Australian Aged Care Provider Insights 2026: What the Latest Market Data Means

LHH Admin
Apr 15
7 min read

Updated: Apr 29

Australia’s aged care market is growing fast, but it is not getting simpler.

The latest Aged Care Market Analysis 2026 from KPMG paints a picture of a sector under pressure, but also one full of opportunity. Government spending is rising.

Home care demand continues to expand. Residential aged care is consolidating. Consumer expectations are shifting. And across the market, providers are being pushed to improve service, strengthen systems, and operate more clearly in a changing environment.

For providers, that means competition is no longer just about being available. It is about being trusted, understood, and well positioned.

For families, it means choosing the right provider is becoming harder, not easier.

A bigger aged care market does not mean an easier one

KPMG reports that the Australian Government spent $39.2 billion on aged care in FY25, an increase of 9.6% on the previous year. Residential aged care received the largest share at $24 billion, followed by Home Care Packages at $9.9 billion and CHSP at $3.3 billion. During the same period, 352,733 people accessed an HCP and 260,772 people received residential aged care.

That is a large and growing market.

But growth on its own does not remove friction. In fact, it can create more of it.

More funding, more service users, and more operational pressure means providers are working in a market where performance, delivery, and differentiation matter more than ever. KPMG notes that costs are rising faster than demand, meaning the government is spending more per person to deliver care.

The result is a sector where growth is real, but so is the pressure to deliver more value, more clearly.

Home care demand keeps rising

One of the clearest themes in the report is the continued expansion of home care.

At 30 June 2025, 292,911 people were receiving a Home Care Package, up 6.3% over the prior 12 months. KPMG links this to both policy settings and the continuing preference among older Australians to stay at home longer. Government funding for HCP also increased by 15% compared with FY24.

That should not surprise anyone working in the sector. Families increasingly want support that helps people remain independent, stay in familiar surroundings, and access care without moving prematurely into residential care.

But demand growth is only one part of the story.

KPMG also reports that 96,709 people were waiting in the National Priority System for an HCP at their approved level, a 41% increase on FY24.

So while home care is clearly expanding, pressure inside the system is expanding too.

For providers, this creates both an opportunity and a challenge. Demand is there. But in a more crowded and more complex environment, success depends on more than simply attracting enquiries. It depends on being the right fit, delivering well, and building trust quickly.

Bigger providers still matter, but the market is not closed off

A useful takeaway from the KPMG report is that scale matters, but it is not the whole story.

The top 25 HCP providers retained 40.5% of total funding in FY25.

That is a meaningful share, and it reflects the continued strength of large operators. At the same time, KPMG notes that the top 25 funding share has declined over the longer period from 45.3% in FY18 to 40.5% in FY25, showing that smaller and mid-sized providers are still finding ways to compete.

The report points to niche offerings, service specialisation, innovation, and strong local relationships as reasons these providers remain competitive.

That matters because it pushes against the lazy assumption that only large providers can win.

In reality, many families are not looking for the biggest provider. They are looking for the provider that feels right for their circumstances. That may be a scaled national operator. It may also be a strong local provider with a clearer service model and a better fit.

This is exactly why comparison and matching matter more now than simple directory volume.

The provider mix is changing

KPMG’s analysis also shows a gradual shift in provider ownership across home care.

Not-for-profit organisations still account for the largest share of HCP providers, but their share has declined, while for-profit providers have grown from 32% in FY18 to 40% in FY25.

State government representation remained steady at 5%, while local government presence declined.

This does not mean one ownership model is inherently better than another. It does mean the market is evolving, and old assumptions are becoming less useful.

Families do not choose care based on an ownership label alone. They choose based on responsiveness, trust, communication, quality, and fit. Providers who understand that shift will be better placed than those still leaning on category-based assumptions.

Residential aged care is becoming more concentrated

While home care continues to expand, residential aged care is consolidating.

At 30 June 2025, 196,313 people were accessing permanent residential aged care, up 3.4% from FY24. Over the same period, the number of providers fell from 642 to 636, homes fell from 2,606 to 2,583, and operational places increased only marginally. Unoccupied operational places dropped 15.5%, pushing average operational occupancy to 89.9%.

The broader trend is clearer still. KPMG notes that residential aged care providers declined from 807 in FY18 to 636 in FY25, while the top 25 providers increased their share of operational places from 36.1% in FY19 to 46.4% in FY25.

That tells us two things.

First, consolidation is not theoretical. It is already happening.

Second, capacity pressure is real. Even where total places are holding up, the system is tightening and choice may narrow in practical terms for many families.

Financial recovery has restored confidence, but not removed the pressure

KPMG highlights a major financial rebound in residential aged care in FY23/24.

According to the report, the sector moved from a $1.7 billion loss to a $410.9 million profit. Total income rose 28.8%, total expenses rose 18.6%, and EBITDA lifted sharply to $2.5 billion.

That recovery matters because it improves sentiment, supports investment activity, and gives larger operators more confidence to grow.

But this is not a story of easy conditions. Labour costs, care costs, and operational complexity remain high. KPMG makes the point that providers able to offer a standout service experience, maintain quality, and manage rising costs are the ones best positioned to grow.

That is the real lesson.

Improved funding can help, but it does not fix weak systems, unclear positioning, or poor consumer experience.

Support at Home is reshaping provider strategy

The shift to Support at Home is one of the most important strategic forces in the market.

KPMG expects the reform to trigger structural adjustment, with smaller providers entering and exiting, medium-sized organisations focusing on organic growth, and strategic operators pursuing acquisitions to build scale and capability. The report also highlights renewed investor appetite for in-home aged care businesses, particularly those with strong technology, high-quality clinical governance, and workforce compliance.

That should get providers thinking beyond compliance.

Support at Home is not just an operational or regulatory shift. It is also a market-positioning shift.

Providers that are easy to understand, digitally capable, operationally disciplined, and genuinely aligned to consumer expectations are likely to be in a much stronger position than those trying to run the next phase of the market on yesterday’s model.

What this means for providers in 2026

The broad message from the report is straightforward.

The aged care market is growing, but it is also getting sharper around the edges. Consumers expect more.

Reform is reshaping the operating environment. Larger providers are still expanding, but smaller and mid-sized providers can remain competitive where they are differentiated, trusted, and operationally sound.

That means providers need to think seriously about:

how clearly they explain what they do
how well they convert interest into trust
how easy they are to compare and understand
how strong their delivery systems really are
whether their model is built for the next phase of aged care, not the last one

The providers who continue to grow are unlikely to be the ones making the most noise. They will be the ones with the strongest fit between service model, operations, and consumer need.

What this means for families

Families are making decisions in a market with more variation, more pressure, and more uncertainty.

Some providers offer scale. Some offer flexibility. Some offer stronger local relationships.

Some offer more modern service models. But more choice does not automatically create better decisions.

It often creates confusion.

That is why better comparison matters. Not generic lead generation. Not endless provider lists. Better decision support.

The real question for many families is no longer “who services this postcode?” It is “who is the right fit for this person, with these needs, in this area, under this funding arrangement?”

That is a much more useful question. And it is where the market is clearly heading.

The Local Home Help view

For us, the KPMG report reinforces a simple point.

The future of aged care is not about who captures the most demand. It is about who earns trust first.

The market is growing. The funding is growing. The complexity is growing too.

That creates real opportunity for providers who are clear, credible, and genuinely well matched to the people they serve. It also creates a real need for tools that help families compare options more confidently and make better care decisions earlier.

Trying to compare aged care providers more clearly? Explore Local Home Help to find providers, compare options, and make more confident decisions about care.

FAQ's

What is changing in the Australian aged care market?	The aged care market is growing, but it is also becoming more competitive and more concentrated. KPMG reports rising government spending, stronger home care demand, ongoing residential aged care consolidation, and increasing consumer expectations around personalised and technology-enabled support.
Is home care still growing in Australia?	Yes. KPMG reports that 292,911 people were receiving a Home Care Package at 30 June 2025, up 6.3% over the prior 12 months, with government funding for HCP increasing by 15% compared with FY24.
Are bigger aged care providers taking over the market?	Bigger providers remain very important, but the market is not fully closed off to smaller operators. KPMG reports that the top 25 HCP providers held 40.5% of total funding in FY25, while smaller and mid-sized providers remain competitive through niche offerings, innovation, and strong local relationships.
Is residential aged care becoming more concentrated?	Yes. KPMG reports that the number of residential aged care providers has declined over time, while the top 25 providers increased their share of operational places to 46.4% in FY25.
What does this mean for families choosing a provider?	It means families need better comparison, not just more options. In a more complex market, the right provider is not always the biggest or best known one. Fit, trust, service model, and clarity matter more than ever.