We knew this was coming: Australia’s aged-care bed gap was forecast years ago

Australia’s aged-care system isn’t short of warnings; it’s short of beds.

The headlines about older Australians stuck in acute wards are grim but predictable. Health ministers say almost 2,500 older people are medically ready to leave the hospital yet can’t, because an aged-care place isn’t available. Recent analysis suggests “stranded” patients now occupy up to one in ten public hospital beds nationally. That is not a hospital problem; it is a capacity problem that aged care and health share.

The ratio that quietly set us up for scarcity

For decades, Canberra managed supply using the Aged Care Provision Ratio (ACPR), the number of subsidised places per 1,000 people aged 70+. Historically, policy anchored residential provision at around 78 places per 1,000. In May 2023, a temporary setting of 60.1 per 1,000 was introduced, effectively resetting expectations downward during reform.

What does the system actually deliver today? As at 30 June 2024, Australia had 227,465 operational residential places, equating to 68.8 places per 1,000 people aged 70+. That sounds close to the “old” target – until you do the math. On that same 70+ population, meeting 78/1,000 would require about 30,000 more beds than exist — roughly the capacity of dozens of mid-sized facilities nationwide (author’s calculation from AIHW ratios and place counts).

In other words, even before demand spikes later this decade, we’re already ~30k places short versus the planning benchmark the sector used for years.

Projections then vs. reality now

Five to ten years ago, planners knew two things with near-certainty: (1) the 70+ and 85+ cohorts would surge, and (2) length of stay would concentrate in higher-acuity, higher-cost profiles. Research has repeatedly flagged that virtually all regions would see growth in older populations and especially in the 85+ share of the 70+ cohort, meaning higher residential care intensity unless alternatives scaled commensurately.

Yet the national stock today is what it is: ~227k residential places in 2024, with a national provision ratio that has slipped below historic norms. The policy dial moving from 78 to a temporary 60.1 per 1,000 signalled, intentionally or not, that public capital for new bricks-and-mortar capacity would not keep pace with demographic momentum.

The inevitable hospital spillover

The consequence is the “exit block” now choking emergency departments and planned surgery lists. States report thousands of bed-days lost each month to delayed discharges for older people awaiting care placements, with NSW alone citing more than 58,000 hospital bed-days recently consumed by patients past their discharge date. Nationally, ministers have labelled it a $1 billion problem and a crisis requiring urgent action.

None of that should surprise anyone who watched the provision ratio drift and capital settings stagnate while reform energy went elsewhere.

What we funded instead

Australia hasn’t been idle: the reform agenda has rightly targeted safety, transparency, workforce uplift and consumer choice. But in a world of finite dollars, every dollar not directed to core capacity widens the access gap. The 2023–24 sector financial report details a system still under strain and mid-transition, with providers navigating uplifted standards and structural cost pressures that complicate new builds and refurbishments. Meanwhile, discrete grants and pilots, worthy as some may be, do not add the tens of thousands of permanent, operational places that demography demands.

A practical reframing for 2026–2030

Leaders in government and industry need a blunt, shared metric: beds per 1,000 (70+) and the absolute gap to target. Then tie funding, planning approvals and capital instruments directly to closing that gap region by region.

Here’s what that looks like:

1. Re-establish a transparent national capacity target
   Publish an updated ACPR for 2026–2030 that reflects real demand (case-mix, acuity, dementia prevalence) rather than fiscal convenience. If 78/1,000 is no longer the right number, say so and justify it with modelling. If it is, budget for it and show the shortfall each year relative to that target.
2. Turn on scalable capital
   Use a mix of low-cost public lending, availability-style payments for regional builds, and streamlined planning approvals for refurbishments that add net beds. Tie instruments to delivery milestones and regional need indices, not generic grants.
3. Make discharge capacity a joint KPI
   Adopt a shared Commonwealth-state KPI: delayed discharges due to aged-care placement. Publish monthly data and fund “surge” packages in hotspots where stranded patients exceed thresholds (the same way we fund elective surgery blitzes). When up to 10% of public beds hold stranded patients, that is a system KPI failure, not a hospital operations failure.
4. Stabilise provider economics to unlock builds
   Capital won’t flow into new supply if operating margins are structurally negative. Align pricing, indexation and acuity-based funding so that new beds are financeable, then monitor the build pipeline as closely as we track staffing minutes.
5. Create a regional “last-mile” pool
   Fund flexible step-down capacity (short-stay transitional places) co-located with hospitals in regions where placement delays are chronic. This reduces length-of-stay penalties while permanent capacity is built.

The current situation is not coming as a surprise; we are suffering from predictable under-capacity. The data show the story: provision ratios eased, stock growth lagged, and now hospitals are carrying the overflow at great human and financial cost. If we want a different headline in 2027, we need an explicit national capacity target, capital that builds real beds, and joint accountability for discharge flow.

Until then, older Australians will keep waiting in the wrong beds because we didn’t build enough of the right ones.