Public hospital system is at breaking point - AMA chief

She said the Rudd government had not done enough to fix the acute care system, and the report showed just how large that task was.

"This report is a wake-up call to the governments of Australia, public hospital infrastructure and capacity must be substantially and permanently expanded," Dr Capolingua said.

"The government's health announcements to date will not fully address acute care pressures into the future."

Dr Capolingua urged the government to spend more than $3 billion to fund thousands of extra public hospital beds.

At least 3,750 more beds were needed, and bed occupancy rates should be at 85 per cent or less, she said.

A growing and ageing population, combined with increased levels of chronic diseases, was putting pressure on the hospital system.

Dr Capolingua was concerned the overstretched health system was taking a toll on doctors, nurses and other medical staff.

"Feedback from those on the ground is that morale is low," she said.

"The fabric of a system built around the dedication of the medical and nursing workforce through hard times is showing signs of reaching its limits."