Hospital funding growth outpaces primary care

A national report showing a dip in primary care expenditure while public hospital spending increased is a reminder of the health system gains that come with a well-funded primary care system, an expert says.
 
The new report by the Australian Institute of Health and Welfare (AIHW) explores how Australia’s $270.5 billion healthcare investment was divided during 2023–24.
 
The Health expenditure Australia 2023–24 report reveals that while health spending as a percentage of total government expenditure remained steady – decreasing marginally from 17.1% to 16.8% in 2023–24 – investment in primary healthcare spending fell by 0.5% to $89.1 billion compared to the previous year.
 
This was mainly attributed in the report to ‘lower government expenditure on public health such as COVID-19 vaccines and rapid antigen tests’.
 
At the same time, hospital expenditure increased by 1.2% to $113.8 billion, ‘driven by increased hospitalisations and patient admissions’.  
 
‘Over the period up to 2018–19, spending on hospitals has tended to increase faster than spending on primary healthcare (4.5% on average per year compared with 2.6%, in real terms),’ the AIHW report notes.
 
‘However, this appeared to shift during the pandemic (2019–20 to 2021–22), when spending on primary healthcare increased in real terms by 7.6% on average per year, more quickly than spending on hospital services at an average annual growth of 4.0%.
 
‘The two-year period from 2022–23 to 2023–24, spending on primary healthcare (including public health) decreased in real terms by 4%, while spending on hospitals increased by 2.9%.’
 
Associate Professor Rashmi Sharma, Chair of the RACGP Expert Committee – Funding and Health System Reform, said ‘investing in general practice is the smartest and most cost-effective way to improve access, reduce hospital demand, and address the growing burden of chronic disease’.
 
‘A well-funded primary care system would allow GPs to manage chronic conditions, mental health, and preventive care more effectively. This will keep people out of hospital and reduce the burden on tertiary care,’ she told newsGP.
 
‘We know that there is significant spending on diseases such as cardiovascular disease and cancer, and we know that preventive health measures in general practice can reduce the risk of these diseases.
 
‘As outlined in the RACGP’s Vision for general practice and a sustainable healthcare system, better support and investment in general practice will reduce the prevalence of low-urgency emergency presentations and preventable hospital admissions.
 
‘Lumos NSW data has shown practices who see their patients more often are associated with fewer ED [emergency department] presentations and hospital admissions than practices who see their patients less often.
 
‘Patients that attended a high-frequency servicing practice were 10% less likely to have an ED presentation and 12% less likely to have an unplanned hospital admission.’
 
Associate Professor Sharma added that the return on investment in primary care has the potential to deliver enormous cost savings.
 
‘The RACGP strongly believes that a well-funded primary care system is essential for the health and wellbeing of all Australians,’ she said.
 
‘For GPs, adequate funding supports longer consultations, multidisciplinary care, and practice viability. The RACGP has highlighted that consultations are becoming longer and more complex, especially for mental health and chronic disease, yet funding does not reflect the true cost of care.
 
‘The college has called for a 40% increase in funding for longer consultations and expanded support for multidisciplinary care teams.’
 
Two additional AIHW reports released alongside health expenditure data explore health spending by injury and disease, with the research released just days ahead of the launch of the Australian Government’s new $7.9 billion Medicare reforms to incentivise universal bulk billing.
 
The AIHW found that in 2023–24, of the $180.4 billion in health spending that could be directly attributed to disease and injury, the three highest-cost disease groups were cancer ($19.7 billion), cardiovascular diseases ($16.9 billion) and musculoskeletal disorders ($16.3 billion).  
 
Cancer also had the highest burden of disease in 2023–24 while mental health and substance abuse had the second highest burden but ranked seventh in terms of spending. 
 
Total health system spending attributable to potentially avoidable risk factors was $38 billion in 2023–24, with the top risk factor contributing to health spending being overweight and obesity at $7 billion. 
 
AIHW data also shows that of the $270.5 billion spent on health nationally in 2023–24, the Australian Government provided $106.2 billion, and state and territory governments spent $82 billion.  
 
An estimated 42.1% ($113.8 billion) had been spent on hospitals, 33% ($89.1 billion) on primary healthcare (including public health), 8.7% ($23.6 billion) on referred medical services, and the remaining 16.2% ($43.9 billion) on other services, research and capital spending.
 
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AIHW general practice funding health expenditure