The federal government is looking at a ''fairly significant system change'' to the way aged care works, according to Aged Care Minister Senator Richard Colbeck.
"We are anticipating that, off the back of the Royal Commission (into Aged Care), so we are doing the preparatory work now," he said.
Senator Colbeck said it was obvious the sector needed to be financially viable.
"We are looking at a new funding model. That will make a material difference, and my expectation is a lot of these things will tie together when the Royal Commission reports."
He said he expected the report, which is due on February 26, would recommend changes for staffing.
"We're doing what we can to prepare so we can respond as quickly as possible. We don't want to preempt what they say."
However Respect Aged Care CEO Jason Binder said he didn't think the government needed to wait until the Royal Commission report came out.
"It would knock my confidence around a bit if the budget is released next week, and there is no significant signal that money will be spent on aged care.
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"We know the sector is underfunded.
"We know from bench marking that more than 60 percent (of facilities) are making a loss.
"We don't need to be waiting for the report to improve the funding.
"If the government is serious about it, they will put their money where their mouth is."
Mr Binder, who oversees 12 aged care facilities, said there were signs in the budget that the government might act on the Royal Commission's recommendations on funding.
"We have a lot of levers pulled in the right direction, but we don't have a lot of confidence to invest in the sector, like building a new aged care home.
"We're not in a precarious (financial) position. Other providers are. Some are really struggling.
"We're making enough to get by but that's not sustainable in the long term."
Mr Binder said if the federal government were to introduce a funding model tied to staff ratios - the number of staff to each resident - his organisation would welcome that.
"We like having a staff ratio. We support that."
Without laws on staff ratios, public confidence could get a knock, he said. "It's not a transparent enough process at the moment."