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Australia’s healthcare sector continues to face familiar pressures—but many are growing in scale, complexity and urgency. From rising hospital admissions to ongoing workforce challenges and digital disruption, the landscape is shifting in ways that demands a more deliberate response.
As this article is being written, recent developments in the Middle East are reinforcing how geopolitical shocks can rapidly compound existing pressures on health systems.
As Australia’s health services enter FY27, it’s critical to reflect on the past year’s lessons and shape your strategy to tackle the evolving challenges and opportunities ahead. With rising pressures and reforms continuing to reshape the sector, FY27 is expected to test healthcare providers, policymakers, and investors—but those ready to act decisively will shape a healthier future.
Below, we reflect on FY26 and explore 10 sector dynamics to watch—and act on—in FY27.
FY26 in perspective
10 sector dynamics to watch—and act on —in FY27
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 and funding reforms accelerate and reshape expectations—prepare now
Since 1 November 2025, aged care providers have been 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 continue to support providers as they transition to the new framework.
The Aged Care Act also sees the introduction of Financial and Prudential standards that set up the minimum requirements and expectations for financial and prudential management, liquidity and investments.
What you can do: Understand what has changed and how it affects your operations. Ensure documentation is consistent and accessible across your organisation to avoid duplication during assessments. Keep frontline teams informed and the resources available to help them adapt and consider your governance, monitoring and oversights to support changes.
2. Private hospitals will continue to face financial pressures and increased competition from new entrants to market—stay agile
In FY27, the private hospital sector in Australia faces ongoing financial pressures from rising costs, driving a focus on productivity and profitability. Integration of AI into clinical and operational workflows will increase, despite challenges around compliance with new regulatory frameworks addressing data privacy, algorithmic transparency, and bias mitigation.
The sector continues to evolve following a FY26 trend of fewer private hospitals and smaller, doctor-owned day surgeries, alongside a growing shift towards value-based care that emphasises patient outcomes. Hospitals are transforming their models of care to deliver significantly more treatment at home, profoundly impacting workforce requirements, technology adoption, and physical infrastructure.
This shift, combined with lower barriers of entry, is encouraging more new market entrants and the growth of alternative acute care providers. Digital health innovations like telehealth, digital therapeutics, and wearable devices further enable chronic disease management outside hospital settings. Additionally, global supply chain disruptions have prompted providers to explore local sourcing and supply chain digitisation to protect margins.
What you can do: Drive structural productivity improvements through end-to-end operating model redesign rather than ad-hoc cost cutting. Embed AI safely by targeting high-value use cases and establishing robust governance aligned with emerging regulations. Strategically decide where to compete, partner, or exit in this evolving landscape, securing defensible advantages through clinical quality, outcome focus, and market partnerships.
3. Workforce pressures will intensify
Expect continuing scrutiny of wage compliance—strengthen payroll governance
Wage, leave and superannuation compliance will continue to be a priority, with particular areas of focus including the payment of annual salaries to award covered employees (due to a Federal Court decision issued in September 2025) and Payday Super (which—from 1 July 2026—changes how employers calculate and when they pay superannuation guarantee).
Wage reform that has been flagged includes the creation of a national portable entitlements scheme for insecure workers.
What you can do: Strengthen payroll governance, including clarifying roles and accountabilities across HR, legal/employee relations, workforce management, and payroll functions. Confirm interpretation and application of legislative, award and enterprise agreement obligations, and implement a system of recurring, independent review of payroll compliance. Make sure payroll systems are fit for purpose and integrated to minimise manual workarounds. Assess the adequacy of the current approach to the payment of annual salaries to award covered employees. Review Superannuation Guarantee processes and readiness for transition to Payday Super.
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 FY27. 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 FY27, 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 there is greater focus on safety, welfare and culture. Employers are required to fulfill the federal positive duty in addition to state-based regulations on psychosocial hazards.
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 2025 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, which took effect on 1 December 2025, further this shift, and join existing frameworks in other states and reinforce the national focus on psychosocial safety at work. In considering employee psychological health and safety, recent regulatory focus has established precedents for emerging psychosocial risks surrounding change management and employee redundancy programs.
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 a comprehensive set of 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.
PwC Australia will be sharing an upcoming series of articles on psychosocial risk. Sign up to receive these articles when they are released.
4. Modern identity and access controls will strengthen cybersecurity
The healthcare sector remained a prime target for cybercriminals in 2025, with 488 organisations globally (13 in Australia) posted on ransomware leak sites, a rise from 370 organisations in 2024. When viewed as a %, this increase of 38% is lower than all sectors increase of 58%. Healthcare was the 6th most targeted sector in 2025, down from the 4th in 2024.
Globally, healthcare providers are adopting strategies to mitigate cyber risk, including modernising identity and access controls. Replacing shared passwords and ad hoc logins with more secure, swipe-card-based access will provide a net security gain.
What you can do: Modernise identity and access management by implementing swipe card-based controls to reduce shared credentials and improve auditability. This approach strengthens security by discouraging weak or shared passwords, enabling stronger authentication methods, preventing unattended access, and aligning permissions with staff roles—thereby limiting privilege sprawl and reducing ransomware risks.
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 and associated compliance 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, and compliance reporting. 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, which came into effect on 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 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 FY27, 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 Alliance for Artificial Intelligence in Healthcare (AAAIH), The Australian Digital Health Agency (ADHA) are moving to provide clearer guidance—but this evolving framework will take time to mature.
We have recently observed growing concerns with AI tools used for clinical documentation. This emphasises the increasing need for clear oversight and governance in AI implementation and ongoing usage. Furthermore, PwC’s 29th Global CEO Survey reveals that most CEOs in Australia report that their AI efforts aren't delivering value. This issue may not stem from a lack of a clear business case, but rather from challenges in implementing AI correctly with the appropriate enablers.
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 FY27, 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: Understand what assurance activities you have across your organisation to support meeting obligations, and coordinate and integrate assurance. 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 are poised for ongoing growth, driven by an ageing population, rising chronic disease and increased healthcare spending. Access and affordability are expected to remain key topics in 2026, influencing the entire healthcare ecosystem. The Australian Government’s decision to reduce PBS co-payments to $25 from 1 January 2026, aims to make medications more affordable, potentially leading to increased sales volumes across the sector. Pricing & reimbursement pressures, as well as healthcare distributor & provider consolidation are likely to enhance affordability, but could impact Pharma and MedTech margins, shaping how global players approach the Australian market—particularly concerning access to novel medicines, including gene therapies, nuclear medicines, and theranostics.
Globally, policy shifts such as US tariff uncertainty and the Most Favored Nation pricing rule continue to reshape manufacturing decisions and threaten to disrupt global pricing strategies. At the same time, personalised medicines and advanced therapies are set to play a significant role in pharma pipelines, creating opportunities for biotech and diagnostics businesses with biomarker-driven discovery and genomics capabilities.
On the R&D front, Australia is expected to maintain an important global role in early-stage clinical research, where Australia’s clinical strength, regulatory regime and trial speed provide an enduring advantage. However, there is no room for complacency; with continued support required from policymakers, and ongoing investments in complementary manufacturing 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 and mitigate margin pressures.
Shape a healthier future—starting now
The pressures facing health and aged care are growing—but so are the opportunities to respond with impact. FY27 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.
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