Who can still afford new beds? The $7.72 gap and what providers control

The squeeze stopping new beds being built also makes every unclaimed dollar of AN-ACC and care minutes funding harder to ignore.

On 1 October the Australian National Aged Care Classification (AN-ACC) price rose 2.55 per cent to $303.19 per resident per day. StewartBrown, applying IHACPA’s own method to its March 2026 cost data, argues the price needed to be at least $310.91, which leaves a gap of $7.72 per resident per day. The sector’s latest results show how little room providers have to absorb it. StewartBrown’s FY26 survey, released at its Finance Forum last week, found 65 per cent of residential homes operated at a loss, up from 62 per cent for the nine months to March 2026 and 49 per cent for the same period a year earlier.

Most of the commentary has treated this as a pricing argument. It is one, and we come back to it below. Our question is a different one: what the gap means for who can still afford to build, and what providers can do while the price debate runs its course. The same squeeze that is stopping beds being built also makes every dollar of existing funding matter more. When margins could absorb a little leakage, a few missed reclassifications or an over-rostered week barely registered. Now they do, and this is where providers have more control than the pricing debate suggests.

The $7.72 is a signal as much as a shortfall

On its own, $7.72 does not look like a crisis. For a 100-bed home running at the FY26 survey average occupancy of 95.1 per cent, it is worth about $268,000 a year. That is material for a single home, yet it is small beside the distance between where the sector sits today and where it would need to be for capital to commit to new construction.

StewartBrown has long argued that residential aged care needs operating EBITDA of $20,000 to $22,000 per bed per year to be investable, which it equates to a 4 per cent return on a $550,000 new build. The FY26 sector average was $3,710, down 46 per cent from $6,817 in FY25. Closing that distance would take roughly $45 to $50 per bed day, so even the full $310.91 would cover only a fraction of it.

What the $7.72 does is tell boards and lenders which way the price is moving relative to cost. The Department has noted that the new price funds the 4.75 per cent Annual Wage Review decision, the work value and gender undervaluation cases and non-labour cost growth. StewartBrown’s concern is the starting point. IHACPA built the FY27 price from FY24 costs indexed forward, while StewartBrown’s survey shows direct care costs, including allocated administration, rising 9.5 per cent in the nine months to March 2026 as providers absorbed the new Aged Care Act and strengthened Quality Standards. A provider modelling a 25-year asset against a price that trails its cost base will choose to acquire rather than build, which is what the market has been doing.

The FY26 survey also shows the Direct Care margin falling 82 per cent to $2.84 per bed day. For years, care margins have quietly subsidised losses in Everyday Living and Accommodation. That cushion has almost gone, which leaves Accommodation, the part of the business that pays for buildings, with nothing underneath it. Accommodation alone ran at a deficit of $13.91 per bed day in FY26.

The supply figures show the consequence. Only around 800 net residential places came online in FY25, against demand that needs more than 10,000 a year. The Government’s $3 billion package targets 5,000 additional beds a year, which the sector has welcomed as a first step that still leaves half the requirement unaddressed.

The same squeeze lands on technology budgets

Capital for buildings and capital for systems come from the same constrained pool, and the technology line is already under scrutiny. StewartBrown’s preliminary corporate administration analysis of around 40 organisations puts corporate costs at 18.04 per cent of operating revenue, three percentage points higher than a year earlier. In earlier periods staffing drove that growth, whereas in FY26 non-staff spending, led by technology, had the greatest impact.

Much of that spend is not the software itself. It is implementation, integration, data cleansing and remediation, with the new Act and Support at Home adding complexity that some systems were not ready for. More than half of the 52 providers delivering both residential care and Support at Home in StewartBrown’s survey run separate finance systems across the two.

So when a CFO with a loss-making portfolio hears the words analytics platform, they hear another line in that 18 per cent. That scepticism is healthy. With margins this thin, any new system has to earn its place.

Why the arithmetic still favours acting

Even so, the revenue and cost levers inside a provider’s control are larger than the price gap the sector is lobbying over. Three stand out.

Classification accuracy. Each resident’s daily subsidy is the AN-ACC price multiplied by the sum of their class weight and the home’s Base Care Tariff (BCT), both expressed in National Weighted Activity Units (NWAU). At $303.19, the $7.72 gap is equivalent to 0.0255 NWAU per resident. Across a home of 95 residents that is about 2.4 NWAU a day, a shortfall that a handful of residents sitting a class or two below their current needs could produce. Reclassification is already routine, with more than 393,000 completed since AN-ACC began and 8,551 in June 2026 alone. The question for each home is how quickly it recognises a change in a resident’s needs and lodges the request, because funding for the period before a request is lodged cannot be recovered. Our own data suggests this is where funding slips. In our analysis of the 2.55 per cent increase, the average daily subsidy across MM1 homes in Mirus data rose just $1.75, about 0.6 per cent, in the 11 months between price changes. Over a similar period the average care minutes requirement rose about 1 per cent. When care needs climb faster than subsidy, classifications may be lagging.

Care minutes. From 1 October 2026, non-specialised metropolitan homes (MM1) receive 0.387 NWAU through the BCT and up to a further 0.113 NWAU through the care minutes supplement, which scales with performance against total and registered nurse targets. At the new price the maximum supplement is $34.26 per resident per day, more than four times the StewartBrown gap and about $1.19 million a year for our example home if it is a non-specialised MM1 home. In the June 2026 quarter, 66 per cent of homes met both targets and 854 missed at least one. The opposite risk matters as much. Homes running well above target are paying for minutes the funding model does not reward, and with direct care margins at $2.84 per bed day there is little room for that either.

Cost benchmarking. Direct care cost growth of 9.5 per cent is a sector average. Within it, some homes carry agency premiums, rostering inefficiencies or overheads that comparable homes have already removed. Benchmarking cost per bed day against peers, line by line, is how a provider separates a funding problem it needs to advocate on from an operating problem it can fix.

What each lever is worth for a 100-bed home

Assumptions. 100 operational beds at 95.1 per cent occupancy (StewartBrown FY26 survey average) across 365 days, with annual figures rounded. The classification figure is illustrative. The care minutes supplement applies to non-specialised MM1 homes only and is paid on a sliding scale, so the figure shown is the value at full compliance. The investability gap is calculated per operational bed.

Least room to spend, most to gain

Put those pieces together and an awkward picture emerges. The providers under the most financial pressure are the least able to fund new systems, carry the most scar tissue from difficult implementations and answer to boards that are wary of anything adding to corporate cost. Those same providers cannot build their way to scale, so their future depends on drawing full value from the beds they already operate. A provider that cannot afford to build cannot afford to leave classification revenue or care minutes funding on the table either.

So the providers with the least room to spend on systems often have the most to gain from getting them right. The way through is a harder test for every system decision. Instead of asking what a platform can do, ask what it returns inside this funding year, measured in dollars per bed day, and what it lets the organisation switch off. StewartBrown’s call for “active simplification” points the same way: map the systems, spreadsheets and workarounds first, then consolidate, automate or retire before adding anything new.

What this means for providers

1. Size your own gap first. Apply the $7.72 to your occupied bed days, then set it beside your classification and care minutes positions. In many homes, the numbers they control will outweigh the one being advocated for.
2. Put a dollar value on classification and care minutes. Measure how long your homes take to lodge a reclassification after a trigger event such as a hospital return or a fall. Then quantify the care minutes supplement at risk in MM1 non-specialised homes, and the cost of minutes delivered above target in every home.
3. Separate funding problems from operating problems. Benchmark cost per bed day against peers, line by line, before the next board paper. The board should see which part of the gap needs advocacy and which part management can fix.
4. Test capital plans against the price trajectory. Before committing to a new build, model it against a price that has trailed costs rather than one that keeps pace with them. That is the risk boards and lenders are already weighing.
5. Hold every technology decision to a payback test. A new tool should replace something or return its cost within the funding year, and someone should own that result. If the question is whether to build systems yourself, see Build or partner?
6. Keep making the case for adequate pricing. Operational efficiency is no substitute for a price that reflects the cost of care under the new Act. It does strengthen the case, because a sector that can show it is capturing every dollar the current model offers is much harder to dismiss.

The longer view

The next price reset is almost a year away, and the Minister has said there is no further money for aged care beyond the commitments in the May Budget. The impasse is unlikely to resolve quickly. In the meantime, the beds Australia needs will be built by providers whose balance sheets survive the wait, and the cheapest lever available to them is the data they already hold.

If you want to see how your own numbers compare, Mirus Benchmarking is a free place to start. It compares your average daily subsidy, occupancy and casemix with similar providers. When you are ready to go home by home, Mirus Metrics brings Revenue Manager, Care Minute Manager and Mirus Benchmarking together, so you can see classification, care minutes and cost performance for each home in one view. To talk it through, get in touch.

Sources

• Department of Health, Disability and Ageing, Residential aged care funding update, AN-ACC price from 1 October 2026
• IHACPA, Residential Aged Care Pricing Advice 2026–27 fact sheet
• The Weekly SOURCE, StewartBrown modelling of a $310.91 AN-ACC price, 14 September 2026
• The Weekly SOURCE, StewartBrown Finance Forum FY26 results, 15 October 2026
• The Weekly SOURCE, StewartBrown corporate cost analysis, 21 October 2026
• Department of Health, Disability and Ageing, Care minutes funding policy fact sheet, September 2026
• The Weekly SOURCE, Care minutes compliance for the April to June 2026 quarter
• Department of Health, Disability and Ageing, Residential Aged Care Funding Assessments Dashboard, July 2026
• Minister for Health and Ageing, More beds, more packages and better care for older Australians
• Ageing Australia, response to the Government’s $3 billion aged care commitment
• The Weekly SOURCE, Minister confirms no new aged care funding, 30 September 2026
• Mirus Australia, 2.55% is the headline. How do we compare is the question, 21 October 2026
• Mirus Australia, Build or partner? An honest answer from a software company, 21 October 2026

Figures current at 22 October 2026. Confirm AN-ACC, BCT and supplement rates against the Department’s current Schedule of Subsidies and Supplements before publication.

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