Hospital spending outstrips primary care - calls to shift the dial

Hospital spending in Australia reached $123.4 billion in 2024/25, up 4% from the previous year and continuing to grow faster than spending on primary healthcare and prevention, according to data from the Australian Institute of Health and Welfare (AIHW). 

In comparison, primary healthcare spending increased by 1.2% to $93 billion, mainly driven by higher spending on dental services, other health practitioner services and community health services.

The AIHW’s Health Expenditure Australia 2024/25 report, released in October, provided a detailed overview of health spending in Australia by area of spending, source of funding and trends over time.

AIHW spokesperson Geoff Callaghan said state and territory governments were now funding a larger share (30.8%) of Australia’s health system than at any point in the past decade, reflecting strong growth in public hospital spending.

Public hospital spending remained the largest component of health expenditure (42.4%).

RACGP WA Chair Dr Ramya Raman said the figures show Australia was still spending far more on treating illness than preventing it.

"Every dollar invested in general practice and preventive care helps keep people healthier, reduces pressure on hospitals and improves the sustainability of our health system," she said.

"We need to shift more investment into prevention and general practice if we're serious about tackling chronic disease and reducing long-term healthcare costs."

Dr Raman said general practice was the most cost-effective part of the health system.

"When patients can see their GP early and regularly, many health issues can be prevented, managed in the community, or treated before they require costly hospital care.

"If we want a sustainable health system, we need to strengthen investment in preventive care and general practice," she said.

Total spending on health goods and services increased by $9.6 billion to $290.7 billion in 2024/25, equivalent to $10,614 per person.

After adjusting for inflation, total health spending grew by 3.4%, outpacing population growth of 1.6% and resulting in the first increase in spending per person since 2021/22.

Mr Callaghan said average health spending increased by $185 per person, or 1.8%.

Health spending accounted for 16.8% of total government expenses, unchanged from 2023/24.

Governments funded 70% of total health expenditure, with the federal providing $113.9 billion and state and territory governments providing $89.6 billion.

Alongside this report, the AIHW released its latest analysis of Australia’s national health spending on disease and injuries.

In 2024/25 some $21.7 billion was spent on cancer, $18.4 billion on cardiovascular disease and $17.5 billion on musculoskeletal disorders. In total $195.1 billion was spent.

Dr Raman said these were conditions where prevention, early intervention and long-term management through general practice play a critical role.

"Evidence consistently shows that stronger investment in general practice and prevention delivers better health outcomes and reduces costs elsewhere in the system," she said.