Australian Hospital Spending Reaches $123.4 Billion as Growth Outpaces Primary Care

Hospital spending in Australia reached $123.4 billion in 2024–25, representing a 4% increase from the previous year and outpacing growth in primary health care and prevention, according to a report released by the Australian Institute of Health and Welfare (AIHW).

The AIHW's Health expenditure Australia 2024–25 report shows that total spending on health goods and services grew by $9.6 billion to $290.7 billion, representing 10.5% of Australia's gross domestic product (GDP) and equivalent to $10,614 per person. Adjusted for inflation, overall health spending grew by 3.4%, exceeding the 1.6% population growth and marking the first real increase in per-person spending since 2021–22.

Governments funded 70% of total health expenditure during the period. The Australian Government contributed $113.9 billion, while state and territory governments funded $89.6 billion. Health spending represented 16.8% of total government expenses, unchanged from 2023–24. Government spending rose by 3.9% in real terms, compared to a 2.4% increase from non-government sources.

AIHW spokesperson Geoff Callaghan noted that state and territory governments now fund 30.8% of the health system—the largest share recorded in the past decade. This shift reflects growth in public hospital spending, which accounted for $99.9 billion of total hospital costs and increased by 5.2% in real terms. Overall hospital expenditure represented 42.4% of all health spending.

In contrast, primary health care spending—including public health—rose by 1.2% to $93 billion. The AIHW indicated this increase was primarily driven by spending on dental services, community health services, and other health practitioners.

In a concurrent analysis of disease and injury spending, the AIHW attributed $195.1 billion directly to specific conditions. The three costliest disease categories were cancer ($21.7 billion), cardiovascular diseases ($18.4 billion), and musculoskeletal disorders ($17.5 billion). Cancer remained the highest-expenditure disease category for the eighth consecutive year, accounting for approximately 11% of disease-related spending.

Mental health conditions and substance use disorders ranked third in total spending while holding the second-highest burden of disease.

The report also included socioeconomic analysis for the first time, finding that across all disease groups, the cost per service was consistently higher for individuals residing in the most disadvantaged areas compared to those in the least disadvantaged areas between 2013–14 and 2024–25.

According to the AIHW's analysis of spending growth drivers, population growth was the primary contributor, accounting for 44.3% of the increase. Higher expenditure per service contributed 33.6%, population ageing accounted for 16.0%, and changes in disease burden represented 6.7%.

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