Rural healthcare in crisis: New report reveals $8.35b funding gap

A comprehensive new report has revealed healthcare services in rural and remote parts of the country are missing out on billions of dollars in funding every year, leading to poorer access to services and worsening health outcomes.  
 
The Forgotten Health Spend: A Report on the Expenditure Deficit in Rural Australia, commissioned by the National Rural Health Alliance and released this week, found a funding shortfall of $8.35 billion in 2023–24 compared to urban areas, equating to $1090.47 less on average being spent per person.
 
This gap has increased by $1.6 billion since 2020–21.
 
The shortfall is most pronounced across primary care, hospitals, aged care, pharmaceuticals, and National Disability Insurance Scheme (NDIS) services, and is responsible for long wait times and workforce shortages.
 
The report highlights that these funding gaps are reflected in health outcomes, with rural Australians experiencing higher rates of chronic disease, hospitalisation, and premature death – up to 2.6 times higher in very remote areas. The limited access to preventive care also leads to higher long-term health costs.
 
Speaking to newsGP, RACGP Rural Chair Associate Professor Michael Clements said he is not at all surprised by the findings.
 
‘This is a useful way of looking at the deficit in care that’s offered to our remote and rural patients because we’ve been pointing at things like higher death rates, younger mortality rates, lower use of PBS medications and less access to the Medicare Benefit Schedule (MBS) for some time and it’s not really getting attention,’ he said.
 
‘It is worth looking at these big numbers as being care that equivalent people are getting access to in the urban towns and really highlighting it for the deficit that it is.
 
‘This is money that had those same people been living in urban areas would have been spent and would have enabled them to get better healthcare.’
 
The report, which uses the Modified Monash Model (MMM) classifications, revealed the largest funding disparities to be in MMM 5–7 areas (small rural towns, remote and very remote communities) where there is a per capita funding shortfall of $4701.
 
In contrast, MMM 2–4 areas (regional centres, large and medium rural towns) receive $967 more per capita, with the MBS, as well as public and private hospitals being the primary drivers of the expenditure gap. However, it is noted that while these areas appear to be well-funded, they often serve extensive catchment areas.
 
MMM 5 regions experience the greatest funding shortfalls, which correlates with significant workforce shortages, resulting in residents of these communities having to travel to larger towns for basic healthcare services, as well as an overreliance on short-term locums and high costs to deliver care.
 
MBS expenditure reflects similar trends, with spending highest in MMM 1 areas at $1310 compared to $832 in MMM 5–7. MMM 5 areas had the lowest claims due to having two-thirds of the GP workforce of MMM 4 areas.
 
Similarly, Pharmaceutical Benefits Scheme (PBS) expenditure was higher in MMM 3 and 4 areas and diminished in remote communities where access to medications is limited.
 
Associate Professor Clements said the funding shortfall is proof that the current funding levers are not sufficient to get care where it is needed – something he says all advocacy groups, including the RACGP, have been pointing out for some time.
 
‘We’ve got pockets of areas where things are going well,’ he said.
 
‘In parts of Queensland, we actually do have the State Government investing quite a bit of money into primary care and general practice services in remote areas. But there are other states where that’s almost non-existent.
 
‘So, one of the constant themes from the advocates, including us, is that the rural and remote communities need different funding models – and funding that’s tailored to that community so that we can actually address this shortfall.
 
‘Hoping and waiting for Medicare or hoping and waiting for some of these federal incentive programs to pick up the slack, is short sighted and too much wishful thinking.’
 
This is acknowledged within the report, with stakeholders calling for a different approach to address the widening gap.
 
‘In summary the suggested approaches involved: defining levels of reasonable access to care and regional planning approaches to determine how these levels can be met at a regional level; coordinated and flexible funding to support services across defined regions; and implementing localised multidisciplinary models of service delivery across sectors,’ the report said.
 
While the Rural Chair isn’t surprised by the report’s findings, he says highlighting the disparities that exist is vital work.
 
‘This really does contribute to the overall body of knowledge that we have and what it’s saying is not a surprise but that doesn’t mean it doesn’t need to be said and doesn’t need to be documented,’ he said.
 
‘We need a whole-of-government funding approach that’s able to be tailored to individual towns and that’s something that we don’t have right now.’
 
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aged care disability Forgotten Health Spend report health expenditure National Rural Health Alliance rural Australia