Reimagining aged care in Australia: From cost centre to economic catalyst

Written by Dmitry Shibanov, CEO & Managing Director SMPLS INNOVATION. Shared with permission from LinkedIn.

Australia stands at a critical healthcare crossroads, particularly in aged care. As we face an ageing population, growing demand for services, and increasingly strained resources, the traditional view of aged care as a government cost burden is no longer sustainable.

At the inaugural Sheba ARC APAC Summit 2025 in Melbourne, healthcare innovators, policymakers, and clinicians from across the Asia-Pacific region gathered to explore transformative approaches that could fundamentally reshape how we deliver and conceptualise healthcare.

Among the many powerful insights shared, one theme emerged with particular relevance to Australia’s aged care sector: the potential to transform healthcare from a cost centre to an economic catalyst.

The resource gap challenging Australian healthcare

The statistics paint a sobering picture of Australia’s healthcare utilisation. In 2022–2023, there were 12.1 million hospitalisations in Australia — approximately 415 for every 1,000 people.

During the same period, 8.8 million Australians visited emergency departments, representing 334 visits per 1,000 people. Perhaps most telling, 86% of Australians saw a general practitioner at least once, with an average of 6.6 visits per person annually.

These figures reflect not merely data points but real people — our parents, our neighbours, ourselves — all interacting with a system under immense pressure.

As Professor Yitshak Kreiss, Director General of Sheba Medical Centre, highlighted at the summit, healthcare systems worldwide face a growing resource gap that threatens the quality of care for future generations. “If we look to the future,” he noted, “we all understand that no one can provide the same level of care” without fundamental transformation.

This resource challenge is particularly acute for aged care in Australia. Traditional residential care models are increasingly unsustainable, both financially and in terms of workforce requirements. The notion that we can hire more staff or secure more funding represents status quo thinking that fails to recognise the fundamental shifts needed in approaching aged care.

Beyond better: The transformation imperative

The summit’s speakers consistently emphasised a crucial distinction between improvement and transformation. Professor Kreiss stated, “We have to do what we do differently, not more of what we do today… We have to practice medicine differently. We have to redesign our health systems differently”.

This perspective represents a profound challenge to how we conceptualise aged care in Australia. Rather than simply seeking to do the same things better or more efficiently, we must fundamentally rethink the design of our aged care system.

As Chris Blake, Group CEO of St Vincent’s Health Australia, noted during a panel discussion, “Innovation really does foster the potential for transformation, but it doesn’t guarantee it… transformation is not just having an image of the future that you can motivate people towards using the available tools, skills and technologies, but also doing the difficult work of unpicking the structure”.

This unpicking of established structures is particularly challenging in healthcare, where, as Blake observed, “there is no stronger addiction to history than in health”.

The aged care sector exemplifies this resistance to fundamental change with its deeply embedded practices and organisational cultures. However, the experiences shared at the ARC APAC Summit suggest that such transformation is not only possible but essential.

Digital innovation as the transformation vehicle

A central theme throughout the summit was the role of digital innovation as the primary vehicle for healthcare transformation. The Victorian Minister for Health, Mary-Anne Thomas, highlighted how the COVID-19 pandemic accelerated the normalisation of virtual care, leading to innovations like Victoria’s virtual emergency department, which now handles approximately 2,000 patients daily.

For aged care, digital innovation offers particularly compelling opportunities to address resource constraints while enhancing care quality.

Dale Fisher, CEO of Silverchain, shared that through hospital-in-the-home supplemented by digital tools, they “managed to reduce the total cost of care from 1,200–1,300 to 350” while saving “about 4,000 bed days a year”. Such dramatic cost reductions and improved patient experiences illustrate the transformative potential of digitally enabled care models.

Beyond mere cost savings, digital transformation enables new care paradigms that better serve older Australians’ preferences for ageing in place.

Providers can extend their reach while maintaining or improving quality by providing patients with digital tools, remote monitoring, and virtual connections to healthcare professionals.

Fisher shared another example in cardiac rehabilitation: providing patients with smartwatches and digital applications “managed to double the clinical capacity… doubled the number of patients in that clinic” while improving program completion rates from below 30% to above 90%.

From cost centre to economic catalyst

Perhaps the most revolutionary insight from the summit was the reconceptualisation of healthcare from cost centre to economic driver.

Professor Eyal Zimlichman, Chief Transformation and Innovation Officer at Sheba Medical Centre, articulated this vision clearly: “We understood that implementing innovation within a structured platform, within our institutions, can also generate economic growth… trying to change the way governments and societies look at us because they look at us as expense centres, cost centres. And as long as we are cost centres, we will not be able to transform ourselves”.

The summit’s host state further illuminated the economic potential of healthcare innovation. According to Victoria’s Minister Danny Pearson, the state’s health tech industry is worth approximately $5.5 billion, comprising more than 4,600 companies that employ over 50,000 people. Investment firms specialising in biotechnology and medical devices in Victoria have more than $3.4 billion in cumulative capital funds.

For aged care specifically, this reconceptualisation opens exciting possibilities. Rather than viewing aged care as a perpetual drain on public resources, we can reimagine it as a sector ripe for innovation that generates economic value while delivering better outcomes.

Zimlichman shared how Sheba Medical Centre has become remarkably successful at spinning out healthcare start-ups — approximately 20 companies per year based on intellectual property developed at the centre. This model of clinician-led innovation, supported by structured commercialisation processes, offers a compelling blueprint for Australia’s aged care sector.

Building an innovation ecosystem for aged care

Transforming aged care from cost centre to economic catalyst requires more than isolated innovations — it demands a cohesive ecosystem that nurtures and scales healthcare solutions. The ARC model highlighted at the summit provides valuable insights for developing such an ecosystem in Australia.

Zimlichman described how they built a “global innovation ecosystem” connecting healthcare systems across multiple countries to support startups and drive transformation. This ecosystem includes training programs for clinicians in entrepreneurship, streamlined commercialisation processes, funding mechanisms like venture funds and incubators, and global collaboration networks.

For Australian aged care, an analogous ecosystem could connect aged care providers with universities, research institutes, technology companies, and investment capital.

Minister Pearson highlighted Victoria’s existing strengths in this regard, noting that the state is “the proud home for 82 ASX-listed therapeutic and medical technology companies with a market capitalisation of around about 81 million”. By more deliberately focusing this innovation infrastructure on aged care challenges, Australia could position itself as a global leader in aged care innovation.

Overcoming barriers to transformation

Despite the compelling vision, significant barriers to transformation exist. Summit participants identified several key challenges that must be addressed to enable the transformation of aged care.

Lester Levy, Commissioner of Health in New Zealand, emphasised the human side of digital transformation: “I think we’d be in real danger of technological solutionism. I think that we really need to be very thoughtful about how we actually adapt and adopt these technologies in organisations that have got legacy ways of thinking”.

This observation underscores the importance of organisational change processes in enabling technology adoption.

Dale Fisher identified two key barriers in the Australian context: “It gets down to two things, I think, it’s money and people… I think there’s a lack of courageous leadership in leading the transformation because when we are in this volatile world, people will go back to what they’re comfortable with”. This leadership challenge is particularly relevant in aged care, where regulatory burdens and financial constraints can discourage innovation.

Another significant barrier is the tension between government funding cycles and long-term transformation needs. As Lester Levy noted, “Governments in particular, particularly if they are significant funders, they are generally looking to secure short-term results… You need to deliver on the short term as well as the long term… If you don’t keep delivering on the short term, it’s going to be very difficult to keep the support of the government funders”.

This tension can be particularly challenging to navigate for aged care providers largely dependent on government funding.

Equity and access: Technology as an enabler

An essential consideration in aged care transformation is ensuring that innovation enhances rather than diminishes equity. The summit featured discussions about geographic disparities in Australian healthcare, particularly for remote and Indigenous communities, and how technology can help bridge these gaps.

For aged care, technology offers promising pathways to address equity challenges. Remote monitoring and virtual care can extend specialised services to older Australians in rural and remote areas. Digital platforms can help coordinate care across multiple providers, improving continuity and reducing fragmentation. Data analytics can identify patterns of disparity and target interventions accordingly.

However, as Professor Kenneth Kwek from SingHealth cautioned, equity considerations must be built into innovation from the beginning: “Sometimes in the less sexy things, that are not in AI, but we’re using very good use of robotic process automation…automating a lot of the menial processes that our staff…in the administration teams have to go through. And they’re able to sort of increase the productivity and efficiency of the teams”.

Such practical innovations that address workforce challenges while improving care delivery offer a model for aged care transformation that prioritises both efficiency and equity.

Conclusion: A new vision for Australian aged care

The Sheba ARC APAC Summit 2025 insights offer a compelling vision for transforming Australian aged care from a government cost burden to an economic catalyst. By embracing digital innovation, building robust innovation ecosystems, addressing organisational barriers, and focusing on equity, we can reimagine aged care as a sector that provides excellent care for older Australians and drives economic growth and job creation.

This transformation won’t happen overnight or without challenges. It requires courageous leadership, policy innovation, cultural change, and sustained investment. However, as the global examples shared at the summit demonstrate, healthcare systems can successfully navigate this transformation journey when guided by a clear vision and structured approach.

As we look to the future of aged care in Australia, we should take inspiration from Professor Zimlichman’s closing remarks: “We are here to write the next chapter in the textbook of health… There’s two types of people in the world of healthcare. There’s ones that study, and there’s ones that write. We want to have this community write the next chapter in that book. This is the book that will transform healthcare for generations to come”.

In subsequent articles in this series, we will explore specific aspects of this transformation in greater detail, examining successful case studies, digital innovation opportunities, funding models, and leadership approaches that can help realise this new vision for Australian aged care. The journey from cost centre to economic catalyst has begun — and the future of aged care in Australia depends on our collective commitment to this transformative path.