How does the Budget stack up for hospitals?

Tonight’s Federal Budget has locked in the $8.5 billion investments in Medicare, yet without significant reforms both public and private hospitals remain on the brink of disaster.

The Australian Medical Association (AMA) warns that the private health sector is in freefall – marked by hospital closures, contract disputes, and a mass exodus of policyholders ditching or downgrading their coverage due to skyrocketing premiums.

“We are concerned these issues will only get worse and are calling for an independent private health authority to oversee urgent reforms and ensure the sector is meeting the expectations of the community,” AMA President Dr Danielle McMullen said.

Catholic Health Australia (CHA) cautiously welcomed the government’s tougher stance on private health insurers, with a commitment to regulatory intervention if payout rates don’t improve.

“We commend the government’s determination that these regulatory measures come at no cost to taxpayers. However, we reiterate our call for deeper structural reforms to ensure the sustainability of the private health sector,” CHA CEO Jason Kara stated.

“Long-term viability of private health care necessitates the implementation of reforms such as the establishment of a National Private Price, addressing payment delays, reducing administrative burdens, and sustainably funding innovative care models like hospital-in-the-home.”

The government’s one-off funding deal for public hospitals in 2025-26 offers a headline-grabbing 12% increase, yet the real numbers tell a different story.

The national efficient price (NEP) has been set at $7,258 – more than 12% higher than last year’s $6,465. But after statistical adjustments, the real increase boils down to just 5.9% – barely enough to keep pace with population growth and ageing. In other words, the “big boost” for hospitals may be more illusion than reality.

Dr McMullen added, “While the recent investment from the federal government and action to address issues in some states and territories is welcome; the delay to a new National Health Reform Agreement (NHRA) was disappointing. The federal government’s promised investment, originally estimated at $13 billion, into our public hospitals is little more than a nice idea if states and territories fail to reach an agreement with the federal government.

“The need for a new fit-for-purpose agreement has never been greater – for both doctors and their patients.”

A deep dive into the Budget reveals that only two components of the health portfolio – the MBS and public hospital funding – are growing at a rate sufficient to keep pace with inflation and population growth.

The Budget has also remained silent on how Australia will deal with climate change and its ongoing impact on people’s health. Our nation still lacks a plan for managing the health impacts of climate change and the rapid rise of artificial intelligence (AI) which are reshaping how healthcare is delivered.

Meanwhile, the Grattan Institute has outlined health reforms that should be tackled by whichever party wins the 2025 Federal Election. Will the next government have the courage to act on these reforms?

In reimagining healthcare across the entire patient journey, Health Industry Hub^TM is the only one-stop-hub uniting the diversity of the Pharma, MedTech, Diagnostics & Biotech sectors to inspire meaningful change.

The Health Industry Hub^TM content is copyright protected. Access is available under individual user licenses. Please click here to subscribe and visit T&Cs here.