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Acquisitions emerged as a key trend of 2025, with several small and mid-size providers choosing to join larger organisations (see graph 1 and graph 2) amid increasing governance complexity and rising operational costs.
However, as noted in the Ansell Strategic Deal Tracker FY25 report, there have also been instances of smaller providers taking over operation of homes or entire portfolios from larger providers. These include Respect’s acquisition of seven homes from BlueCare, and not-for-profit social impact investment manager For Purpose Investment Partners’ acquisition of Luson Aged Care and Signature Care and subsequent rebrand to For Purpose Aged Care.
In conversation with Australian Ageing Agenda, aged care and retirement living industry specialist Cam Ansell said this consolidation of the Australian aged care market was likely to continue.
Mr Ansell, who is the managing director of Ansell Strategic, also noted that with the new Aged Care Act now in effect, the supporting rules have become clearer, in turn creating a more stabilised foundation for aged care. This partnered with the “insatiable demand going forward” has made Australia an attractive place for foreign investment, he said.
Across the Tasman, market consolidation has brought with it a shrinking not-for-profit sector, however, which Mr Ansell explained is a risk Australia should be cautious of, as it can lead to shrinking access to care for disadvantaged people.
“I started working in New Zealand in 2008 and at that time, it was about even for-profits and not-for-profits and the removal of the managed bed policy – so the removal of their equivalent to the Aged Care Approvals Round – and the ability to be able to charge additionally meant that the private sector, for-profit sector, grew quite quickly,” he explained.
“A lot of my clients in New Zealand are large listed and large private equity groups, and they, through consolidation, have grown substantially, and with the exception of CHT Care Homes, the not-for-profit sector has shrunk,” he continued.
“There’s probably an element of service efficiency that comes with that and some of the operators have been quite innovative and dynamic in adjusting to the changing needs of their customers because they’re chasing returns.”
But this risk can be mitigated if the Commonwealth gets its pricing right for supported resident capital supplements, he added.
Sharing resources, maintaining identity
Mr Ansell said acquisitions can be a great opportunity for smaller providers to improve their information system capacities.
Aged care is a complex sector and reporting requirements for quarterly and annual data can be a burden for smaller providers – which Mr Ansell said he has seen overseas.
There is therefore “really exciting potential” for the sharing of resources and the establishment of platforms to take some of that work away from the operator through acquisitions.
“When I was in the US, a lot of the firms that I was with… specialised in outsourcing a lot of that reporting requirement, so you still have to do the collection and some level of collation of information but the analysis and the presentation and reporting of the information to the funders and regulators was outsourced,” he explained.
“And so there’s potential for that [in Australia], and that would help a lot of the smaller organisations to remain – I’d love to see more of that, particularly with not-for-profits.”
This is particularly important for people who are financially disadvantaged or who have high functional or clinical dependence as they are, from a profitability perspective, “not always the ideal residents to have,” Mr Ansell said.
The not-for-profits will have an important role in focusing on providing care for these people, Mr Ansell said, with options for banding together to look for collaborative ways to reduce “the burden of red tape” and manage the infrastructure requirements.
The acquisition trend can also help deliver more flexible services, because as Mr Ansell described, the more robust the head office is, the easier it is to deal with the shifting rules and requirements.
“That’s part of it but it’s not all of it, and sometimes we place too much stock in that level of efficiency,” he said.
“The other thing that it does is when I’ve got a large portfolio, I’ve actually started to balance the risk of running that large group – if I’m running two or three homes and something goes wrong with one home, that’s half of my portfolio at risk. When you’ve got 50 or 100 [homes] I’m a little bit more balanced and I’ve got more resources to be able to adjust and move our skill base into focusing on any of those areas.”
Bigger also means more opportunities to respond before something becomes a problem, Mr Ansell said.
“If we’re running robust information systems, rather than being reactive to those things going wrong, we can start using the information that we have to report to proactively manage our sites and avoid or mitigate a lot of the risks associated with those challenges.”
It is also easier to take information from more sources to “proactively leverage” information as a lead indicator, allowing larger providers to proactively deal with future problems, including workforce retention, agency dependence, rostering issues and compliance, he added.
“You start to be able to move from an environment of reactive operation to proactive,” he said, “then when you do need to react either to something that’s been set off by a lead indicator or it’s just something’s gone wrong at site, a larger provider can generally come into that void and address it.”
“We spend a lot of time talking about the economies of scale that come from having a head office shared across more sites. There’s actually massive operational benefits from being part of a large group if that large group is well operated.”
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