Lexi Webster
Australia's healthcare industry is one of the best in the world, providing safe and affordable healthcare for all Australians. The industry encompasses various health facilities and services, including hospitals, medical services, pathology, and diagnostic imaging. The market size of the healthcare industry in Australia was valued at $218.4 billion in 2025, with 163,000 businesses, and it accounts for 10% of the country's GDP. The sector is the nation's biggest employer, making up around 13% of the working population. However, the industry faces challenges due to an ageing population, the rising prevalence of chronic diseases, and increasing healthcare costs, with out-of-pocket expenses being the third highest in the developed world.
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What You'll Learn
- Healthcare is the largest sector of the Australian economy, making up 10% of GDP
- Demand for health services is increasing due to an ageing population
- The cost of healthcare is becoming unaffordable for many Australians
- Medicare is Australia's universal healthcare scheme, available to citizens, permanent residents, and reciprocal agreement countries
- The healthcare industry is Australia's biggest employer, with around 13% of the population working in the sector
Healthcare is the largest sector of the Australian economy, making up 10% of GDP
Healthcare is a massive industry in Australia, and it's getting bigger. It is the largest sector of the Australian economy, making up 10% of GDP. This equates to a market size of $218.4 billion in 2025. The industry encompasses hospitals, medical services, pathology and diagnostic imaging services, and more. General hospitals generate over half of Australia's health services revenue, with other key sources including general practitioners (GPs), clinical specialists, and dentists.
The Australian healthcare system is jointly run by federal, state, and territory governments, and local agencies. Medicare, Australia's universal healthcare scheme since 1984, is available to citizens, permanent residents, and those from countries with reciprocal agreements. It covers public hospital services and some or all of the costs of other health services, including GPs, specialists, physiotherapy, community nurses, and basic dental services for children.
The Pharmaceutical Benefits Scheme (PBS) makes some prescription medicines cheaper, with the Australian government subsidising the rest of the cost. The Medicare Benefits Schedule (MBS) is a list of all health services that the government subsidises, which is kept up-to-date by a team of medical experts.
An ageing population and the rising prevalence of chronic diseases are increasing demand for healthcare services in Australia. This has led to wage increases for healthcare workers, with demand for the healthcare and social assistance workforce expected to increase by 14.9% over the next four years. There is also an expected undersupply of 123,000 nurses by 2030.
While Australia's healthcare system is considered one of the best in the world, providing safe and affordable healthcare for all, it is becoming increasingly unaffordable. Out-of-pocket expenses for individuals are the third highest in the developed world, and many Australians are paying out-of-pocket for Medicare services.
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Demand for health services is increasing due to an ageing population
Australia's healthcare industry is one of the best in the world, providing safe and affordable healthcare for all Australians. It is jointly run by the federal, state, and territory governments. Healthcare is the largest sector of the Australian economy, contributing 10% of the GDP and employing around 13% of the working population.
The ageing population, along with the rising prevalence of chronic diseases, has increased the demand for healthcare services in Australia. This has resulted in workforce shortages and a greater need for carers and volunteers. The healthcare workforce in Australia includes medical practitioners, nurses, and allied health professionals such as physiotherapists, dieticians, and occupational therapists. Over 50% of the 450,000 paid health professionals in Australia are nurses, while 12% are medical practitioners and 9% are allied health professionals.
To address the growing healthcare needs of the ageing population, health policymakers in Australia have tried multiple approaches in primary care, hospital services, and private health insurance. However, the challenge of aligning financial incentives in a mixed public-private healthcare system and reforming a medically-centered primary care model remain key difficulties.
Technological advancements, such as the integration of telehealth, and improved access to services are expected to significantly enhance revenue in the healthcare industry.
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The cost of healthcare is becoming unaffordable for many Australians
Healthcare is the largest sector of the Australian economy, comprising 10% of GDP and employing around 13% of the working population. However, the cost of healthcare is becoming unaffordable for many Australians. A survey by the Australian Patients Association and Healthengine revealed alarming trends of financial stress in the healthcare system, with 75% of respondents reporting that financial pressures impacted their healthcare decisions, and 73% saying they were delaying or skipping basic healthcare due to cost-of-living pressures.
The dual private and public healthcare system in Australia means that those who cannot afford private care may still receive treatment through the public system. However, public hospitals only cover essential acute medical services, and there can be long waiting times for non-urgent cases. Private healthcare providers can set their own fees, which are often high, and while the private market is subsidised through Medicare, patients are only reimbursed a fixed amount, which may not cover the full cost of treatment. This means that healthcare costs can be a significant burden, particularly for socio-economically disadvantaged people, older Australians, and those with higher healthcare needs.
The Australian government's universal healthcare scheme, Medicare, covers the full cost of public hospital services and some or all of the costs of other health services, including GP visits, medical specialists, physiotherapy, community nurses, and basic dental services for children. The Pharmaceutical Benefits Scheme (PBS) also makes some prescription medicines cheaper, with the government paying the remainder of the cost for those enrolled in Medicare. However, with the rising demand for healthcare services due to an ageing population and the increasing prevalence of chronic diseases, the pressure on healthcare employment and wages is increasing, contributing to rising healthcare costs.
To address these challenges, Australia has introduced technological advancements such as telehealth and improved access to services, which are expected to enhance revenue. Additionally, initiatives like Urgent Care Clinics provide free access to doctors or nurses for non-emergency urgent care, helping to reduce the burden on emergency departments. However, low awareness of such initiatives among the public means that many are still struggling to access affordable healthcare.
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Medicare is Australia's universal healthcare scheme, available to citizens, permanent residents, and reciprocal agreement countries
Australia's health system is considered one of the best globally, offering safe and affordable healthcare for its citizens. The healthcare sector is the largest in the country's economy, contributing 10% of its GDP and employing around 13% of the working population.
The Pharmaceutical Benefits Scheme (PBS) is another crucial component of Medicare, making some prescription medicines more affordable. The PBS lists over 5,200 products, including brand name, generic, biologic, and biosimilar medicines. Enrolled Medicare patients only pay a portion of the cost of PBS medicines, with the government subsidising the rest.
Medicare also covers visitors from countries with reciprocal health care agreements (RHCA). These agreements allow citizens from specific countries to receive subsidised health services for essential or emergency medical treatment while in Australia. There are currently 11 countries with RHCA in place with Australia, including the United Kingdom.
The demand for health services in Australia is increasing due to an ageing population and the rising prevalence of chronic diseases. This has resulted in a growth in the healthcare industry, with a market size of $218.4 billion in 2025 and 163,000 businesses, reflecting a 5.0% CAGR growth between 2019 and 2024.
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The healthcare industry is Australia's biggest employer, with around 13% of the population working in the sector
Healthcare in Australia is jointly run by federal, state, and territory governments, with the federal Minister for Health setting national health policy. State and territory governments regulate and administer major healthcare elements, such as doctors, public hospitals, and ambulance services. The healthcare industry encompasses various health facilities and services, including hospitals, medical services, pathology, and diagnostic imaging. General hospitals generate over half of Australia's health services revenue, with other key revenue sources including general practitioners (GPs), clinical specialists, and dentists.
Australia's healthcare system is considered one of the best in the world, providing safe and affordable healthcare for all Australians. Medicare, Australia's universal healthcare scheme since 1984, covers all public hospital services and some or all of the costs of other health services, such as GP visits, medical specialists, physiotherapy, community nursing, and basic dental services for children. The Pharmaceutical Benefits Scheme (PBS) under Medicare makes some prescription medicines more affordable, with the Australian government subsidising the remaining cost.
However, healthcare in Australia is becoming increasingly unaffordable, with rising out-of-pocket expenses for individuals. While 86% of Medicare services are bulk-billed, hidden within these statistics is the fact that many Australians pay out-of-pocket for services, and Australia has one of the highest individual healthcare payment rates among OECD countries. The ageing population and the rising prevalence of chronic diseases contribute to higher healthcare costs and boost demand for healthcare services in Australia.
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Frequently asked questions
The healthcare industry in Australia is large and complex, encompassing public and private hospitals, medical services, pathology and diagnostic imaging services, and more. In 2025, the market size of the industry was valued at $218.4 billion, with 163,000 businesses operating in the sector. It is the country's largest sector, contributing to 10% of Australia's GDP.
Hospitals make up the largest segment of the industry, with general hospitals generating over half of the country's health services revenue. Other key revenue sources include general practitioners (GPs), clinical specialists, and dentists.
The Australian government plays a crucial role in the healthcare industry. The federal Minister for Health sets the national health policy and provides funding to state and territory governments, which manage and administer healthcare services, including doctors, public hospitals, and ambulance services.
Australia's healthcare system is considered one of the best in the world, providing safe and affordable healthcare for its citizens. Medicare, the country's universal healthcare scheme, covers the cost of public hospital services and some other health services. However, there are concerns about increasing out-of-pocket expenses, with Australia ranking high among OECD countries for individual healthcare costs.
The industry faces several challenges, including an ageing population, a rising prevalence of chronic diseases, and workforce shortages. These issues are driving up demand for healthcare services and increasing pressure on healthcare employment, particularly in nursing and specialist areas.
