Top 3 Challenges Aged Care Providers Face with the New Reforms
Change, though challenging, is an opportunity for growth. The upcoming aged care reforms, set to take effect on July 1st, 2025, mark the most significant transformation in years. While change can feel overwhelming, these reforms are designed to enhance care quality, provide more choice for seniors, and ensure providers operate with greater transparency and accountability.
However, change doesn’t happen overnight. The government has already laid out a roadmap, with significant adjustments—including award wage increases for aged care workers—already in motion. This means providers must act now to ensure their teams, processes, and compliance structures are ready.
Rather than seeing these reforms as a burden, they should be embraced as an opportunity to build a stronger, more resilient aged care system. The key is preparation. With the right approach, providers can transition smoothly while improving the quality of care and workplace culture. Here, we explore the top three challenges providers face and how to navigate them successfully.
Strategy: Navigating Compliance & Financial Adjustments
Increased Compliance and Aged Care Regulatory Pressure
The reform is to be put in place to ensure that our senior community are treated with the respect that they deserve. This new act will give those seeking aged care services more choice over their care and the provider that they choose. The reforms introduce stricter compliance measures, mandatory reporting requirements, and enhanced governance standards. Providers must ensure they align with new aged care quality standards, workforce regulations, and consumer rights protections.
New Aged Care Act
According to the Australian Government website, “The Australian Government has developed a new Aged Care Act to strengthen Australia's aged care system. The new Act aims to ensure that people who access aged care services funded by the Australian Government are treated with respect and have the quality of life they deserve.” This is the throughline between all new processes and models that need to be adhered to.
It is important to recognise that these reforms stem directly from the findings of the Aged Care Royal Commission, which identified significant shortcomings in the previous system. As the Department of Health and Aged Care (DHAC) states, “The Royal Commission found the current Aged Care Act and its related legislation is no longer fit for purpose. This is because it is structured around providers and how to fund them, rather than around the people accessing services and what they need. The new rights-based Act will put older people who need aged care at the centre of the system.” While increased regulatory requirements can be challenging, the reforms are designed to prevent the systemic failures that led to the Royal Commission in the first place.
If you are unsure of the immediate changes that the government is embedding into the aged care industry come July 1st, below are some links to inform you:
First Nations Aged Care Assessment System
Please ensure you have made yourself familiar with the roadmap as it is the most up-to-date list of events of the rollout. From what you’ve read you can feel the weight of these changes. They aren’t quick fixes, they are to rid of past systemic practices and ensure that both the provider and those who are in need of aged care services are put first and treated properly.
What’s Your Next Move?
What’s your next move?
We do not need to detail the penalties aged care providers would be charged if they were to fail to comply, knowing that you’re reading this blog right now means that you’re serious about getting these changes streamlined for both your clients and your team. Change is meant to be hard because it means the way things have always been done, are now shaped differently and that takes growth from leadership, staff, and stakeholders to make sure this change is felt consistently across the board.
Here is how to get onto the front foot:
Understanding the full scope of regulatory changes
Updating internal policies and procedures
Managing additional reporting requirements without added admin burden
If you’re thinking this feels like something you can manage, we assure you- you can but adding the complexities of human resources or lack there of which we understand is yet another challenge you face, you’re going to want to get the staff that you have up to scratch and serving not only the new standard but taking the initiative to go above and beyond. This reform is more human than you may acknowledge at first. It’s more than protocol, it's a way of being. That’s why having a well trained, adaptable team isn’t just beneficial—it’s essential. With workforce shortages and new training requirements, ensuring your team is prepared isn’t just about compliance; it’s about setting them up for success.
Understanding the Funding Model Shift
It’s no secret that financial strain is one of the most pressing concerns for aged care providers, and with the new reforms, these pressures are only set to increase. The changes will bring new funding models, adjustments to subsidies, and additional costs associated with compliance, workforce upskilling, and operational adjustments.
One of the key changes is the introduction of a revised funding structure that places a greater emphasis on transparency, accountability, and aligning resources with consumer needs. While this is a positive step toward ensuring quality care, it also requires providers to rethink their financial strategies and adapt their systems to meet these new requirements. It’s important to note that NDIS providers, who are already operating with a high level of transparency and alignment with the service plans they provide, are ahead of the curve. This positions them to benefit from the changes, creating opportunities, and raising the bar for aged care providers who will need to catch up.
Providers will need to closely evaluate the updated funding allocations and ensure they are making the most of available government support while maintaining financial sustainability. This requires a thorough review of budgeting, revenue streams, and expense management.
Balancing Cost Pressures with Quality Care
A major challenge will be striking a balance between maintaining financial viability and delivering high quality care. The increased costs associated with staff training, recruitment, and compliance measures will require a strategic approach to cost management. Aged care providers must look at innovative ways to optimise resources without compromising care standards.
Some effective strategies include:
Financial Forecasting & Budgeting: Ensure that your financial planning accounts for increased operational costs, wage adjustments, and regulatory compliance expenditures.
Funding & Grants: Stay informed about government grants, funding supplements, and subsidies that can ease financial burdens.
Cost Efficiency Measures: Evaluate your current operational expenses and explore ways to streamline processes, reduce inefficiencies, optimise staff scheduling, and leverage technology to enhance productivity.
Revenue Diversification: Consider alternative revenue streams such as private funding options, strategic partnerships, or value-added services to increase financial resilience.
Services: Workforce Challenges & Consumer Expectations
Aged Care Workforce Shortages and Staff Training
How many times have you introduced something new—perhaps a bit of a stretch—but with the right camaraderie from your staff, it could have been easily implemented? And how many times have they made it feel harder than it needed to be? Change is good, yet not everyone embraces it. Resistance often comes from a lack of understanding or agreement, which means your role as a leader is to bridge that gap. This time, as an aged care provider, you don’t have the luxury of choice. Your team must get on board and align with the new industry standards. The latest reforms place a strong emphasis on workforce capability, training, and retention, making it crucial to support your staff in understanding not just what’s changing, but why it matters.
This is easier said than done, with the aged care sector already facing significant challenges such as staff shortages many organisations are struggling to recruit and retain skilled professionals. Unfortunately, this industry is prone to aged care employees playing the field, always looking for an organisation that can pay them more, give them more benefits, or better working conditions. It’s a competitive environment and now more than ever before this reform will add more pressure on your staff that may not be loyal to your specific organisation.
With this reform, your organisation may feel the pressure to recruit additional staff, particularly in roles like Registered Nurses (RNs) and those responsible for clinical governance, due to the increased need for care oversight and meeting compliance requirements. For frontline care workers, however, the need for additional staffing might not be as immediate. It’s also important to note that many residential aged care providers have been requesting extensions to meet certain nursing staff requirements, given the current shortage of general nurses. While the increase in workload is temporary, it’s crucial to ensure that your existing staff are not stretched too thin and that the risk of burnout is minimised.
This would also mean that not only will old staff need training to reform-related changes, the new staff will need the same training in addition to learning the culture, your orgaisations values and standards and understanding how to perform well in the environment you have cultivated.
We’re sure, just reading this is proving to be exhausting. And we are not here to scare you, in fact we want to prepare you, and that is why we are going to go behind the curtain and what we deem is the third challenge: financial pressures and funding adjustments.
Engaging Consumers and the Community
With the reforms placing greater emphasis on consumer rights and transparency, there’s an increasing need for providers to not only engage residents, families, and the broader community, but also to foster a cultural shift toward more people-centric service delivery. Operating in a way that truly puts people at the center of care requires organizations to pivot, embracing new values, practices, and perspectives in their approach to design and delivery.
To help navigate this shift, strategies to strengthen consumer engagement include:
Open Communication Channels: Regular updates through meetings, newsletters, or online platforms to keep stakeholders informed and involved.
Feedback Mechanisms: Establishing surveys and advisory panels to better understand the needs and expectations of residents and their families, and integrate those insights into service improvement.
Personalised Care Plans: Ensuring services align with individual preferences and needs, reinforcing a person-centered approach to care, and providing additional support for respite services to assist both residents and their families.
Service Innovation: Rethinking existing services and introducing new offerings that align with consumer needs and preferences, ensuring aged care providers remain responsive and competitive in an evolving landscape.
By embracing a cultural shift toward greater transparency, collaboration, and responsiveness, aged care providers can build trust, foster strong relationships with their communities, and demonstrate their commitment to delivering high-quality, human-focused care.
Processes: Operational Efficiency & Technology Adoption
Leveraging Technology to Ease Financial Strain
Technology can play a pivotal role in alleviating financial pressures. Investing in digital solutions such as automated compliance tracking, workforce management software, and AI-driven administrative tools can help reduce the manual burden, optimise resources, and cut down on unnecessary expenditures.
By implementing technology-driven solutions, aged care providers can enhance efficiency, reduce costs, and ensure they meet new regulatory requirements without overloading their workforce. However, finding the right solution can be difficult. We've seen clients who were sold a solution that promised greater efficiency—through features like scheduling and automation—only to discover that the technology couldn’t deliver as promised. Often, these systems require significant customisation to meet the unique needs of the organisation. Therefore, it’s crucial for providers to choose technology that aligns with their specific needs and can be tailored to truly improve operations.
Preparing for Financial Sustainability in the New Era of Aged Care
Adapting to financial pressures is not just about managing current costs but also about future-proofing your organisation. Developing a robust financial strategy, staying ahead of regulatory updates, and ensuring that your organisation is both compliant and competitive will set you up for long-term success.
Now more than ever, aged care providers must take proactive steps to navigate these financial challenges. Change is here, and with the right strategies in place, your organisation can not only survive but thrive under the new reforms.
Final Thoughts: The Time to Act is Now
The upcoming aged care reforms bring undeniable challenges, but they also present an opportunity for growth, innovation, and improved care standards. Compliance, workforce management, and financial adjustments are three key areas that require immediate attention.
By staying informed, implementing strategic solutions, and embracing change with a proactive mindset, aged care providers can successfully transition into this new era of aged care. The time to act is now – start preparing today to ensure a seamless transition come July 1st, 2025.
If you need guidance in navigating these changes, our consulting team is here to help. Let’s work together to build a future-proof, high-quality aged care system that benefits both providers and the communities they serve.
Want expert guidance? Download our Aged Care Reform Readiness Checklist or book a free strategy call today