Australia’s healthy health sector

| April 24, 2024

New research from the Productivity Commission has found Australia’s healthcare system delivers some of the best value for money of any in the world.

“Australia’s healthcare spend is big and getting bigger, but we are seeing significant return on that investment through better health outcomes,” said Commissioner Catherine de Fontenay.

This is the first time that the quality of Australia’s healthcare has been considered in an assessment of productivity.

“Previous research assessed the productivity of our healthcare system by looking at how much it costs to provide a service, such as a visit to hospital. This research looks at how much it costs us to treat a particular disease and the outcomes of treatment,” Commissioner de Fontenay said.

“Looking at the outcomes our system creates for patients provides a much truer picture of its productivity. A healthcare system that gets people in and out of hospital quickly and cheaply isn’t much good if those patients aren’t getting better.”

Quality-adjusted multifactor productivity grew by about 3% per year between 2011-12 and 2017-18 for the subset of diseases studied, which together account for around one-third of healthcare expenditure. This growth was driven mostly by improvements in quality rather than reductions in cost.

“Productivity growth was particularly strong for the treatment of cancers, likely due to the introduction of new cancer therapies in the 2010s. This highlights the importance of quickly integrating new treatments as they emerge,” Commissioner de Fontenay said.

While these quality-driven productivity improvements are welcome, Australia’s growing healthcare bill is still cause for concern.

“Healthcare spending already accounts for 10% of GDP and this is only going to increase as our population ages. Our challenge moving forward will be to provide services more cheaply and efficiently without comprising on quality.”

The report finds that reducing our sizeable risk factors, such as obesity and alcohol consumption, is one way of enabling our healthcare sector to do more with less.

“We have the fourth highest rate of obesity in the world and the sixth highest level of alcohol consumption. This worsens population health and creates more work for our healthcare sector,” Commissioner de Fontenay said.

The report also suggests better integrating digital technology as it emerges could help contain our healthcare spend without sacrificing on the quality of care.

“Digital records, new models of remote care, and new technologies, such as AI, can make healthcare more efficient and less costly if integrated safely and effectively.”

The Commission will be exploring the transformative potential of technology adoption in healthcare in a follow-up paper to be released in coming weeks.

When released, the Advances in measuring healthcare productivity research paper can be accessed from the Commission’s website at

The Productivity Commission provides independent research and advice to Government on economic, social and environmental issues affecting the welfare of Australians.