JOINT POSITION: Strengthening the sustainability of Australia’s private hospital system

Background

Australia’s health system is built on an integrated public–private model, in which public hospitals, private hospitals, and community-based services operate as interdependent components of a single national system. This mixed model has historically deliveredbroad access, high-quality care, and flexibility during periods of peak demand, while enabling governments to leverage private sector capacity to complement publicly funded services. That balance is now under significant strain.

Across both public and private sectors, hospitals are facing rising demand driven by population growth, ageing, increasing complexity of care, and the cumulative effects of deferred treatment during the COVID-19 pandemic. At the same time, workforce shortages are constraining capacity, increasing costs, and limiting hospitals’ ability to respond to demand even where physical infrastructure exists.

The pressures confronting the system are not confined to one sector. Public hospitals are experiencing sustained access block, emergency department overcrowding, ambulance ramping, and growing elective surgery backlogs. Private hospitals, which provide a substantial share of elective surgery and act as critical surge capacity for the public system, are facing escalating input costs, contracting pressures, and increasing financial fragility. When capacity or viability is lost in one part of the system, the effects are immediately felt across the other.

These challenges are occurring in a policy environment where funding, regulation and accountability are fragmented across multiple portfolios and levels of government. While responsibilities are shared, policy responses are often siloed, creating misaligned incentives and leaving individual sectors to absorb pressures generated elsewhere in the system. This fragmentation makes it increasingly difficult for hospitals to plan, invest and sustain services.

The risks of inaction are significant. Without coordinated Commonwealth leadership, Australia faces declining hospital capacity, worsening access and affordability, increased pressure on the public system, and erosion of the mixed public–private model that underpins health system resilience.