Aged Care Reform 2025: What Australian Providers Need to Know About Governance and Compliance

The Australian aged care sector is on the precipice of its most significant transformation in decades. With the new Aged Care Act 2024 (Cth) commencing on 1 July 2025, providers across the nation face a new era of heightened accountability, transparency, and a profound shift towards person-centred care. This isn't merely a legislative tweak; it's a fundamental reimagining of aged care, driven by the recommendations of the Royal Commission into Aged Care Quality and Safety. For Boards and leadership teams, understanding and proactively addressing these reforms, particularly in the critical areas of governance and compliance, is not just advisable – it's paramount for long-term sustainability and delivering genuinely high-quality care to older Australians.

The Upcoming Reforms: A New Dawn for Aged Care

The genesis of these reforms lies in the Royal Commission's findings, which exposed systemic issues within the aged care sector. The new Aged Care Act 2024 is designed to rectify these shortcomings by:

• Centering Older People's Rights: A new "Statement of Rights" is embedded within the Act, empowering older Australians and placing their independence, autonomy, and preferences at the heart of care delivery. Providers are legally obliged to uphold these rights.

• Strengthening Quality Standards: The existing Aged Care Quality Standards are being significantly enhanced, with a greater focus on tangible outcomes, clinical governance, and robust reporting mechanisms. This includes new requirements around care minutes, 24/7 Registered Nurse coverage in residential care, and improved infection control.

• Introducing a Risk-Based Regulatory Model: The Aged Care Quality and Safety Commission (ACQSC) will adopt a more proactive, risk-based approach to oversight, with increased powers for monitoring compliance and responding to breaches.

• Overhauling Funding Models: Significant changes to funding, including means-tested contributions for non-clinical care and the introduction of the "Support at Home" program (replacing Home Care Packages and Short-Term Restorative Care from 1 July 2025), aim to create a more sustainable and equitable system.

• Enhancing Transparency and Accountability: Providers will face increased reporting obligations, including public reporting on care outcomes and financial information, fostering greater trust and informed choice for consumers.

Key Changes Affecting Boards: A New Paradigm of Responsibility

The new Act places unprecedented responsibility on the governing bodies of aged care providers. Boards are no longer simply overseeing operations; they are directly accountable for ensuring the delivery of safe, high-quality, and rights-based care. Here are the critical areas impacting Boards:

• Personal Accountability of Responsible Persons: The Act introduces statutory duties for "responsible persons" (including board members and executives), requiring them to exercise due diligence to ensure the provider complies with its obligations. Serious failures can result in significant civil penalties, potentially including personal exposure. This marks a substantial shift, moving beyond organisational liability to individual responsibility.

• Heightened Clinical Governance Obligations: Clinical governance is now central to regulation. Boards must ensure robust clinical governance structures are in place, demonstrating continuous improvement in clinical care, medication management, and the appropriate use of restrictive practices. This requires a deep understanding of care quality and a willingness to challenge and monitor clinical outcomes.

• Enhanced Due Diligence and Oversight: Boards must proactively acquire and maintain knowledge of the new Act's requirements, ensuring their organisation has the necessary resources and processes to manage adverse effects on the health and safety of individuals receiving care. This extends to having effective systems for receiving and responding to information about incidents and risks.

• Transparency and Public Reporting: Boards will be responsible for ensuring accurate and timely public reporting on various aspects of their operations, including care outcomes, financial performance, and compliance with the Statement of Rights. This level of transparency demands robust internal reporting frameworks and a culture of openness.

• Work Health and Safety-Style Duties: The Act introduces duties that require providers to take "reasonably practicable" steps to avoid causing harm to individuals receiving care. Boards must ensure their organisation’s work health and safety frameworks extend to safeguarding the wellbeing of care recipients.

• New Registration Categories and Ongoing Oversight: The streamlined provider registration process will involve six categories based on service complexity and risk. Boards must ensure their organisation meets the specific obligations of their registered categories and is prepared for regular reviews and ongoing oversight by the ACQSC.

How Boards Need to Respond: Proactive Risk Management and Robust Reporting

The impending changes necessitate a proactive and strategic response from every aged care Board in Australia. Delaying action is not an option.

1. Proactive Risk Management: Shifting from Reactive to Predictive

The new regulatory model is inherently risk-based, demanding that Boards adopt a sophisticated approach to risk management.

• Comprehensive Risk Assessments: Conduct thorough, organisation-wide risk assessments that specifically address the new legislative requirements. This includes identifying potential risks related to the Statement of Rights, strengthened Quality Standards, clinical governance, workforce capabilities, and financial sustainability under the new funding model.

• Develop and Embed a Robust Risk Management Framework:

  • Culture of Safety: Foster a strong organisational culture where reporting of incidents, near misses, and concerns is encouraged and acted upon without fear of reprisal.

  • Proactive Monitoring: Implement systems for continuous monitoring of key performance indicators (KPIs) related to care quality, safety, and compliance. This includes real-time data on care minutes, incident reporting (including expanded reportable incidents like psychological and financial abuse), and consumer feedback.

  • Scenario Planning: Engage in scenario planning to anticipate potential challenges and develop contingency plans. What if there's a serious incident? What if staffing levels become critical?

  • Board Education and Training: Ensure all Board members receive ongoing education on the new Act, accompanying Aged Care Rules, and their personal obligations. Understanding the nuances of "due diligence" and "reasonably practicable" is crucial.

• Strengthen Internal Controls: Review and update all internal policies, procedures, and systems to align with the new Act. This includes:

  • Care Planning & Delivery: Ensure person-centred care planning is embedded, with clear processes for documenting and upholding individual choices and preferences, including the "dignity of risk."

  • Workforce Management: Implement robust recruitment, training, and supervision practices to ensure staff possess the necessary qualifications, skills, and understanding of the new standards and the Code of Conduct for Aged Care. Address the mandated care minutes and 24/7 RN requirements.

  • Complaints and Feedback: Establish accessible and transparent complaints mechanisms, ensuring complaints are handled efficiently, resolved effectively, and used for continuous improvement. The new independent Complaints Commissioner will play a significant role.

  • Whistleblower Protections: Ensure strong internal policies and procedures for whistleblower protections are in place, encouraging staff and residents to report concerns without fear.

• Leverage Technology: Invest in and utilise technology solutions that can enhance governance, streamline document management, track compliance, and provide real-time data for risk monitoring and reporting. This includes electronic care records, incident management systems, and board management software.

2. Robust Reporting: Demonstrating Accountability and Continuous Improvement

The new Act demands a far greater level of transparency and detailed reporting, both internally to the Board and externally to regulators and the public.

• Enhanced Board Reporting: Management must provide the Board with comprehensive, timely, and actionable reports that go beyond traditional financial metrics. These reports should include:

  • Quality of Care Metrics: Detailed data on care outcomes, incident rates, restrictive practices, consumer feedback, and adherence to the strengthened Quality Standards.

  • Clinical Governance Dashboards: Clear indicators of clinical performance, staff competencies, and adherence to clinical protocols.

  • Risk Registers and Mitigation Strategies: Regular updates on identified risks, their likelihood and impact, and the effectiveness of mitigation strategies.

  • Compliance Status Reports: A clear overview of the organisation's compliance with all aspects of the new Act and Rules, highlighting any areas of non-compliance and remediation efforts.

  • Workforce Data: Information on staffing levels, qualifications, training, and retention.

• Public Reporting Preparedness: Understand and prepare for the new mandatory public reporting requirements. This will involve:

  • Financial Transparency: Clearly presenting financial information to demonstrate responsible use of funds.

  • Quality Indicator Program (QIP) Expansion: Be ready to report on expanded quality indicators, including allied health and lifestyle staffing measures.

  • Care Minutes Performance Statements: Residential aged care providers will need to provide audited statements on their care minutes performance.

• Strategic Communication: Develop a clear communication strategy for all stakeholders – residents, families, staff, and the wider community – about the changes and how the organisation is adapting. Transparency builds trust.

• Independent Assurance: Consider engaging independent assurance providers to review governance frameworks, risk management systems, and compliance readiness. This can provide valuable external validation and identify blind spots.

Conclusion: A Transformative Opportunity

The Aged Care Reform 2025 presents both challenges and immense opportunities for Australian aged care providers. While the increased regulatory burden and accountability may seem daunting, they are ultimately designed to build a more respectful, higher-quality, and sustainable aged care system. For Boards, this is a call to action – to elevate governance practices, embed proactive risk management, and embrace transparency. By doing so, providers can not only ensure compliance and mitigate risks but also seize the opportunity to lead the way in delivering genuinely person-centred, dignified, and exceptional care to older Australians. The future of aged care is being shaped now, and Boards are at the forefront of this crucial transformation.