The evidence base for aged care’s missing price says the funding model’s own relativities need a rethink

What was actually measured

The Residential Aged Care Cost Collection 2024-25 is, in IHACPA’s own words, “the most comprehensive dataset to date on the costs and time involved in delivering residential aged care in Australia”. It ran from July 2024 to September 2025 across 200 homes, and the sample was designed to be nationally representative by size, ownership and location. Ninety-four per cent of the collected data made it into the final costed dataset: 12,537 residents and 355,830 days of care.

The method is worth pausing on, because it is not a survey. Direct care time was captured by Bluetooth-enabled wearable devices recording time interactions between residents and staff, rather than by asking providers to estimate it. That was then combined with financial data from the Quarterly Financial Report and the Aged Care Financial Report. When people argue about how many minutes of care a resident receives, this is the closest thing Australia has to a measurement rather than a claim.

One methodological point matters for reading every number below. Costs are expressed per registered bed day, which includes days a resident is on leave, because as the report notes, costs such as cleaning and accommodation continue while a resident is absent.

What it cost

Average daily cost per registered bed day, RACCC 2024-25

Source: IHACPA, Residential Aged Care Cost Collection 2024-25 Final Report, cost findings and the average-daily-cost-by-location analysis. MM refers to the Modified Monash Model remoteness classification. Costs are per registered bed day, which includes leave days.

Two things stand out. The first is that direct care labour accounted for 50 to 60 per cent of total expenditure and remained the primary cost driver, followed by hotel, accommodation and other non-labour costs. Aged care is a wages business, and the cost data says so plainly.

The second is the geography. A resident in a remote or very remote home cost $768 a day to care for, against $419 to $460 in the rest of the country. That is a gap of roughly 1.8 times, and it is the single widest variation in the report.

It would be wrong to conclude from that alone that remote homes are underfunded, and we are not saying so. The AN-ACC model has two parts: a variable subsidy set by each resident’s AN-ACC class, and a Base Care Tariff, a fixed payment covering stable costs across all residents in a home. The Base Care Tariff is the mechanism through which a home’s characteristics, including where it is, are recognised. The question the cost data raises is not whether an adjustment exists. It is whether the adjustment is the right size, and that is a question the report itself takes up.

The finding that matters most

IHACPA used the dataset to produce a set of AN-ACC cost weights. Set against the price weights the funding model actually uses, they show, in the report’s words, “a clear narrowing in the cost range between the lowest and highest AN-ACC classes compared with the current price weights”.

In plainer terms: when AN-ACC was designed, the gap between what it costs to care for the least complex resident and the most complex one was assumed to be wider than this collection measured it to be. The report offers a probable reason, that sector reforms since 2018 have changed cost structures, and is careful about how far it will go:

A definitive explanation, however, would require a comprehensive review of the AN-ACC classification and its underlying cost relativities.

IHACPA, Residential Aged Care Cost Collection 2024-25 Final Report, cost findings

The report also states directly that its cost weights “are not directly comparable with the price weights used in the AN-ACC funding model, given the different cost components included”. We are repeating that caveat rather than burying it, because it is the difference between a fair reading of this report and an unfair one.

Even with the caveat, the recommendation is unambiguous. Recommendation five asks IHACPA to analyse the AN-ACC cost relativities using these findings, including the observed narrowing, to reassess the proportionality between measured cost differences and the AN-ACC price weights including Base Care Tariff settings, and, where the evidence shows under- or over-recognition of relative cost, for example for respite residents or high numbered classes, to update the weights or the tariff settings accordingly.

That is the pricing authority telling itself, on its own evidence, that the shape of the funding model may no longer match the shape of the costs. It sits among ten recommendation areas, which also include expanding participation, strengthening care-time measurement, refining the measurement of indirect care, improving the visibility of allied health, and better representing respite. IHACPA says it “will consider these recommendations for future cost collections”.

Why this lands awkwardly right now

Put the sequence together. The cost collection reported in April. The 2026-27 pricing framework, the methodology document, came out around the same time. The current price, $295.64 per NWAU, covers 1 October 2025 to 30 September 2026, and as we re-checked today the 2026-27 dollar figure is still not published: IHACPA’s residential pricing advice page lists 2023-24, 2024-25 and 2025-26, and nothing later. The consultation IHACPA opened on 9 July, which closes at 5pm on 21 August, feeds the framework for 2027-28, not the number providers are waiting on.

So the evidence base for a price arrived three months before the price did, and it carries a recommendation to reconsider the model’s internal relativities. Our view, and it is a view: that is a defensible reason for an authority to take longer, and it is also precisely why providers deserve to be told whether that is what is happening. A pricing authority reassessing its weights against new evidence is doing its job. Providers building budgets against a price that expires in nine weeks, with no figure and no stated reason for the delay, are being asked to carry the cost of that diligence without being told it is under way.

One honest caveat on our own framing: nothing we have read says the missing 2026-27 advice is delayed because of this cost collection. We have not seen IHACPA give a reason for the timing, and we are not asserting a causal link. What we can show is the sequence, the dates and the recommendation, all from the authority’s own documents.

What to watch

The 2026-27 residential pricing advice, whenever it appears, is the thing to read against this report. The specific question is whether it moves any AN-ACC weights or Base Care Tariff settings, or whether it indexes the existing structure and leaves recommendation five to a later year. Those are two very different answers, and the report above is what makes it possible to tell them apart.