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Rise in spending on hospitals and primary health care

24 March, 2014

While health spending in Australia has risen markedly in the last decade, the increases have not been even across all sectors, or across states and territories, according to a report released last Friday by the Australian Institute of Health and Welfare (AIHW).

The report, 'Health expenditure Australia 2011-12: analysis by sector', shows that over the decade from 2001-02 to 2011-12, expenditure increased in all areas of health, but some areas grew faster than others.

In recent years, the share of Australian government funding directed towards primary health care has risen, while the share directed towards hospitals has fallen.

"Between 2001-02 and 2003-04, for every dollar the Australian government spent on hospitals, it spent on average 97 cents on primary health care. In 2011-12, the Australian government spent around $1.16 on primary health care for every dollar it provided for hospitals," said AIHW spokesperson Dr Adrian Webster.

"In contrast, state and territory governments in total increased the proportion of their recurrent expenditure allocated to hospitals and reduced the proportion allocated to primary health care."

Between 2001-02 and 2011-12, and taking inflation into account, total growth in state and territory government funding for hospitals ($11.5 billion) was almost double (1.8 times) Australian government funding growth for hospitals ($6.2 billion) and 2.4 times non-government expenditure growth ($4.8 billion).

Expenditure trends also varied between the states and territories.

Western Australia had the largest growth in state government funding for hospitals, more than doubling (2.16 times) its spending between 2001-02 and 2011-12, with an annual average growth rate of 8.0 per cent.

Average annual state government hospital expenditure growth over the same period in Victoria (4.3 per cent) and New South Wales (4.8 per cent) was below the national average of 5.6 per cent.

Per person health spending by the Western Australian government was 2.5 times larger in 2011-12 ($2,219) than in 2001-02 ($891). South Australia, the Northern Territory and the Australian Capital Territory also more than doubled their per person expenditure between 2001-02 and 2011-12.

Non-government spending was the highest in Victoria in both 2001-02 ($1,550 per person) and 2011-12 ($2,165 per person), while it was lowest in the Northern Territory ($968 per person in 2001-02, $1,313 per person in 2011-12).

The corresponding national averages in 2001-02 and 2011-12 were $1,361 and $1,909 per person.

"Between 2001-02 and 2005-06, the share of recurrent expenditure attributed to hospitals increased from 39.4 per cent to 40.6 per cent," Dr Webster said.

"The share for primary health care decreased over this time from 39.1 per cent to 37.8 per cent. No clear trend has been seen in these areas since 2005-06, with hospitals comprising 40.4 per cent of recurrent expenditure and primary health care comprising 38.2 per cent in 2011-12."

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