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Chapter 3: Funding Australian general practice care

3.1 Government contribution to patient services

Funding for primary care as a proportion of total government healthcare spend is in decline (Figure 30), and funding for GPs and general practice services is less than 8% of total health expenditure in Australia. Chronic disease expenditure in Australia is heavily weighted towards tertiary healthcare, with 61% of spending going to public and private hospitals compared to 8% to general practices.34 This limits the ability of GPs to provide preventive care for patients with chronic diseases and ignores the overwhelming evidence of the health benefits and economic savings that could be achieved by investing more in primary healthcare.35

The 158 million services GPs provided in 2018–191 represent only 7.4%§ of total government health spend, with the investment in general practice health services totalling $9.85 billion.36,37 The same year saw 11.5 million hospitalisations, 8.4 million emergency department presentations and 39 million non-admitted service events – totalling around 59 million services38 that cost federal, state and territory governments $61.8 billion.37


Taken together, this means GPs provide more than twice the number of episodes of care a year than hospitals, for one-sixth of the expenditure amount.
 

Australian healthcare expenditure is projected to increase faster than ever over the next 40 years, growing from 19% of total government spending in 2021−22 to 26% in 2060−61. Funding for public hospitals is projected to be the fastest-growing component, nearly doubling between 2020−21 and 2031−32. Per-person spending on public hospitals is expected to rise from $880 in 2020−21 to $1190 in 2031−32. MBS spending per person will increase from $1110 to $1280 between 2020−21 and 2031−32, while Pharmaceutical Benefits Scheme (PBS) spending per person will increase from $540 to $590 over the same period.39

The projected doubling in hospital expenditure highlights the need to establish more long-term preventive health measures that will deliver better outcomes for an ageing population and constrain unsustainable increases in healthcare expenditure. Primary care reduces downstream costs through early identification and management of health risks.

Developing new models of care will improve collaboration between primary care and secondary/tertiary care across the federal, state and territory funding divide. It will also assist in creating continuous and coordinated care pathways, reducing duplication of services and wasted health resources.

Figure 29. Government expenditure on general practice compared to spending on other areas of the health system

Government expenditure on general practice compared to spending on other areas of the health system
Measure: Total government (state/territory and federal) and non-government expenditure on health, by area of expenditure, 2018–19.
Data source: Australian Institute of Health and Welfare. Health expenditure Australia 2018–19. Health and welfare expenditure series Cat. No. HWE 80. Canberra: AIHW, 2020.
 

Figure 30. Total government expenditure on primary care is declining

Total government expenditure on primary care is declining
Measure: Government expenditure on primary care and hospital services, 2008–09 to 2018–19.
Data source: Australian Institute of Health and Welfare. Health expenditure Australia 2018–19. Health and welfare expenditure series Cat. No. HWE 80. Canberra: AIHW, 2020.

 
  • § Calculated using 2018–19 dollars for total government expenditure on general practice (Productivity Commission, 2020), against 2018–19 total government expenditure on health (AIHW, 2020).
  • 1. Department of Health. Annual Medicare statistics: Financial year 1984–85 to 2020–21. Canberra: DoH, 2021.
  • 34. Productivity Commission. Innovations in Care for Chronic Health Conditions, in Productivity Reform Case Study. Canberra: Productivity Commission, 2021.
  • 35. PricewaterhouseCoopers. Economic benefits of the RACGP's Vision for general practice and sustainable healthcare system. Melbourne: PwC, 2020.
  • 36. Productivity Commission. Report on government services. Canberra: Productivity Commission, 2020.
  • 37. Australian Institute of Health and Welfare. Health expenditure Australia 2018–19. Canberra: AIHW, 2020.
  • 38. Australian Institute of Health and Welfare. Australia's hospitals at a glance 2018–19. Canberra: AIHW, 2020.
  • 39. Commonwealth of Australia. 2021 Intergenerational Report. Canberra: Treasury, 2021.