Private hospitals a public good for a strained system

PRIVATE hospitals are a cornerstone of Australia's mental health system, providing care that relieves pressure on public services.

In 2023-24, private acute psychiatric hospitals delivered 1,084,846 patient days of care, with 83% of admissions coming via private health insurance. They also managed more than 217,000 admissions, ensuring patients had timely access to treatment and their choice of provider.

Private hospitals play a distinct role. While public hospitals account for most overnight mental health care, private facilities have seen a 22% rise in same-day admissions and an 11% increase in overnight stays over the last decade.

This complementary mix allows the public system to focus on high-complexity, emergency and involuntary long-stay cases, while private facilities provide flexible, responsive care for a severe to moderate patient cohort.

But the sector is under strain. The 2024 Federal Financial Health Check confirmed escalating costs, workforce shortages, and falling margins are threatening viability. In just two years, 18 private hospitals have closed and over 80 services cut. The Hobart Clinic, Tasmania's last private inpatient mental health facility, will close in October due to a projected $3 million deficit.

Contract disputes between insurers and providers compound the challenge, with millions of Australians at risk of higher out-of-pocket costs or reduced access.

Brett Heffernan, CEO of the Australian Private Hospitals Association, said:

"Private hospitals are not a luxury add-on to the system. They are integral to ensuring Australians can access timely, high-quality mental health care. Without sustainable funding arrangements, patients will lose choice, wait times will blow out, and public hospitals will be left to shoulder an even greater load.

"The evidence is clear. If private mental health services falter, the entire system will crumble. That is why governments and insurers must recognise the crisis engulfing hundreds of thousands of Australians and their families."

-ENDS-

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