Victorian public sector residential aged care services (PSRACs) play a critical role within local health systems, particularly in rural and regional communities. Many have evolved over time as part of broader health services and continue to operate as small, community-based facilities or specialist services supporting cohorts with complex needs.
Despite this essential role, PSRACs face significant structural challenges. They operate within a competitive aged care market while also meeting additional legislative requirements, including mandated staffing ratios. At the same time, they are more likely to support residents with complex clinical, behavioural and psychosocial needs, often in areas where alternative providers are limited or absent. These factors combine to create ongoing financial sustainability pressures.
KF Consulting was engaged as part of a consortium commissioned by the Public Sector Residential Aged Care Leadership Committee to better understand the unique operating environment, challenges and future requirements of these services.
The consortium undertook detailed demographic, service and financial analysis across participating services. This included data modelling, stakeholder engagement and comparative analysis to identify demand patterns, cost drivers and differences in resident complexity.
The work indicated that PSRACs operate as a safety net, supporting high-complexity residents and sustaining access in thin markets. However, current funding models do not adequately reflect these realities, particularly the cost of complexity and small rural service delivery.
Our modelling provided the evidence base required to inform future funding reform, policy advocacy and sustainable service planning, positioning the sector for more equitable and fit-for-purpose outcomes.