanced daily

Dr Dalal said this quarter’s data shows the department has constructed a funding model in which a home’s AN-ACC and care minute supplement revenue and its care worker and RN staffing costs are two sides of the same daily equation, with a very small acceptable margin for error between them.

“Under-shoot the target, even by a fraction of a percentage point, and the supplement is gone – not reduced pro rata in every case, but gone in a step change, because the matrix is banded,” Dr Dalal said.

“Over-shoot it, and you are paying PCA and RN wages that generate no additional revenue at all. The band in between – compliant, but not wastefully over-compliant – is where every home needs to sit, and this needs to be measured every day. That is an extraordinarily fine needle to thread, and it cannot be threaded by reviewing a spreadsheet after the quarter has already closed and the department has already published who won and who lost.”