If Australia’s private healthcare sector had a spirit band, it would be Oasis.
As AFR columnist James Thomson quipped on a recent Chanticleer Podcast, the relationship between hospitals and insurers is a lot like Noel and Liam Gallagher—brilliant when aligned, but famously fractured. It’s a fitting metaphor for what I call the circle of private healthcare mistrust—a dynamic where hospitals, insurers, clinicians, and government are deeply co-dependent, yet chronically misaligned.
That theme ran throughout this year’s AFR Healthcare Summit in Sydney. The tone was frank, the stakes were clear, and the urgency to act has never been greater. Here are the key signals leaders should be paying attention to 👇🏻.
Australia’s trifecta of healthcare pressure
Federal Health Minister Mark Butler offered a useful framing for the pressures facing Australia’s health system: a trifecta of structural challenges. We’re getting sicker (driven by rising rates of chronic disease, obesity, and mental health), older (as the population ages), and facing a funding crunch (as healthcare grows more complex and expensive to deliver).
It was a timely reminder that while Australia’s system remains globally admired—particularly when compared to countries like the US, where medical bills are a leading cause of bankruptcy—complacency has taken hold. Underinvestment in digital infrastructure, stagnant funding models, and a lack of national vision have left the system struggling to meet both current and future needs.
Butler made the stakes clear: “In health, the opportunity cost of a reform ignored is unacceptably high.”
Mental health: the biggest issue for young Australians
Pat McGorry, Executive Director at Orygen, shared a confronting stat: in 2022, 39% of young Australians experienced a mental health issue. But the system’s response remains fragmented and inconsistent.
39% of young Australians experienced a mental health issue in 2022
Dr Pat McGorry
Emma Greeney, Director of Policy & Advocacy at Mental Health Australia highlighted the imbalance—mental health represents 15% of the national health burden but receives only 9% of the budget. Andrew Wilson, CMO from Medibank noted that while good mental health care exists, it’s unevenly delivered and often generic rather than tailored to complex needs.
What wasn’t said—but is front of mind for many in the industry—is the growing cost pressure on private health insurers. Some may be tempted to scale back mental health coverage. That would be a critical misstep. Doing so would reduce access for those who need it most—and further diminish the value proposition of PHI in a sector already struggling with relevance.
Medibank’s recent announcement of $50 million in mental health investment is a strong signal in the opposite direction. Let’s hope others follow.
Chronic disease and obesity: the system-wide multiplier
Obesity has now overtaken smoking as the leading contributor to chronic disease in Australia. Two in three Australians are overweight or obese. One in two has a chronic condition—and if nothing changes, one in two will have multiple chronic conditions by 2035.
Dr Ted Wu, Director of Diabetes Services at Royal Prince Alfred Hospital called it plainly: “91% of preventable deaths annually are due to obesity and overweight.” Robyn Littlewood, CEO at Health and Wellbeing Queensland shared that the youngest known Aussie diagnosed with type 2 diabetes is just four years old.
GLP-1 drugs (like Ozempic and Wegovy) were described as genuinely groundbreaking, with benefits beyond weight loss—extending to cardiovascular health, type 2 diabetes, sleep apnoea, and fatty liver disease. Their speed of impact is unlike anything we’ve seen before.
But access remains a critical issue. “We can’t afford for 66% of the population to be on GLP-1s,” said Wu. Littlewood added that those who need them most often can’t afford them—and behavioural and lifestyle supports are frequently lacking.
The real question isn’t if GLP-1s belong on the PBS—it’s how and when. Staging access by BMI and chronic condition count, alongside future oral versions to reduce cost and increase supply, was suggested as a logical path forward.
Digital health: from replacement to re-imagination
Elizabeth Koff, Managing Director of Telstra Health, reflected on the sector’s challenges by noting that AI is increasingly being layered onto a system already under strain. Her message was clear: without fundamental redesign, technology alone won’t fix what’s broken.
Despite years of investment, Australia’s digital health efforts have mostly focused on replacing analogue processes rather than reimagining the system. My Health Record was repeatedly described as a “shoebox of PDFs”—a digital facade over legacy workflows.
Multi-factor authentication (MFA) was another flashpoint. It’s clunky and frustrating for many frontline users, but also critical for security. This tension—between usability and risk mitigation—highlights just how far we are from truly fit-for-purpose digital health infrastructure.
The issue isn’t innovation—it’s design. Until we re-architect care models and workflows, digital tools will keep reinforcing dysfunction rather than solving it.
Insurers and hospitals: strained partnerships in a high-cost system
Tensions between insurers and hospitals were a recurring theme at the summit. The relationship is marked by deep interdependence but limited trust—and outdated funding models that do little to align incentives.
There’s still no shared scoreboard for outcomes. And while the government is seeking to rebalance profits between private health insurers and private hospitals, efforts like mandating minimum payout ratios risk unintended consequences—reducing funds available for innovation, prevention, and digitally enabled care.
The inefficiencies are significant. Ramsay Health Care shared that nurses now spend 30% of their time on admin. The expected shortage of 70,000 nurses by 2035 should be a catalyst to rethink not just staffing, but how care is delivered. AI listening tools, digital scribes, and diagnostic automation are beginning to ease some of that burden—and offer a glimpse of what future-ready workflows might look like.
Notably, the CEOs of both Medibank and nib made it clear they won’t be investing in Healthscope or traditional hospital models. The message was unmistakable: the future of healthcare isn’t in more beds—it’s in integrated, preventative, digitally enabled systems of care that meet people where they are.
Encouragingly, there seemed to be high-level alignment between insurers and providers on the need to shift away from episodic funding toward value-based, outcome-driven models. While the details remain to be worked through, this signals a shared interest in more sustainable—and meaningful—measures of success.
Equity: still a persistent, systemic gap
From GLP-1 access to mental health care to digital readiness, the same pattern emerged: those who need the most support often have the least access.
Regional and remote communities, Indigenous Australians, and low-income households continue to face compounding disadvantage. These are often the very populations with the highest levels of health need—yet they face the greatest barriers to care, including cost, availability, and system complexity.
As care becomes more digitally mediated, there’s a growing risk that these gaps will widen. And while equity is often framed as a moral imperative, it’s also a structural one. A system that consistently underserves high-need populations cannot claim to be either sustainable or high-performing.
Final thought: It’s time to break the circle
The AFR Healthcare Summit made one thing clear: the system knows what’s broken. And the talent, intent, and urgency to fix it are there. But so are the barriers—structural, cultural, and commercial.
The challenge ahead isn’t just technical—it’s relational. As long as we operate within the circle of private healthcare mistrust, every attempt at reform will be slower and harder than it needs to be.
In our 2024 PHI Innovation Report, where we highlighted how major insurers are already responding to these pressures—reimagining mental health models, investing in digital infrastructure, rebalancing power with suppliers, and grappling with the growing imperative to deliver more equitable care.
If the system wants a blueprint for action, it’s already emerging. But to move forward, stakeholders will need to shift from transactional arrangements to transformative partnerships.
Because the longer we remain in mistrust and misalignment, the more expensive—financially, socially, and politically—the consequences become.