Evidence base for additional investment in rural health in Australia

23 June 2023

This report presents estimates of the expenditure and usage patterns in the Australian healthcare system based on geographical remoteness, exploring health expenditure from a patient-centred perspective.
It demonstrates the shortfall in health expenditure across hospital, community, aged care, the disability sector, and ancillary care in Australia’s regional and remote communities. The National Rural Health Alliance commissioned this report to better understand current healthcare expenditure and to inform discussions on the health needs of rural Australia.

The disparity in health expenditure between metropolitan and rural, regional, and remote Australia (referred to in the remainder of the report as “rural Australia” unless otherwise stated) is difficult to measure due to the complex public-private health system in Australia. Health funding primarily comes from federal and state/territory governments, as well as private health insurers and individuals. In Major Cities and Inner Regional areas, health services are mainly supported through activity-based funding and fee-for-service funding, while block funding is common in remote areas. This makes it challenging to get a clear picture of the disparity in health expenditure between metropolitan and rural Australia. This report focuses on service delivery expenditure and how that varies across different regions. The expenditure does not cover all government expenditure on the service delivery sectors covered, including programs aiming to support improved heath workforce and infrastructure in urban and rural areas. Assessing the distribution of this expenditure would have required a different methodology and significant additional analysis and was not within the scope of the work.

Nous’ analysis evaluates both publicly available and privately sourced data sets, including the Australian Institute of Health and Welfare (AIHW), Australian Bureau of Statistics (ABS), National Disability Insurance Scheme (NDIS), Medicare benefits scheme (MBS), pharmaceutical benefits scheme (PBS) and census data, working to align them to demonstrate the component parts of the rural health spend. Few data sources broke down expenditure by geographical remoteness, necessitating modelling to estimate these expenditure figures. This analysis was then contextualised through a series of structured interviews with key stakeholders in rural health delivery to provide a representative current state report.

Available data sets each used one of Australian Geography Standard Remoteness Area (RA) or Modified Monash Model (MMM) scales. Unless otherwise stated, we will use the terms “urban” for RA 1/MMM 1, “regional and rural” for RA 2-3/MMM 2-5, “remote” for RA 4-5/MMM 6-7 and “rural Australia” or “non- urban” to summarise non-urban expenditure (see glossary overleaf).

This report demonstrates a clear healthcare disparity between rural and urban Australia: rural Australians have a poorer health status, and even before accounting for the increased cost of health service, receive significantly less funding per capita than their urban counterparts.

Further action to address these inequities would improve both social justice and economic prosperity. Rural industries such as farming, mining, and tourism make up disproportionately large (compared to population share) portion of Australia’s economic output. Poor health service access is a disincentive to live in rural areas and poorer health outcomes limit the potential of rural industries by reducing the workforce's efficiency through increased absenteeism and decreased productivity.

To effectively address this inequity in healthcare and health outcomes, the specific barriers to delivery and the shortcomings of the current approach need to be acknowledged. Current funding models and service delivery arrangements create significant barriers to workforce recruitment and retention, further exacerbating the funding shortfall. This issue is particularly evident in market-based programs like MBS and NDIS, where expenditure is directly dependent on practitioner availability to provide services. To truly make a difference for rural Australia’s health, we need to take a comprehensive approach that considers the challenges faced by these communities. This includes addressing both workforce shortages and funding shortfalls.

This analysis shows the need for greater and more strategic investment in the health of rural Australians. There is clear evidence that per-person spending on healthcare is not equitable, and that this inequity is contributing to poorer health outcomes experienced in rural areas.

©2023 National Rural Health Alliance | Privacy Policy & Collection Statement