Spending on hospitals

Public and private hospitals are funded from a range of sources, including the Australian Government, state and territory governments, private health insurance funds and out-of-pocket payments by individuals. Hospitals can vary greatly in terms of the types of services they provide and the patients they treat and their main source of funding along with other factors.

How much is spent on hospital care?

In 2019-20, hospitals accounted for 41% of all health expenditure—$83.5 billion of $202.5 billion. This was comprised of an estimated $35.9 billion (43%) funded by state and territory governments and an estimated $31.4 billion (38%) by the Australian Government (excluding Medicare Benefits Schedule (MBS) and some Pharmaceutical Benefits Scheme (PBS) spending that relates to services provided in hospitals and that have not historically been treated as hospital spending). The remaining $16.2 billion (19%) came from non-government sources (Figure 1).

Spending per person increased by an average of 3.1% per year between 2014–15 and 2019–20 after adjusting for inflation (4.2% for public hospital care and 1.3% for private hospital care).

The line chart shows the expenditure on public and private hospitals by the Australian Government, state and territory governments and non-government entities over the period of 2010–11 to 2019–20. Over this period, state and territory governments consistently spent the most on public hospitals whilst non-government entities consistently spent the most on private hospitals. In 2019–20, the Australian Government spent $26.9 billion and $4.6 billion on public and private hospitals respectively compared with state and territory governments who spent $34.9 billion and $1.1 billion respectively and non-government entities who spent $4.7 billion and $11.5 billion respectively.

Public hospitals

In 2019–20, $66.4 billion was spent on public hospitals in Australia by the Australian Government, state and territory governments, and non-government sources. State and territory governments, which have primary responsibility for administering public hospitals, contributed the most funding:

  • state and territory governments—$34.9 billion (56%)
  • Australian Government—$26.8 billion (40%) (not including payments made by the Australian Government as Medicare benefits associated with private patients)
  • non-government entities—$4.7 billion (7.0%) (including individuals and private health insurers).

Between 2009–10 and 2019–20, Australian Government expenditure on public hospitals increased 4.4% per year on average and state and territory expenditure increased 3.4% per year on average.

Private hospitals

In 2019–20, 71% ($11.5 billion) of the estimated $17.1 billion spent on private hospitals was funded by the non-government sector:

  • private health insurance providers—$8.6 billion (50%)
  • Australian Government—$4.5 billion (27%)
  • individuals—$1.5 billion (8.9%)
  • other non-government—$1.4 billion (8.2%)
  • state and territory governments—$1.1 billion (6.2%).

Between 2009–10 and 2019–20, total funding increased by an average of 3.0% each year. The proportion of funding provided by the Australian Government increased 0.6% and funding from state and territory governments increased, on average, 8.1%. This may have been, at least in part, a result of the introduction of means testing of the private health insurance premium rebate in 2012, which shifted funding from the Australian Government to private health insurance providers (AIHW 2019).

Where do I go for more information?

Health Expenditure Australia 2019-20, About - Australian Institute of Health and Welfare