The leadership test hiding inside aged care’s consolidation wave

Australia’s aged care sector is shrinking. That much is known. What’s discussed far less is why some organisations are surviving it – and what the exits say about the leaders who did not see them coming.

Michael Goldsworthy has facilitated more than 283 mergers and amalgamations across Australia’s human services sector. He’s not surprised by what is happening. In fact, he’s been predicting it since the late 1980s.

His assessment of where the sector stands now should concern every board in Australia.

The numbers boards need to know

Residential aged care providers have fallen from roughly 3,000 in 1990 to 642 by 2025, with an 18% drop between 2017 and 2024 alone. KPMG’s latest Aged Care Market Analysis confirms further exits are coming as Support at Home reforms reshape the home care landscape.

Goldsworthy’s projection: the sector bottoms out between 200 and 300 residential providers. A parallel consolidation is running in Support at Home.

From April 2026, metropolitan residential providers face AN-ACC funding penalties for failing to meet tightening care minute targets. Only around 54% of providers are currently compliant. Financial pressure on mid-tier and smaller operators is about to intensify sharply precisely at the moment demographic demand is accelerating.

The leadership gap nobody is naming

Here’s where Goldsworthy’s analysis cuts hardest.

“With an objective look at the CEOs in aged care, many are first and foremost managers of a service or a set of services. They are categorically not leaders and developers of an organisation. I reckon that’s about 65 to 70 per cent.”

This isn’t a recruitment problem alone, but rather reflects something structural: aged care has historically promoted people who understood the service deeply but were never equipped to build and develop an organisation inside a rapidly transforming market. When conditions tighten, those organisations are the first to find themselves in trouble.

Boards share responsibility here. The question is not only whether the CEO understands care delivery, it’s whether they can read a market, build a strategy, and make decisions at speed when the environment shifts underneath them.

Goldsworthy also warns against the assumption that importing leaders from banking, aviation or finance solves this. Of ten such appointments, he estimates roughly three integrate the business and service realities of aged care and stay. The other seven leave within two to five years.

What a viable position looks like from here

Goldsworthy doesn’t see this as a sector in terminal decline. He sees a bell curve nearing its trough and the early signals of a new one forming.

The providers building toward that next curve share two characteristics: genuine service specialisation that sits outside standard residential and home care models, and diversified funding that reduces exposure to any single government lever.

The third condition is harder to rely on: a shift in the government’s mode of engagement from transactional enforcement to genuine partnership with providers.

“The government’s first thoughts on aged care are legislation and regulation, funding and finance, monitoring and review. When in reality, right now, we need innovation, creativity, entrepreneurship, and a genuine partnership with providers.”

For boards and executives navigating this environment, the consolidation wave isn’t the strategic problem to solve. The leadership capability sitting inside the organisation – or absent from it – is.