Residential care trends in 2025 

2025 is shaping up to be a pivotal year for residential care in Australia. 

With the introduction of the new Aged Care Act, the sector is set for a major overhaul, compelling nearly every organisation to adapt their business practices. This legislation is expected to drive transformative change, reshaping how care is delivered and managed nationwide. 

At the same time, providers continue to navigate challenges such as an ageing population and workforce shortages, pushing them to devise innovative solutions to maintain quality care. 

To explore what’s ahead, we speak with Adrian Schauer, CEO and Founder of AlayaCare, and Annette Hili, General Manager ANZ. Drawing from their expertise, along with current data and sector trends, we’ve put together a glimpse into what 2025 might bring for residential care. 

The Aged Care Act will reshape residential care

The introduction of the Aged Care Act in 2025 is set to bring significant changes to the residential care sector, reshaping operations, compliance, and client expectations.  

“Like the home care sector, residential care will see changes in 2025 with the introduction of the Aged Care Act,” says Annette. “We’ve already seen some of these changes come into effect, but providers will have to remain tightly across the new requirements and regulations to make sure they’re remaining compliant in 2025.” 

Key shifts under the Act will require providers to adapt quickly to maintain compliance and ensure quality care for residents. Some of these include: 

• Increased care minutes: The introduction of mandated care minutes has already prompted providers to reconfigure operations to meet the required levels of care. This focus on care delivery efficiency will intensify in 2025 as providers balance staffing shortages with these requirements. 
• Provider registration: Similar to home care, residential providers will need to register under the new system. 
• Statement of Rights and Principles: Providers will need to adhere to these foundational principles, as well as the updated Quality Standards. This will necessitate staff training and internal audits to align with the regulatory framework. 
• Stronger regulatory oversight: New laws aimed at protecting older Australians will give regulatory bodies enhanced powers to investigate breaches and enforce civil penalties. This will require providers to demonstrate proactive risk management and compliance across their operations. 
• Means-tested contributions: From 1 July 2025, individuals entering residential aged care facilities will face larger means-tested contributions, which may affect demand and financial planning for providers. 

What will this mean for residential care providers in 2025? 

• Increased operational focus on achieving care minute targets, which could drive investment in workforce planning tools 

• Greater emphasis on compliance and governance to align with provider registration and regulatory requirements 

• Proactive measures to meet Quality Standards and Statement of Rights, including staff training and robust monitoring systems 

• Financial adjustments to account for changes in client contributions, potentially impacting business models and marketing strategies 

• Heightened transparency and accountability as providers prepare for increased regulatory scrutiny and enforcement 

Sustainability will be prioritised

Sustainability is emerging as a critical focus for the home and residential care sector in 2025. Highlighted at the 2024 Aged & Community Care Providers Association (ACCPA) conference, sustainability now encompasses not just environmental goals, but also financial stability – a dedicated program stream at the event. 

The rising operational costs facing businesses make sustainable practices more essential than ever.  

“Increasingly, we’re being told about the difficulties in running a business as operational costs put pressure on providers’ bottom lines,” explains Adrian. 

Data from the 2024 11 Stewart Brown Aged Care Financial Performance Survey (June 2024) underscores this trend: 

• The average residential aged care home saw an operating loss of $1.58 per bed day for mature homes between June 2023 and June 2024, which is equivalent to an operating loss of $536 per bed per annum 
• In 2024, 51.3% of aged care homes operated at a loss 
• The sector average result for everyday living services (including catering, cleaning and laundry) is currently at a $5.61 per bed day loss 

To navigate these challenges, providers will look for solutions that ensure operational efficiency and sustainability, enabling them to remain resilient well beyond 2025. 

How will this look for residential care providers in 2025? 

• Optimising resource management to reduce waste and control costs 
• Leveraging technology to streamline processes and improve efficiency 
• Diversifying revenue streams to create financial stability 
• Focusing on staff and client satisfaction to ensure retention and long-term success 

Artificial Intelligence (AI) will be even more integrated

It likely won’t surprise many to read that AI will be a significant trend in 2025. 

But this year we will see adoption increase dramatically as the rate of technological development escalates, and the need to streamline and automate processes intensifies. This will include the largescale adoption of AI agents, AI systems that act autonomously to proactively identify opportunities for improvement and take action without constant human input. 

Annette explains that many residential care providers will look to adopt AI in 2025: “We’re going to see a lot more desire for people to look at ways to utilise Artificial Intelligence (AI) to cut out some of those repetitive tasks. Our clients are going to be wanting us as vendors to be coming up with ways to do that in a way that’s practical, secure and safe because of the important information that they have.”  

Adrian agrees, “What I predict is you’re going to have AI integration and other types of tools help our customers be more efficient in how they deliver care. And enable a better experience, not just for their clients but for their care workers as well.” 

This is mirrored in the numbers. Global AI in healthcare is expected to reach $67.4 billion USD by 2027, growing at a compound annual growth rate of 46%. 

How will this look in residential care in 2025? 

• Optimising operations: AI will be used to automate shifts and scheduling and summarise data sets 
• Improving clinical outcomes: AI algorithms are being used to help predict and prevent adverse outcomes for clients 

Shift in care delivery

With telehealth and virtual care technology improving rapidly, coupled with increased pressure on bottom lines, we will see a more pronounced shift in care delivery in 2025. 

Virtual care delivery offers a lower cost alternative for care providers, and is increasingly being optimised in care delivery platforms to make it a more seamless user experience for clients and patients, without them needing to leave the residential facility. 

“Service providers [will] have to reassess how they’re delivering care,” explains Annette. “So things like, what can virtual care achieve? What are the options and opportunities that are there through some of the smart devices that are coming into play?  

“I think there’s a lot of service providers that are starting to dabble in that space, but I think over the next couple of years we’re going to see that shift even more,” she continues. 

“It’s a very different type of care delivery to what we’ve been used to in the past.”  

How will this look for residential care providers in 2025? 

• Telehealth: Although it’s existed for decades, COVID-19 propelled the use of telehealth technology in residential care. Its adoption will only increase in 2025 
• Remote monitoring: With increased access to monitoring software, clinicians and healthcare workers will increasingly monitor patients and clients remotely 
• Online information sharing: With secure, encrypted information sharing increasingly available, electronic medical records (EMR) and other digital information sharing will gain further popularity in 2025 

Increased pressure on existing residential care providers

The residential care sector continues to face growing demand while simultaneously seeing a decrease in providers. This is already putting pressure on those still operating, and this trend will continue in 2025.  

According to a KPMG market analysis, “As at 30 June 2023, residential aged care services in Australia supported 190,683 people, a 2.4% increase from FY22. Yet there has been a 5.2% decrease in providers and a 1.4% increase in vacancies.”  

This shrinking provider base coupled with increasing vacancies places added strain on existing facilities to deliver high-quality care with limited resources. While the full impact of the Aged Care Act on these challenges remains uncertain, providers will need to adapt quickly to avoid overwhelming staff and compromising care standards. 

Innovation and efficiency will be key strategies in 2025 as providers navigate these pressures.  

“2025 increasingly feels like the year of change born from pressure. New regulation, new technology, new opportunities. Change can be tough, but those who meet it head on will see long-lasting impacts,” says Adrian. 

What will this mean for residential care providers in 2025? 

• Increased reliance on technology: Providers will adopt digital solutions to streamline administrative tasks and improve operational efficiency, allowing staff to focus more on direct care 
• Optimised workforce management: Tools to support scheduling and workload distribution will be essential to address staff shortages and reduce burnout 
• Emphasis on care quality: Providers will prioritise maintaining high standards despite resource constraints, likely through targeted investments in training and monitoring systems 
• Creative problem-solving: To manage the balance between increased demand and fewer resources, providers will experiment with innovative models of care and partnerships 

Focus on data and security

With the rapid adoption of new technology in home and residential care, the need to address data security is becoming increasingly urgent.  

While advancements in new technology promise incredible benefits, they also open new vulnerabilities that bad actors could exploit.  

The Notifiable Data Breaches Report for Australia (January to June 2024) highlights the stakes: 

• The healthcare sector reported the highest number of data breaches 
• Breaches increased by 9% compared to the previous reporting period 
• Phishing remained the most common source of breaches 

These figures are daunting, but aren’t an indication we should shy from innovation. In fact, the opposite is true.  

As society advances, operating without integrating advanced technologies will be nearly impossible. With this progress comes the critical responsibility to ensure the privacy and security of users and clients. 

“We are fully leaning into the power of AI and new technology to deliver change in the home and residential care space. But with this comes a huge responsibility from us as software providers, as well as anyone using this technology, to maintain data security and integrity,” says Adrian. 

“This is why security is ingrained in every aspect of the system, with security automation tools directly integrated into the CI/CD pipeline and infrastructure,” he continues. 

In 2025, as technological advancements accelerate, the focus on robust data security measures will become more pronounced. 

How will this look for residential care providers in 2025? 

• Increased use of encryption to secure data transmission 
• Comprehensive staff training, addressing human error as the weakest link in security 
• A shift to secure, encrypted platforms for managing sensitive information 

The new year promises considerable challenges and even more opportunities for those working in residential care. 

It’s already clear that the ability to adapt and embrace change will be critical for all providers who aim to remain resilient and deliver exceptional care in 2025. 

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Want to learn how AlayaCare can help your organisation navigate these residential care changes in 2025? Reach out to our dedicated Australian team.