Thinking of Buying a Care Home Business in Australia? Here Are 3 Vital Questions to Ask

The Australian residential aged care industry is valued at $38.7 billion in 2025, employing over 367,000 people across 1,887 enterprises.

Profit margins average 3.5%, generating $1.35 billion in profit, with revenue expected to grow at an annualised 4.9% through 2030 to reach $49.1 billion, driven by population ageing, higher care demand, and government reform programs.

However, the sector continues to face rising compliance costs, labour shortages, and financial pressure among smaller operators, with ongoing consolidation favouring large not-for-profit and private groups.

1. Is the Business Financially Sustainable and Profitable?

Why It Matters:

Care homes depend on a stable flow of government subsidies and resident fees.

Profitability is challenged by high staffing costs, regulatory reform, and a growing focus on quality-of-care compliance.

What to Check:

• Revenue sources – Government funding accounts for over 70% of sector income under the Australian National Aged Care Classification (AN-ACC) model, with fixed and variable subsidies linked to resident care needs.

• Profitability trends – Compare margins against the 3.5% industry average and monitor wage cost impacts following Fair Work Commission increases of up to 28% from 2024–25.

• Cost structure – Wages total $23.6 billion in 2025 (61% of revenue), highlighting the labour intensity of the industry.

• Occupancy and bed utilisation – Average occupancy remains below pre-pandemic levels, affecting economies of scale. Review historical occupancy and waiting-list data.

2. How Competitive is the Business’s Market Position?

Why It Matters:

The sector is highly fragmented, with over 60% of providers operating a single facility, yet consolidation is accelerating as small homes struggle with compliance and staffing costs.

Brand reputation, care ratings, and local community engagement are now key competitive drivers.

What to Check:

• Ownership structure – Not-for-profits control about 57% of facilities, while private operators manage 33% and government-run homes make up the remainder.

• Compliance and accreditation – Confirm the business meets the Aged Care Quality Standards, as published through the national Star Ratings system.

• Geographic footprint – New South Wales, Victoria, and Queensland host nearly 80% of all aged care homes, correlating with demographic concentration.

• Service mix – Review range of services provided (e.g., dementia, respite, palliative care) and whether operations are co-located with retirement villages, which enhances retention and revenue.

3. Is the Business Aligned with Industry Trends and Future Growth?

Why It Matters:

The upcoming Aged Care Act 2024, effective 1 July 2025, introduces sweeping reforms around resident rights, funding transparency, and provider accountability.

Care homes that adapt early to these reforms will have a strong advantage.

What to Check:

• Regulatory readiness – Ensure the facility is prepared for mandatory registration under the new Aged Care Regulatory Model and compliance with minimum care minute requirements (215 minutes per resident per day, including 44 minutes by a registered nurse).

• Workforce strategy – Assess recruitment and retention programs, given ongoing labour shortages and higher wage expectations.

• Sustainability of funding – New means-tested co-contributions and hotelling supplements (covering catering, laundry, and cleaning) will enhance revenue potential from wealthier residents.

• Growth prospects – The aged 85+ population is projected to triple by 2060, requiring an additional 40,000 beds by 2030, creating expansion and investment opportunities.

Ready to Invest in a Thriving Care Home Business?

With an ageing population, increased funding, and sweeping regulatory reform, Australia’s care home industry is poised for long-term expansion.

Success will depend on financial discipline, compliance strength, workforce stability, and readiness to meet rising expectations for quality care and transparency.

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