Australia’s public hospitals are wasting at least $1.2 billion a year, according to a new Grattan Institute report. That number is alarming, but the real problem runs deeper. Inefficiency is falling hardest on older Australians and quietly pushing many into aged care earlier than they should be.
Hospitals are already stretched. Ambulances wait outside emergency departments. Surgery delays are growing. Staff are burning out. Yet spending has risen by about $3 billion every year for the past decade. The pressure keeps growing, and older people sit right in the middle of it.
Older Australians stay in hospital longer and are more likely to suffer complications like falls and pressure injuries. They also face the biggest delays when it is time to leave. If someone cannot return home safely, the hospital becomes the holding bay.
The report shows that waiting for a place in residential aged care adds more than $6,600 to the cost of a single stay. That delay also increases frailty and slows recovery, making a return home less likely. What starts as a hospital admission too often ends as a permanent move into aged care.
Families know this pattern well. Providers see it constantly. Yet it continues because the system is clogged at every point.
The report reveals large and unexplained cost differences for the procedures older Australians rely on most. A hip or knee replacement can cost thousands more at one hospital than another, with no better outcomes. These inefficiencies soak up resources that should be used to shorten wait lists and deliver safer care.
Fixing this would matter immediately. If high cost hospitals simply matched the middle of the pack, taxpayers would save $1.2 billion a year, enough to fund an extra 160,000 hospital visits. Many of those visits would go to older Australians stuck waiting for treatment that helps them stay mobile and independent.
The report is blunt about the budget mess. States set unrealistically low budgets for hospitals, then quietly bail them out at the end of the year. These top ups average about 6 percent of total spending. This stop-start cycle leaves hospitals unable to plan and constantly scrambling to catch up.
Rather than fixing the system, state and federal governments continue a familiar routine of blaming each other for cost pressures and slowdowns. While they argue over who pays what, older patients wait longer, stay longer, and lose more independence.
This political tug-of-war does nothing to help the people who use hospitals the most.
For older Australians, inefficiency is not an abstract policy problem. It is the reason an emergency visit turns into an eight-hour wait. It is why a routine surgery takes months to book. It is why a hospital admission becomes the turning point that pushes someone into aged care.
When hospitals are clogged, older people decline faster. Their mobility drops. Their confidence to return home disappears. Families are left dealing with decisions they are not ready for.
The report calls for smarter spending, not simply more funding. Key reforms include:
These are practical steps that would free up beds, shorten waits, and protect the independence of older Australians.
Australia is ageing rapidly. If hospital inefficiency continues unchecked, older people will keep paying the price long before the politics sort themselves out.
