The boost in federal government investment through the Aged Care Capital Assistance Program aims to bolster aged care beds in hotspots in NSW, South Australia and Western Australia, amid warnings of a coming crisis.
"We know we face a big challenge in increasing bed capacity across our health and aged care systems to meet growing demand," federal Health Minister Mark Butler said.
"That is why we're investing so strongly to increase supply as quickly as possible."
The additional funding round starts immediately in a bid to relieve pressures on hospitals, where some older Australians are languishing due to the lack of aged care beds in many parts of the nation.
Service providers wanting to access the funds have been told they will need to open the beds within two years if they take it.
The money will be released in two tranches, with the Illawarra region and Adelaide first, followed by the Hunter region and Perth.
The multimillion-dollar injection takes funding through the federal program to over $1 billion since 2022, with more money to come, Mr Butler said.
The national peak body for aged care, Ageing Australia, backed the deal but said it would not solve the problems facing the sector.
"We need thousands more beds than this fund will deliver," chief executive Tom Symondson said.
"We're reaching crisis point."
Over the next four decades, the number of people aged over 85 will triple, Mr Symondson said.
"We should be building about 10,000 beds a year, but last year we built only about 400," he said.
"Within the next few years, we will find ourselves in a situation where we literally cannot meet demand.
The Older Persons Advocacy Network said the boost in funding would help alleviate some of the delayed discharge pressures impacting hospitals, and offer older people, their families and support networks greater certainty and confidence.
"We know that prolonged stays in acute care often lead to cognitive decline and physical impairment, which is why extra funding is crucial," chief executive Craig Gear said.
The peak body for older Australians, COTA, said anything that provided older Australians with the care and support was a good thing.
"But more must be done to fix the growing pressures across Australia's health and aged care systems," chief executive Patricia Sparrow said.
