Your aged care board and executive are increasingly consumed by operational crises, workforce instability and mounting compliance demands. The result? We can see strategic leadership work has taken a back seat, management capability is overlooked, and organisations become trapped in a relentless cycle of reacting to problems rather than actual work being done on building sustainable futures.

The consequence is exactly what we are seeing right now: an increasingly unstable sector, where organisations become so caught up in the day-to-day that they can no longer see the forest for the trees. And when survival becomes the only strategy, selling up can start to look like the only way out.

Does your aged care board and executive team have clear KPIs for achieving strategic objectives? Are they accountable for developing the capability and performance of senior managers? And perhaps more importantly, do they measure how much time is spent making decisions, resolving problems and providing direction on matters that should sit firmly within senior management responsibilities?

The problem is, how do you know whether your leadership team is actually leading the organisation forward, or simply keeping it running?

Have we created an environment where even highly capable managers are being set up to struggle?

The Financial Reality Is Difficult to Ignore

The latest StewartBrown FY2026 financial performance findings, released in October, provide a confronting picture.

Some 65% of residential aged care homes surveyed recorded an operating loss, while average operating EBITDA declined to approximately $3,710 per bed annually, compared with $6,817 the previous year.

Average occupancy increased to 95.1%, yet financial performance continued to deteriorate. This figure can be skewed if aged care organisations offline their bed numbers to reflect better occupancy performance.

These results challenge the assumption that improving occupancy and maintaining government funding will be enough to secure sustainability.

StewartBrown's October analysis highlighted rising corporate costs, with preliminary findings from approximately 40 organisations showing corporate expenditure reaching 18.04% of operating revenue. But what is driving these costs? Are smaller and medium-sized aged care providers increasingly reliant on external consultants and specialist advisors to meet complex governance, compliance and operational requirements, while larger organisations have the economies of scale to maintain this expertise internally? And if so, does this place smaller providers at an increasing financial disadvantage, further threatening their long-term sustainability?

The question for boards is no longer simply how to reduce costs.

It is whether their organisations have the leadership capability, systems and operational accountability needed to deliver safe, quality care while remaining financially sustainable.

Have We Created a Cycle of Leadership Turnover?

Today's residential aged care managers must understand clinical governance, workforce management, AN-ACC funding, care minutes, financial performance, quality standards, legislative obligations and the expectations of residents and families.

The Productivity Commission's Report on Government Services 2026 identified service managers as having the highest quarterly separation rate among the residential aged care workforce groups reported, at 7% in the April–June 2025 quarter. Workload, burnout and organisational culture featured prominently among reported reasons for turnover.

Boards and executives need to ask some difficult questions.

Are our managers leaving because they lack capability? Or because we have appointed capable people into roles with unrealistic expectations, insufficient resources and limited development opportunities?

Are we assessing performance against achievable outcomes, or expecting managers to compensate for structural and financial problems beyond their control?

And when a manager leaves, do we examine the conditions that contributed to their departure, or simply recruit another person and repeat the process?

When Executives Become Operational Managers

There is a fundamental difference between providing effective executive oversight and assuming responsibility for managing daily operations.

When executives are routinely resolving problems, managing serious incidents, correcting compliance or directly addressing operational underperformance, something needs to change.

An executive team that is continuously managing operational crises may be signalling a deeper problem with organisational capability, accountability or systems.

Is Compliance Consuming Our Capacity to Lead?

The Department of Health, Disability and Ageing's 2026 reporting schedule demonstrates the continuing volume of financial, workforce, quality and operational reporting expected of providers.

Reporting information is not the same as using information effectively.

Consider how much organisational time is devoted to preparing reports, reconciling data, responding to immediate compliance concerns and meeting submission deadlines.

How much of that same information is then used to identify emerging risks, improve productivity, develop staff capability or guide strategic investment?

Compliance is not a substitute for effective governance.

Are We Heading Towards a Coles and Woolworths Model of Aged Care?

As financial margins narrow and regulatory obligations increase, are economies of scale becoming a prerequisite for survival?

Larger providers may have greater capacity to distribute corporate costs, invest in technology, employ specialist governance and compliance teams, and develop structured leadership programs.

Smaller and community-based providers may not have access to the same resources.

Could aged care progressively develop into a market dominated by a small number of large operators, much like Australia's supermarket sector?

The real question is whether the regulatory and financial environment will continue to support a diverse aged care sector, or increasingly favour organisations with sufficient corporate infrastructure to absorb the costs of compliance.

And importantly, could better governance, stronger management capability and more efficient operational systems help smaller providers remain competitive and sustainable?

We Are Investing in the Wrong Solutions

When financial and operational pressures increase, the immediate response is often to introduce additional reporting, restructure management positions, recruit new executives or engage external consultants to address specific problems.

Unless these interventions strengthen internal capability, the improvements may be temporary.

What happens when the consultant leaves, the new executive moves on or another regulatory requirement is introduced?

Sustainable improvement requires more than resolving today's problem.

It requires developing people who can manage tomorrow's challenges.

The Strategic Conversation Boards Should Be Having

Boards have a responsibility to understand whether their organisation has the capacity to deliver its strategic objectives.

That requires looking beyond current compliance results and financial statements.

Five questions deserve a place in board and executive discussions:

1. Management capability: Do our senior managers have the skills, authority and resources required to deliver the outcomes we expect?
2. Leadership retention: Do we understand why managers leave, and are we addressing the underlying causes rather than simply recruiting replacements?
3. Operational accountability: Are executives regularly resolving matters that should be managed at an operational level?
4. Financial sustainability: Are our operating models, corporate costs, workforce arrangements and funding practices sufficiently effective to support long-term sustainability?
5. Strategic capacity: How much of our board and executive time is spent addressing immediate problems compared with planning for future workforce, infrastructure, technology, care quality and service development?

These questions do not diminish the importance of regulatory compliance or operational oversight.

They recognise that effective governance requires both.

It's Time to Move Beyond Survival

Aged care does not have the luxury of ignoring its immediate operational challenges.

Resident safety, workforce pressures, financial sustainability and regulatory obligations will always require attention.

But if boards and executives remain consumed by today's problems, who is doing the work for tomorrow?

The sector cannot continue to rely on replacing managers, introducing additional reporting and expecting increasingly stretched executive teams to compensate for gaps in organisational capability.

We need to consider whether the way we structure, support and develop our leaders is contributing to the very challenges we are trying to overcome.

And perhaps the most important question for aged care boards today is this:

Are we developing leaders who can build our future, or simply finding new people to manage our present?

About ATACA

Advisors to Aged Care Australia (ATACA) works with aged care boards, executives and management teams to strengthen clinical governance, funding performance, operational accountability and organisational capability.

Our approach connects quality care, financial sustainability and effective leadership, helping organisations identify operational risks, improve management capability and develop sustainable systems for continuous improvement.

References and further reading

• StewartBrown, Aged Care Financial Performance Survey FY2026, findings reported by The Weekly SOURCE, 15 October 2026.
• The Weekly SOURCE, Corporate costs growing faster than revenue: StewartBrown, 21 October 2026.
• Department of Health, Disability and Ageing, Quarterly Financial Snapshot, April–June 2026, published 27 October 2026.
• Bolton Clarke, Aged Care Supply and Demand Update – 2026, 28 October 2026.
• Productivity Commission, Report on Government Services 2026: Aged Care Services, 29 January 2026.
• Mirus Australia workforce research, reported by HelloCare, 26 August 2026.