{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.title}}
{{item.text}}
Australia’s healthcare sector continues to face familiar pressures – but many are growing in scale, complexity and urgency. The landscape is shifting in ways that demand a more deliberate response.
Reflecting on the 2024-25 financial year, we’ve identified 10 sector dynamics to watch – and act on – in the year ahead. Use them to shape your business model so you’re ready for what’s next.
The 2024-25 financial year: Busy times
Predictions: 10 sector dynamics to watch – and act on – in FY26
With more change on the horizon, these 10 sector dynamics highlight where the sector is heading and what you can do to stay ahead.
1. Strengthened aged care standards will raise expectations – prepare early
From 1 November 2025, aged care providers will be held to higher compliance expectations under strengthened Quality Standards. They provide more detail on expectations and outcomes for each standard alongside a refreshed regulatory approach. The compliance processes introduced with the 2019 standards will continue to support providers as they transition to the new framework.
What you can do: Understand what’s changing and how it affects your operations. Ensure documentation is consistent and accessible across your organisation to avoid duplication during assessments. Keep frontline teams informed about the changes and the resources available to help them adapt.
2. Expect continued margin pressure in private hospitals – improve productivity
Private hospitals are likely to face ongoing margin pressure as rising costs continue to outpace revenue growth. In response, providers may accelerate efforts to improve productivity, with more radical options such as service consolidation, integration or divestment being considered to maintain viability.
What you can do: Focus on lifting productivity across clinical and back-office areas by rethinking how care is delivered and adopting effective AI tools. Consider whether strategic partnerships or merger and acquisition opportunities could support more sustainable growth and resilience in the year ahead.
3. Workforce pressures will intensify
Expect tighter scrutiny of wage compliance – strengthen payroll processes
Wage compliance will continue to be a topic of concern, particularly around Long Service Leave (due to increased audit activity by state regulators) and the Superannuation Guarantee (given the proposed introduction from July 2026 of the Payday Super regime which will require Superannuation Guarantee contributions to be paid within seven days of each payday – replacing the current quarterly model).
Wage reform that has been flagged includes the creation of a national portable entitlements scheme for insecure workers and legislation to protect penalty rates.
What you can do: Make sure payroll systems are up to date and minimise reliance on manual workarounds. Review Superannuation Guarantee remittance data to identify and reduce failed transactions. Ensure strong controls are in place for key risk areas and use internal audit findings to guide a clear payroll compliance action plan.
Anticipate ongoing workforce shortages – invest in attraction and retention
Workforce shortages, particularly in rural and regional health services and aged care, will remain a key challenge in FY26. To tackle these issues, the federal government launched the Workforce Incentives Program offering annual payments to skilled doctors in rural areas, and South Australia launched the Single Employer Model to improve job stability for GP and rural registrars. The 2024-25 Federal Budget allocated $2.2 billion to aged care, with a significant portion focused on workforce retention, including $88.4 million for recruitment. Policy adjustments, such as expanding the role of enrolled nurses, aims to ease nursing shortfalls. While these measures are promising, their impact will take time to be felt.
What you can do: Address nursing shortages with a clear workforce strategy that combines competitive pay, professional development and smarter use of data. Support career progression by investing in training and upskilling programs. Reassess your current staffing model to ensure it aligns with evolving care standards and quality metrics. And use workforce data to guide planning, enhance care delivery and strengthen compliance.
Sexual assault and harassment risks will come under greater scrutiny – strengthen prevention and culture
In FY26, compliance with the positive duty to prevent sexual harassment, sex-based discrimination and related misconduct will face increased scrutiny. Health and aged care environments unfortunately carry heightened risk due to high-pressure conditions, hierarchical workplace structures and regular exposure to third parties, particularly patients. Employers will need to take a more proactive and structured approach to prevention as regulators and the public place greater focus on safety, welfare and culture.
What you can do: Conduct a positive duty risk assessment to build a clear picture of the risks your workforce faces and to inform targeted prevention strategies. Support this with capability building and a clear action plan. Consider an independent review of workplace behaviours and culture to understand employee experience and assess whether your current policies, processes and leadership approaches are supporting a safe and respectful environment.
Gender pay reform will reshape the nurse workforce – prioritise DEI and retention
Award rate increases for nurses, up to 25% for some, came into effect in March following the Fair Work Commission’s gender undervaluation review. This significant shift gives nurses greater flexibility in choosing employers and may intensify existing shortages across the health and aged care sectors. As demand for skilled nurses grows, organisations that fail to prioritise equity, culture and retention risk losing experienced talent to more attractive employers.
What you can do: Review your Diversity, Equality and Inclusion (DEI) and retention strategies to ensure they align with workforce expectations. Conduct a gender-focused competitor analysis to benchmark against leading employers and identify opportunities to strengthen your offering, across policy and culture.
Psychosocial risks in the workplace will come under increased regulatory scrutiny – get on the front foot
There is growing recognition of psychosocial risks in the workplace as a critical factor affecting mental health. As work continues to shape the daily lives of Australians, expectations will rise for employers to proactively manage psychological health and safety. New regulations in Victoria, expected to take effect from 1 December 2025, will further this shift, joining existing frameworks in other states and reinforcing the national focus on psychosocial safety at work.
What you can do: Start by conducting comprehensive risk assessments to identify foreseeable risks and ensure workers are not – so far as reasonably practicable – exposed to psychological safety hazards. Engage staff in identifying risks and designing prevention strategies, using relevant codes of practice to guide consultation. Build robust governance, reporting and monitoring systems to track risks and controls over time and ensure alignment with regulatory requirements and director obligations.
4. Cyber threats will likely escalate – strengthen your defences and data controls
The healthcare sector is a prime target for cybercriminals. In 2024, 370 organisations globally were posted on ransomware leak sites and healthcare ranked as the fourth most targeted sector. PwC analysis found that 66% of attacks were driven by cybercrime, 31% by espionage and 3% by sabotage.
High-profile attacks – including incidents at Change Healthcare in the US (ransomed for US$22 million), MediSecure in Australia (compromised the data of nearly 13 million people) and Synnovis in the UK (400GB of private data lost from NHS England) – exposed the scale of disruption. With growing regulatory attention and increasingly sophisticated threat actors, cyber risk will remain a critical concern for healthcare providers in FY26.
What you can do: Continue to limit access to medical devices and their connected networks – and regularly test the controls that manage this access. Understand what medical and patient data you hold, assess its sensitivity and reduce unnecessary data – particularly unstructured data – while strengthening controls for structured data. At a minimum, continue to implement and refine core protections such as the Essential Eight to stay ahead of evolving threats.
5. Financial pressure will drive structural change – strengthen your sustainability strategy
Ongoing economic challenges will force many private health and aged care providers to sharpen their focus on financial sustainability. Rising costs – such as those prompting the private hospital financial viability health check – along with regulatory shifts, workforce constraints and changing consumer expectations, will continue to test sector resilience.
What you can do: Build a more resilient fiscal framework by investing in adaptive technologies – including AI – and care models that improve service quality while reducing cost to serve. Explore opportunities to diversify revenue streams and evolve business models to better meet future patient and resident needs – and to be competitive in the future marketplace where new and larger organisations will operate. Strengthen financial sustainability by applying technology to critical support functions – including revenue cycle management, workforce optimisation and rostering. A financially sustainable future will depend on operational efficiency, care quality and digital maturity working together.
6. Financial fraud exposure may increase
The new Aged Care Act, effective from 1 November 2025, broadens the protections for whistleblowers to make sure older people, people who are close to them, and aged care workers can report information without fear that they will be punished or treated unfairly. With these protections extended and reporting pathways opened outside the organisation, providers may see an increase in disclosures, including of financial fraud. This shift could expose existing fraud schemes and reduce providers’ ability to control how reports are handled or investigated.
What you can do: Ensure your internal reporting channels are well-publicised, easy to access and trusted – so you're the first to know when issues arise. This visibility can act as a deterrent, increasing perceived risk for potential offenders. Strengthen your detection mechanisms and ensure adequate resources are in place to investigate concerns and protect whistleblowers throughout the process.
7. AI adoption will accelerate – build strategy, guardrails and capability
In FY26, the uptake of AI across the health sector will reshape care delivery, operations and administration. AI is already being piloted in areas like clinical diagnosis, treatment planning and back-office efficiency – and its integration into end-to-end business processes will only deepen. However, clinician and staff adoption is outpacing many organisations’ ability to provide clear governance, increasing the risk of inconsistent or unsafe implementation. Meanwhile, regulators such as the Therapeutic Goods Administration (TGA) and national bodies like Australian for AI in Healthcare (AAAIH) and The Australian Digital Health Agency (ADHA) are moving to provide clearer guidance – but this evolving framework will take time to mature.
What you can do: Develop a structured AI strategy with clear policies, governance and training. Start with a maturity assessment to understand readiness across leadership and staff. Separate low-risk, decentralised use from high-risk applications that need stronger oversight. Invest in AI literacy to build fluency across teams – and embed AI capabilities into business processes rather than treating them as standalone tools. A clear, controlled approach will help your organisation harness AI responsibly – improving patient outcomes, staff productivity and financial performance.
8. Healthcare mergers and acquisitions will stay active – focus on resilience and innovation
While the healthcare M&A market in Australia has slowed compared to previous years, we expect activity to remain steady as investors refocus on areas critical to the sector’s long-term evolution. In this context, health technology emerges as a key area of interest with its ability to address inefficiencies and meet care demands. Investors are particularly drawn to digital platforms to alleviate pressures on traditional healthcare systems, along with subsectors showing greater margin resilience (including an ability to influence price and cost outcomes). Both HealthTech and MedTech companies have become attractive targets – they’re asset light and come with reduced clinical and operating risk.
What you can do: Investors can focus on resilient healthcare subsectors – especially those aligned with preventative health, digital platforms and scalable service models. Explore assets with the potential to improve access, reduce costs and deliver value through technology or care innovation. Diversify portfolios to balance risk and remain adaptable to changing market conditions, care models and regulatory expectations. Staying close to emerging trends in healthcare delivery and reform will be key to making informed, future-ready investment decisions.
9. Director obligations will expand – strengthen oversight and assurance
The responsibilities of directors in healthcare organisations are evolving, with increased emphasis on understanding systems of control and ensuring organisational obligations are met. In FY26, directors will face heightened expectations to demonstrate clear oversight across critical areas, including financial stewardship, risk management, care delivery and incident response. Key changes in obligations include Work Health Safety, Sexual Assault and Sexual Harassment and attestation requirements under the new Aged Care Act.
What you can do: Use internal audit and second line risk functions to clarify organisational obligations and ensure robust oversight mechanisms are in place. Establish clear reporting lines, strengthen controls and embed regular review processes to support ongoing compliance and informed board-level decision-making.
10. Pharma and MedTech will evolve under pricing and policy pressure – future-proof your strategy
Australia’s pharmaceutical and MedTech sectors will continue to grow, driven by an ageing population, rising chronic disease and increased healthcare spending. Meanwhile, the Australian Government’s decision to reduce PBS co-payments to $25 from 2026, will make medications more affordable, which could lead to increased sales volumes across the sector.
Globally, policy shifts – including US tariff uncertainty and the Most Favored Nation pricing rule – are reshaping manufacturing decisions and threatening to upend global pricing strategies. At the same time, personalised medicines and advanced therapies will play a significant role in pharma pipelines, creating opportunities for biotech and diagnostics businesses with biomarker-driven discovery and genomics capabilities.
What you can do: Pharmaceuticals need to build resilience into R&D, supply chain and commercial strategies to manage international policy risks. Strengthen capabilities to support more complex medicine development and distribution. Optimise local sales models to serve smaller, more targeted patient populations. Integrate AI and digital tools across the value chain, from drug discovery to commercial delivery, to remain competitive in a fast-changing market.
Shape a healthier future – starting now
The pressures facing health and aged care are growing – but so are the opportunities to respond with impact. The next financial year will reward those who move decisively.
We can help you shape the strategies and actions needed to succeed – and build a business model that delivers lasting value for your organisation and the people you serve.
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Contact us
Follow PwC Australia
