IHACPA reveals true cost of care

On 28 April 2026, the Independent Health and Aged Care Pricing Authority (IHACPA) released its Residential Aged Care Cost Collection 2024–25 Final Report — the most comprehensive view we have ever had of what it costs to deliver residential aged care in Australia. The headline number is striking: $430 per resident, per day.

For operators wrestling with the 24/7 RN requirement, mandated care minutes and successive Fair Work wage decisions, that figure will feel both validating and uncomfortable. It validates what providers have been saying for years. Care is more expensive than the funding suggests. It is uncomfortable because the gap between measured cost and government price has rarely been so visible.

What the report measured

The report is based on the largest aged care cost collection IHACPA has ever run. The consortium led by HealthConsult drew costed data from 188 residential aged care homes, covering 12,537 residents and 355,830 days of care, between July 2024 and September 2025. Real-time direct care time was captured using Bluetooth-enabled wearables, then reconciled with Quarterly Financial Report (QFR) and Aged Care Financial Report (ACFR) data.

That methodology matters. For the first time, the sector has direct care minutes measured objectively at scale rather than estimated from rosters or self-reports.

Four findings worth sitting with

1.  The $430 average hides enormous variation. Permanent residents in AN-ACC Class 2 cost $354 a day; Class 13 residents cost $489. Respite is even more variable, ranging from $381 (Class 101) to $498 (Class103). Geography is decisive: homes in MM 6–7 (remote and very remote) record average daily costs of $768, almost double the $419–$460 seen across metropolitan and regional Australia (MM 1–5).
2. Care labour is still the dominant cost, but its share has shifted. Direct care labour accounted for 58% of total cost per bed day in 2024–25, down from 65% in the2023 Residential Aged Care Costing Study. This isn't because care has become cheaper. It's because non-labour categories non-labour categories — hotel services, accommodation, compliance overhead — have grown faster grown than care labour as a proportion of the total. The cost structure is reshaping.
3. Smaller and government-operated homes carry materially higher per-resident costs. This isn't new, but the cost collection gives the clearest quantification yet. The differentials are now large enough that pricing relativities need to be on the table.
4. The AN-ACC weights themselves may need a re-look. The cost weights produced from the cost collection show a notably narrower range between the lowest and highest AN-ACC classes than the current price weights. IHACPA flags that this likely reflect show the sector has changed since the classification was built in 2018 and signals a broader review may be needed.

The funding gap, in plain numbers

Here is where the report bites. Care services represented 67% of the total bed day cost in 2024–25 — about $288 per day. The current AN-ACC base price, which is intended to fund care, is $295.64, roughly 2.7% above the measured cost. That sounds reassuring until you factor in the 1 October 2025 Fair Work wage rise, ongoing CPI pressure, and the lag built into the cost collection cycle. The margin is real, but it is thin and getting thinner.

What this means for 1 October 2026

IHACPA will use this dataset to inform its pricing recommendation to the Minister for Health and Aged Care, with new AN-ACC prices taking effect from 1 October 2026. Government, of course, makes the final call — and recent history reminds us that the announcement can land as late as September, leaving providers little time to adjust budgets, rosters and resident contributions.

What providers can do now

Don't wait for the price determination. Three things are worth doing this quarter:

1. Benchmark your direct care cost per bed day against the report's AN-ACC class averages. If your home sits materially above or below, understand why. The cost collection gives you the most defensible reference points the sector has had.
2. Stress-test your 2026–27 budget against a flat AN-ACC outcome. If government adopts IHACPA's likely advice, indexation will not feel generous. Build the scenarios now, not in September.
3. Look hard at indirect care time and overhead allocation. Two of IHACPA's four deep-dive analyses pointed straight at these areas and they are exactly where manyproviders can find both cost discipline and quality improvement.

Sources 

• Independent Health and Aged Care Pricing Authority (IHACPA), Residential Aged Care Cost Collection 2024–25 Final Report, April 2026 
• Minister for Health and Aged Care, More beds, more packages and better care for older Australians, Department of Health, April 2026
• Minister for Health and Aged Care, More beds, more packages and better care for older Australians, Department of Health, April 2026
• Department of Health, Introducing pricing risk assessments 2026