The 10% problem: why Support at Home's pooled care management model is quietly redrawing competitive lines in home care

Most of the commentary on Support at Home has focused on the headline transition — the new classifications, the participant rights framework, the end of the waiting list. What's received far less attention is a structural change embedded in the funding architecture that will, over the next two to three years, meaningfully separate operators who scaled deliberately from those who grew opportunistically.

That change is the 10% pooled care management model.

What the model actually does

Under the old Home Care Packages program, care management was a line item. Providers could charge up to 20% of the government subsidy for care management and up to 15% for package management. The sector took full advantage: across Q1 2025-26, the median care management charge sat at 17% across all HCP levels, and package management at 12%. That's up to 29 cents of every subsidy dollar flowing into administrative functions — before a single hour of direct care was delivered.

The government noticed. The Financial Report on the Australian Aged Care Sector (FRAACS) data from 2020–21 to 2023–24 shows that while providers were charging 16.5–18% of revenue for care management, their actual cost of delivering it was between 10.5–11%. The department's own quarterly reporting has flagged that providers appeared to be using care management margins to cross-subsidise losses elsewhere in their P&Ls.

Support at Home closes that gap.

From 1 November 2025, package management ceased to exist as a separate funding stream. All administrative costs must be absorbed into service pricing. And care management moved to a fixed pooled model: 10% of each participant's quarterly budget is automatically deducted and credited upfront to a provider's care management account at the start of each quarter.

That 10% is pooled across all participants within a service delivery branch. It cannot be used for anything except care management. Providers cannot charge separate administration or travel fees, and cannot claim those costs from the care management account.

For an operator running 50 participants at an average Classification 4 quarterly budget, that might be $40,000–$60,000 of care management funding per quarter. For an operator running 5,000 participants across multiple branches, it scales commensurately — and so do the dynamics.

The cash flow shift that most operators haven't fully priced in

The most immediately consequential change for smaller providers is not the margin compression — it's the timing and structure of cash flow.

Under the old model, providers earned care management revenue progressively as they delivered services and submitted claims. The new model front-loads the recognition of care management funding: it is credited to the provider's care management account on the first day of the quarter. But here's the constraint — that funding can only be claimed as care management services are actually delivered.

Providers that underdeliver care management in a quarter can roll unspent funds forward within the financial year without limit. But at year-end, the maximum carryover to the following financial year is capped at the equivalent of one quarter's allocation (the Q4 base amount). Any excess is returned to government.

This creates a use-it-or-lose-it discipline that the old model never imposed. Providers with high participant churn, inconsistent care coordination staffing, or incomplete care planning processes will find themselves returning funds at year-end — not because they failed to charge, but because they failed to deliver and document.

Large operators with stable, tenured workforces and established care management cadences will absorb this naturally. Their care partners are already in a rhythm of monthly minimum contacts, care plan reviews, and quarterly budget conversations. The 10% flows in, gets deployed, and carries forward cleanly within the year's cap.

For smaller operators whose care management has historically been reactive rather than systematic — triggered by crises rather than scheduled touchpoints — the new model demands a different operating discipline that many are not yet running.

Where scale becomes structurally advantageous

The pooling mechanism, properly understood, is a form of cross-subsidy within a provider's own cohort — and it disproportionately benefits operators with large, diverse participant populations.

The Support at Home program manual is explicit on this: the care management account is held at the service delivery branch level, and funding from all participants within that branch is pooled together. A provider can apply intensive care management resources to a participant going through hospitalisation or a care needs change — like the case study in the program manual of Graham, whose post-hospitalisation transition required liaising with hospital staff and attending a case conference — without needing to draw on that individual's personal budget allocation. The cost is absorbed across the pool.

For a provider with 20 participants in a branch, an unexpectedly complex month for two or three participants creates real cost pressure on the pool. For a provider with 400 participants across the same branch footprint, those peaks are averaged out. The law of large numbers works in their favour.

This is a structural efficiency that does not accrue to small providers no matter how well-run they are. It is a function of scale, not quality.

The implication for competitive positioning is significant. At Q1 2025-26 — the final quarter before the new Act took effect — there were 939 registered home care providers. The for-profit segment ran at 79.9% profitability (NPBT), while not-for-profits sat at 71.3%. Sector NPBT margin was 7.1% on $2.2 billion of revenue. That spread will widen under the new model, and it will widen along the fault line of participant scale.

The participant acquisition premium just increased

Here is a consequence that has not yet fully entered the operator conversation: under the pooled model, every incremental participant added to a service delivery branch improves that branch's care management economics — not just marginally, but with compounding benefit.

Each new participant brings 10% of their quarterly budget into the pool. That additional funding increases the cushion available for complex cases elsewhere in the cohort. The fixed overhead of a care partner's time spreads across a larger base. The administrative infrastructure for monthly contact, care planning, and budget review does not scale linearly with participant count.

This creates a genuine economic incentive to grow market share within geographic service delivery branches — something the old HCP model, where revenue was largely per-package-per-recipient, did not produce in the same way. Under the old model, growth was volume growth. Under the new model, growth within a branch is also a structural margin improvement.

For investors and acquirers evaluating home care assets, this should be changing how they think about geographic concentration of participant base, not just total participant count. A provider with 800 participants spread thinly across 20 branches has fundamentally different care management economics than one with 800 participants concentrated in 5 branches — even if total revenue is identical.

The hidden cost of participant churn

The funding mechanics also reveal a risk that scale providers can manage but smaller providers cannot easily absorb: mid-quarter participant movement.

Under the Support at Home rules, new participants who join part way through a quarter do not receive care management funding in the care management account until the following quarter. The calculation is made on the last day of the previous quarter based on connected participants.

For a provider gaining 30 new participants in the first month of a quarter, that represents a full quarter of care management obligation — including the mandatory monthly minimum contact of at least 15 minutes, care plan setup, service agreement establishment, and budget review — with no corresponding care management funding until the following quarter begins.

A large operator with substantial existing care management headroom can absorb this across the pool. For a small provider whose care management account is already tightly matched to their care partner staffing costs, new participant onboarding in months 1 or 2 of a quarter is effectively a subsidised cost. The commercial logic of rapid growth actually deteriorates for providers operating at low scale — the opposite of how the old per-package model worked.

What this means for operators, investors, and the shape of the sector

The Support at Home care management model is, at its core, a policy mechanism designed to shift provider incentives away from administrative extraction and toward care delivery. The government achieved this by fixing the care management revenue at 10%, removing package management entirely, and preventing the use of pooled funds for anything except care management activities.

But as with most well-designed policy mechanisms, it produces unintended structural effects. The pooling architecture, the upfront quarterly allocation, the cross-quarter rollover constraints, and the mid-quarter participant timing rules all combine to create an operating environment where scale is not just commercially attractive — it is mechanically advantageous.

For operators considering their positioning, the immediate question is whether their care management delivery model is genuinely systematised or still relationship-dependent. Monthly minimum contact requirements, care plan review disciplines, budget management processes, and the ability to absorb complex cases from the pool without diverting resources from other participants — these are operational capabilities, not just compliance activities.

For investors, the question is whether the assets being evaluated have participant concentration sufficient to benefit from the pooling model, or whether their geographic and branch spread will generate chronic care management cost pressure relative to the 10% funding allocation.

And for the sector as a whole, the question is what 939 providers looks like in three years — when the operators who built scale within branches are running meaningfully better economics than those who didn't.

The answer is probably: fewer.