Aged Care Business Model: 5 Profitable Structures and How to Choose the Right One
The aged care market is one of the most structurally complex – and most financially significant – healthcare sectors in Australia. With over 1.3 million Australians receiving some form of aged care support, and federal funding exceeding $25 billion annually, the business opportunities are substantial. But so are the barriers. Choosing the wrong aged care business model at the outset costs investors time, capital, and regulatory standing that can take years to recover.
HCPA has supported 25+ aged care businesses through Commission approval this year, across every major business model. Our team, led by Team Lead Shayan – 7 years in quality and compliance, 3 years specialising at HCPA, has seen what works, what fails, and why. This guide gives you the structural analysis to make the right choice before you commit capital.
What Defines an Aged Care Business Model?
An aged care business model defines how your organisation will deliver care, generate revenue, structure costs, and sustain growth within the regulatory framework set by the Aged Care Act 1997 and its successor legislation. The model you choose determines your capital requirements, your staffing structure, your revenue streams, your compliance obligations, and ultimately your return on investment.
Five primary business models operate in Australian aged care. Each carries distinct advantages, challenges, and financial profiles. Understanding them clearly before applying for approval or committing capital is not optional – it is the foundation of a viable business.
The comparison below reflects actual market conditions and regulatory requirements as of 2025. The Support at Home program, which commenced 1 July 2025, has changed the revenue structure for home care providers significantly. Any analysis of home care business models must account for this reform. If your advisor is not referencing Support at Home, find a new advisor.
Model 1: Residential Aged Care
What It Is
Residential aged care facilities (RACFs) provide 24-hour accommodation, personal care, and clinical care to older Australians who can no longer safely live at home. Facilities range from 30 to 300+ beds. The regulatory framework is the most demanding in the sector, and the capital requirements are the highest.
Revenue Structure
Revenue comes from three main sources. Basic Daily Fees (BDF) are set by the Government and paid by all residents (currently around $63.57 per day). AN-ACC subsidies are government funding based on assessed care needs – the higher a resident’s care complexity, the higher the AN-ACC weight and therefore the government subsidy per resident per day. Accommodation contributions come from Refundable Accommodation Deposits (RADs) or Daily Accommodation Payments (DAPs), negotiated with each resident based on the facility’s published maximum accommodation price.
A 60-bed facility running at 95% occupancy can generate $6-9 million in annual revenue, depending on AN-ACC case mix and accommodation pricing strategy. Optimising AN-ACC coding is one of the highest-return activities available to residential care operators – providers who systematically under-code leave significant government funding on the table.
Capital Requirements
Building or acquiring a residential facility requires significant capital. New builds typically cost $200,000-$350,000 per bed depending on design standard, location, and construction market conditions. Acquisition of existing facilities has become increasingly competitive, with EBITDA multiples of 8-12x common for well-performing facilities. Working capital requirements are substantial – RAD liabilities are large and must be managed carefully.
Who It Suits
Residential aged care suits investors with substantial capital, long investment horizons, and the operational capability to manage a complex 24/7 service environment. It is not a market for undercapitalised operators. Those who succeed bring healthcare operations experience, strong clinical governance, and sophisticated financial management.
Model 2: Home Care and Support at Home
What It Is
Home care providers deliver services to older Australians in their own homes – personal care, domestic assistance, nursing, allied health, and social support. The Support at Home program (commencing 1 July 2025) replaces the Home Care Packages program and the Commonwealth Home Support Programme, fundamentally changing the funding and service delivery model.
Revenue Structure Under Support at Home
Under Support at Home, funding is allocated to individual participants via a budget approach across eight support categories. Providers deliver services and claim against the participant’s budget. The key revenue driver is service delivery efficiency: the spread between the government fee schedule rates and your cost of service delivery determines your margin.
Providers with strong case management capability, efficient rostering systems, and well-managed worker-to-client ratios generate margins of 8-15%. Providers without these systems struggle to break even. The Support at Home transition has tightened margins for poorly-organised operators while rewarding those with genuine operational discipline.
Capital Requirements
Home care is the most capital-efficient entry point into aged care. Infrastructure requirements are modest (office space, software systems, vehicles), and there is no facility construction or acquisition cost. Registration costs via HCPA typically range from $6,600-$17,500 depending on the scope of services and complexity of the application. This makes home care the most accessible market entry point for new operators.
Who It Suits
Home care suits operators with strong community networks, workforce recruitment capability, and genuine care coordination expertise. The market is competitive, but the regulatory barriers are lower than residential care, and the growth trajectory is strong given Australia’s ageing population and preference for ageing in place.
Model 3: Specialist Disability Accommodation (SDA)
What It Is
SDA sits at the intersection of the NDIS and aged care for a specific group – older Australians with disability who access NDIS funding and require specialist housing. SDA providers develop and own purpose-built or modified properties that meet strict NDIS design standards across four categories: Improved Liveability, Fully Accessible, Robust, and High Physical Support.
Revenue Structure
SDA revenue comes from NDIS SDA payments made directly to the registered SDA provider on behalf of participants. Payments range from $15,000 to $240,000 per participant per year depending on design category, location, and dwelling type. High Physical Support properties in major cities generate the highest SDA payments. Contracts are typically long-term, creating stable, government-backed revenue streams with strong property asset value.
Capital Requirements
SDA development requires significant property investment, though returns are attractive relative to conventional property development. Developers typically target yields of 8-12% on SDA property, compared to 3-5% for standard residential property. The combination of government-backed income and property capital growth makes SDA compelling for property investors with patience and regulatory understanding.
Model 4: Respite Care
What It Is
Respite care provides short-term relief to primary carers of older Australians – either in a residential facility (residential respite) or in the person’s home (flexible respite). It serves a critical social function and is government-funded, but operates within a constrained revenue framework that requires careful financial modelling.
Revenue and Operational Considerations
Respite is rarely viable as a standalone business model in residential settings. Occupancy volatility is the core challenge: respite beds are booked and vacated frequently, creating unpredictable revenue. Most operators integrate respite capacity into their residential aged care facilities as a proportion of total beds (typically 10-20%), using respite as a pipeline for permanent admission conversion and as a demand management tool.
In-home respite under the Support at Home program is more financially predictable and integrates naturally with a home care service model. Providers already delivering home care services can add respite as an extension of existing operations with minimal additional overhead.
Model 5: Hybrid and Integrated Models
What It Is
The most successful aged care organisations in Australia operate hybrid models that combine multiple care types under a single governance structure. A typical integrated model might include residential care, home care, short-term restorative care, and allied health services. This creates multiple revenue streams, diversified regulatory risk, and a complete care continuum that retains clients across their care journey.
Strategic Advantages
Integrated models create powerful competitive moats. When a residential facility also offers home care, it can support residents to return home after a health event rather than losing them to competitors. When a home care provider also operates short-term restorative care, it can support clients through acute episodes without losing them to the hospital system permanently. Revenue retention and referral network control are the primary strategic benefits.
The regulatory complexity of operating multiple approval types simultaneously is significant. Providers pursuing integration need robust governance structures, experienced compliance teams, and the operational systems to manage distinct service types within a unified organisation. This is where HCPA’s ongoing compliance and growth support services deliver the most value – helping providers scale across service types without regulatory gaps.
Comparing the Five Models: Decision Framework
| Business Model | Capital Required | Revenue Potential | Regulatory Complexity | Best Entry Scenario |
|---|---|---|---|---|
| Residential Aged Care | Very High ($5M+) | Very High | Very High | Experienced operators, investor groups |
| Home Care / Support at Home | Low ($20K-$100K) | Moderate-High | Moderate | New entrants, community networks |
| Specialist Disability Accommodation | High (property investment) | High (stable income) | High | Property developers, NDIS investors |
| Respite Care | Low-Moderate | Low standalone | Moderate | Addition to existing residential or home care |
| Hybrid / Integrated | Variable | Highest | Highest | Scaling operators, strategic growth |
The Registration Process: What to Expect
Regardless of which model you choose, operating as an aged care provider requires approval from the Aged Care Quality and Safety Commission. The approval process involves a detailed application, evidence of organisational capacity, governance and quality management systems, financial viability assessment, and in some cases a site assessment.
HCPA’s 20-step registration process typically takes 6-8 months from initial engagement to Commission approval. Our team handles the full application, document preparation, policy development, and Commission liaison. The approval fees set by government do not include the consulting support needed to build a submission that actually succeeds. That is where HCPA’s investment of $6,600-$17,500 delivers measurable return: providers who attempt self-submission face higher rates of rejection, longer timelines, and the cost of a second attempt.
For new providers, understanding your intended business model before lodging an application is essential. The Commission assesses your governance and systems against the specific care types you have applied to deliver. A mismatch between your intended model and your application documentation is one of the most common reasons for delayed or refused approvals.
Review our aged care registration guide for a full breakdown of what the application process requires. If you are weighing up your business structure alongside registration, our aged care business plan service can help you document your model, financial projections, and operational design in a format that satisfies both the Commission and your lenders.
Frequently Asked Questions: Aged Care Business Models
Can I operate multiple aged care service types under a single approval?
Yes, but each service type requires separate approval from the Commission. A provider can hold approval for residential aged care, home care, and other service types simultaneously. Each approval carries its own compliance obligations, and the Commission assesses each service type independently during site assessments. Your governance and quality management systems must be robust enough to cover all approved service types.
How long does it take to get an aged care provider approval?
The Commission’s assessment process typically takes 3-6 months from application lodgement, but applicants must first prepare documentation and systems that can take 3-6 months with professional support. HCPA’s end-to-end process typically achieves approval within 6-8 months from first engagement. Timelines can extend if documentation is incomplete, if systems require significant development, or if the Commission requests additional information.
What is the minimum viable size for a residential aged care facility?
There is no regulatory minimum bed count, but financial viability generally requires a minimum of 50-60 beds to support the required clinical staffing ratios and administrative overhead under the current funding model. Smaller facilities (30-49 beds) can be viable in regional areas with lower land and construction costs, but require careful financial modelling. Facilities below 30 beds are generally not financially sustainable under the current AN-ACC and fee structure.
Can a for-profit business receive government aged care funding?
Yes. Government funding is available to approved providers regardless of their corporate structure – for-profit, not-for-profit, or government-operated. For-profit providers receive the same AN-ACC subsidies, Support at Home funding, and other government payments as not-for-profit operators, provided they meet the same approval and compliance requirements. Approximately 40% of Australian aged care providers operate on a for-profit basis.
What financial records does the Commission require during the application?
The Commission assesses financial viability as part of the approval process. Required financial documentation typically includes: 3-year financial projections with assumptions clearly stated, evidence of available capital or financing, details of the applicant’s financial management systems, and for existing organisations, audited financial statements for the preceding 2-3 years. Financial viability must be demonstrated for the care types applied for, not just the organisation overall.
Is home care more profitable than residential care?
Home care is more capital-efficient and accessible as a business entry point, but residential aged care has higher total revenue potential at scale. A well-run 100-bed residential facility will generate significantly more revenue and profit than a home care business serving an equivalent number of clients, but requires 10-20 times the capital investment. The right answer depends on your capital position, operational experience, and growth strategy – not a generic comparison.
Start with the Right Business Model Advice
Choosing your aged care business model is one of the highest-leverage decisions you will make. The wrong choice wastes capital, delays returns, and creates regulatory exposure that compounds over time. The right choice, built on accurate market data and regulatory knowledge, positions you on a clear Regulatory Growth trajectory a sustainable, compliant, and profitable aged care business — and your Regulatory Growth foundation is already in place.
HCPA has guided 25+ providers through approval and into profitable operations this year. Our team of consultants, each with 2+ years of aged care regulatory experience, provides business model analysis, financial modelling review, registration support, and ongoing compliance management. We bring the regulatory intelligence. You bring the business ambition. Together, we build your Regulatory Growth.
Your aged care business model determines everything that follows – your funding, your staffing, your compliance obligations, and your growth ceiling. Get the foundation right. Talk to HCPA today and build your aged care business on a structure that works from day one.
