Special treatment: Improving Australians’ access to specialist care

by Peter Breadon, Jessica Geraghty, Dominic Jones, Elizabeth Baldwin

15.06.2025 report

Chapter

Overview

Millions of Australians face an unenviable choice when they need to see a specialist doctor: pay high fees or wait too long for care.

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Patients pay a fee for two thirds of appointments with a specialist doctor, such as a psychiatrist or cardiologist. That’s much more often than for the GP, where only one in five visits costs money.

Individual visits can cost hundreds of dollars. It quickly adds up if you need to see many specialists for a chronic disease, such as complex diabetes, or to visit the same psychiatrist many times.

On average, patients who pay a fee are charged $300 a year. Even poor people can face huge costs. One in 10 low-income patients who are billed pay almost $500 a year. The problem is getting worse: fees have soared by 73 per cent since 2010.

Almost a million people delay or skip specialist care because of the cost. They are risking missed diagnoses and delayed treatment. That leads to avoidable suffering and adds pressure on hospitals.

Public hospitals run free clinics, but they provide just a third of all specialist care, and their wait times are often far too long. In many parts of Australia, wait times for urgent appointments are months longer than clinical guidelines recommend.

These problems have festered because the system has been running on autopilot. Governments must tackle five root problems to improve access to specialist care for all Australians.

First, we should train the specialists we need, where we need them. Training places are determined by specialist colleges and the immediate service needs of public hospitals, not the community’s healthcare needs. Too few doctors have been trained in rural areas and in some specialties, such as psychiatry and ophthalmology.

Governments should establish a workforce planning body and tie training funding to its recommendations about what specialist training is needed, and where. While they work on these reforms, governments should make it easier for specialists from comparable health systems to work in Australia.

Second, governments should invest more in public clinics, so everyone can get the care they need. Specialist care is a postcode lottery: people living in the worst-served areas receive about a third fewer services than the best-served areas. Public clinics don’t do enough to fill the gaps. Spending $470 million a year would provide one million extra public appointments each year in the areas that get the least care.

Third, to make that investment go further, governments should modernise public specialist clinics, clarifying their role, spreading best practices, and publicly reporting waiting times.

Fourth, governments should take pressure off specialist care by helping GPs manage more care. Systems that allow GPs to easily get advice from other specialists could avoid 68,000 referrals each year and save patients $4 million in out-of-pocket costs. GPs and other specialists would be paid for their time, at a cost of $26 million a year.

Finally, the federal government should combat extreme fees. An initial consultation with a cardiologist or endocrinologist can cost up to $370, and up to $670 for a psychiatrist. The government should claw back public subsidies from specialists who charge extreme fees. This could save up to $170 million a year, and would discourage excessive fees.

There is no time to waste. Without action, fees and waiting times will only get worse as Australians get older and sicker. Targeted investment and sensible reforms will ensure every Australian can get specialist treatment when they need it.

Recommendations

1. Train the specialists Australia needs

  • Federal and state governments should establish a national health workforce planning body to set targets for specialist training, including the mix of specialists and the amount of rural training.
  • Federal funding for specialist training should be tied to these targets. It should be increased by $155 million a year.
  • The federal government should pay specialist colleges an extra $9 million a year to develop and expand flexible training models.
  • The federal government should make it simpler for overseastrained specialists to work in Australia.
  • Specialist qualifications from more countries with comparable health systems should be recognised.

2. Invest in public clinics where they are needed most

  • Federal and state governments should invest about $500 million a year to expand public specialist clinics in areas with the least care.

3. Modernise public clinics

  • The National Health Reform Agreement (NHRA) should specify the role of public clinics, and how they will change to provide more and better care.
  • States should give public hospital clinics clear guidance on best practices to maximise productivity.
  • The NHRA should provide $60 million to spread best practices across the system.
  • The independent hospital pricing authority should review specialist clinic funding to make sure prices encourage best practices.
  • Federal and state governments should agree to shift current Medicare Benefits Schedule funding to activity-based funding.
  • The NHRA should set out a framework for consistently measuring and reporting state and clinic performance.

4. Reduce unnecessary specialist referrals

  • Federal and state governments should set up a system that makes it easy for GPs to get advice from other specialists.

5. Reduce extreme fees

  • The federal government should withdraw all Medicare funding from specialists who charge extreme fees (fees that are, on average, more than three times the schedule fee).
  • The federal government should require referrals to inform patients that they can use a referral to see any specialist, and let them know where to find information about a specialist’s fees.
  • The federal government should initiate a review of Medicare Benefits Schedule rebates to ensure they reflect the cost of care.
  • The federal government should direct the Australian Competition and Consumer Commission to study specialists’ costs and fees.

IN THIS CHAPTER

1. High fees, long waits, and missed care

Too many Australians don’t get the specialist care they need when they need it. Patients face an unenviable choice: pay high, often opaque, fees in the private sector, or join a long queue for a public appointment. As a result, diagnoses and treatments come too late, or are missed altogether. People suffer unnecessary illness and pain, and the healthcare system bears unnecessary costs.

1.1 Rising chronic disease means specialist care is becoming even more important

As chronic diseases become more common, our need for specialists1This report focuses on non-GP specialists working in outpatient settings. General practice is also a recognised medical specialty, but for simplicity in this report, when we say ‘specialists’, we mean non-GP specialists. to prevent, diagnose, and manage complex conditions is increasing.

1.1.1 Australians are getting older and sicker

Australians are living longer than ever.2Our life expectancy – now 84 years – is one of the highest in the world, and still increasing. Since 1990, we’ve added an extra 6.9 years: Dattani et al (2023). But we’re also living longer with disease and disability.3The average Australian can expect to live 12.6 years with a disease or disability: Dattani et al (ibid). This has increased by 1.8 years since 1990. That means about a quarter of the extra years of life since 1990 will be lived in ill-health. The main culprit is the rising incidence of chronic disease. Half of Australians – including 79 per cent of people older than 65 – live with at least one chronic disease.4ABS (2023a). Chronic diseases are long-term, non-communicable diseases such as cancer, cardio-vascular disease, diabetes, chronic obstructive pulmonary disease, and mental health conditions: AIHW (2024a).And one in five Australians live with more than one chronic condition.5In 2022, 22 per cent of Australians lived with multiple chronic conditions, up from 17 per cent in 2012: ABS (2023a).

Australia should do more to prevent chronic conditions from developing in the first place, and to help patients manage them through primary care.6Breadon et al (2023), and Breadon and Romanes (2022). But specialists also play an essential role.7Best-practice integrated care for chronic disease usually involves a combination of specialist advice and primary team care: S. Smith et al (2017) and Mitchell et al (2015). People with long-term health conditions are more than twice as likely to have seen a specialist in the past year.8Compared to those without long-term health conditions: ABS (2024a).

1.1.2 Specialists play an essential role in the health system

Specialists are doctors with advanced training and experience who provide care in a particular field of medicine. They see patients with complex health issues – such as chronic diseases – who have been referred by another doctor.9Nurse practitioners can also refer patients to specialists. Only specialist appointments for which patients have a valid referral are subsidised by Medicare. Nurse practitioner and GP referrals last for 12 months; specialist-to-specialist referrals last for three months: Department of Health and Aged Care (2021a).

About 40 per cent of Australians saw a specialist in 2023-24.10ABS (2024a).Older Australians are even more likely to receive specialist care. Altogether, Australian governments and patients spent $8.7 billion on specialist care in 2021-22.11This includes $5 billion in state and federal government spending on public clinics, $2.3 billion in federal government Medicare subsidies, and $1.4 billion in patient out-of-pocket fees: IHACPA (2023) and AIHW (2025). Spending per service across private and public services are not directly comparable, because of differences in case mix, functions (e.g. public services also teach students), and costs included (e.g. public clinic costs include some imaging and pharmacy costs).

Across all specialties, about two thirds of appointments are private appointments, where patients receive a Medicare rebate and usually also pay a fee.12Similar to primary care, where private GP businesses provide most care. The other third of specialist appointments are in public outpatient clinics, attached to public hospitals. They are staffed by salaried specialists 13Many doctors work across both the public and private sectors: Cheng et al (2013). and provide free care to patients.14Most people seen in public clinics are treated as public patients, but some clinics operate as bulk-billing Medicare clinics. Chapter 4 discusses this issue.

But the split of public and private care varies a lot across specialties (Figure 1.1). Almost three quarters of oncology and anaesthetics appointments are in the public system, but it’s less than one in five for cardiology and dermatology – and less than one in 20 for psychiatry.

Problems in both the public and private parts of the system – and how it works as a whole – mean too many patients miss out on care.

Figure 1.1: Public clinics provide the majority of care in some specialties, and small fractions in others

Share of total specialty appointments provided by public clinics, 2022-23

Figure 1.1: Public clinics provide the majority of care in some specialties, and small fractions in others
Note: The remaining appointments were provided by private specialists.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b). See
Appendix B.

1.2 Patients face high costs or long waits to see a specialist

After a referral, many patients face an unenviable choice: pay high fees for a private appointment, or submit to a long wait for a public appointment.

1.2.1 Private specialists can be expensive

Consumers directly pay about $1 in every $6 spent on healthcare in Australia – higher than many similar countries.15Duckett et al (2022). This contributes to our poor performance on access to healthcare, compared with our peers. In one analysis, we were second worst among 10 countries for access, beating only the US: Commonwealth Fund (2024). Specialist appointment fees are a big share of these out-of-pocket costs. The majority – 78 per cent – of GP visits are bulk billed.16In 2023: Department of Health and Aged Care (2025a). But most specialist appointments attract a fee. The average person who saw a specialist in 2023 had just a third of their appointments bulk billed.17Grattan analysis of Medicare-subsidised specialist attendances: see Appendix F. Even in low-income households, 72 per cent of people who saw a private specialist paid a bill at least once (Figure 1.2).

Among those who paid a bill, annual out-of-pocket costs amounted to $300 on average in 2023. Specialist costs are greater than the typical annual bill for prescriptions, GPs, allied healthcare, or imaging services.18Median annual out-of-pocket payments among people who used the service: Duckett et al (2022, p. 18). And some patients pay more still. About 650,000 people spent more than $574 on specialist appointments.19This is the 90th percentile of total annual out-of-pocket payments, among people who paid a specialist bill. This is an increase from 2019, when the comparable value (after adjusting for inflation) was $525: Duckett et al (ibid).

Many people can comfortably afford out-of-pocket costs. But even poorer people can face big bills (Figure 1.3). One in ten low-income people who saw a specialist paid more than $475 out of pocket.

Average out-of-pocket costs for specialist attendances have grown by 73 per cent, in real terms, since 2010: faster than for other Medicare services (Figure 1.4).20The federal government froze MBS indexation between 2013-14 and 2017-18. But the increase in out-of-pocket costs exceeds that required to make up for the freeze. As a rough estimate, if benefits had been indexed to the forecasts of Wage Cost Index 6 every year – a similar index to the unpublished one the government uses – the average benefit per service would have been $4.40 higher (in 2025 dollars) in 2017-18 than 2012-13. But the average out-of-pocket cost per service increased even more – by $9.60, in 2025 dollars – over the same period, and has continued rising since, even though indexation has been restored. The fee for an initial consultation has risen, in real terms, for most specialties since 2019 (Figure 1.5).

High out-of-pocket costs, particularly for ongoing conditions, can contribute to economic hardship.21Duckett et al (2022), Callander et al (2019), Essue et al (2011), and Jeon et al (2009). Many Australians have very little savings in the bank to absorb a big unexpected bill.22Coates and Cowgill (2020). Some patients report taking on debt, seeking financial aid, or cutting back on other essentials such as groceries to pay high out-of-pocket costs.23Robins et al (2025).

1.2.2 Wait times for public clinics are long

People who can’t afford to pay with money often pay with time, putting their health at risk.

Wait times for a free appointment at a public clinic are often far longer than clinical guidelines recommend. Across Sydney, Melbourne, Brisbane, and Adelaide, there are 50 specialties where waiting times extend longer than a year.24Grattan Institute analysis of AIHW (2024b). Outpatient clinic types where the 90th percentile of waiting times is greater than a year. Locations are patients’ usual residence. Other states did not report waiting times in the national dataset we drew on. Waiting time data are not high quality. Measures of waiting times that have not been validated and have no national definitions, so are not comparable across jurisdictions. However, these results, and the more granular data available in some states, clearly point to long public wait times in some cases.

One in 10 people living in Sydney and waiting for a respiratory cystic fibrosis appointment wait more than three years for a consultation. So do one in 10 people in outer regional Victoria waiting for a neurosurgery appointment, people in inner regional South Australia waiting for an immunology appointment, and people in outer regional NSW waiting for a haematology appointment.

Figure 1.2: Most patients, even low-income patients, pay for specialist care out of pocket

Share of patients who paid a bill for specialist care at least once in 2023

Figure 1.2: Most patients, even low-income patients, pay for specialist care out of pocket
Notes: Weekly household income as reported in the 2021 Census. Among people who had at least one private specialist appointment in 2023.
Source: Grattan Institute analysis of ABS (2024b).

Figure 1.3: Even poor people can face high out-of-pocket costs

Out-of-pocket specialist costs per person, 2023

Figure 1.3: Even poor people can face high out-of-pocket costs
Notes: Weekly household income as reported in the 2021 Census. Total annual out-of-pocket costs. Excludes people who were exclusively bulk billed and did not incur a cost.
Source: Grattan Institute analysis of ABS (ibid).

Figure 1.4: Out-of-pocket costs for specialist care have increased faster
than for other Medicare services

Average out-of-pocket cost per service, 2025 dollars

Figure 1.4: Out-of-pocket costs for specialist care have increased faster than for other Medicare services
Notes: ‘Specialists’ is all private specialist attendances. ‘GPs’ is all GP non-referred attendances. ‘Other Medicare services’ is a weighted average of all other Medicare subsidised services. Estimates include people who were bulk billed and people who paid a bill. Rolling 12-month average based on quarterly data.
Source: Grattan Institute analysis of Department of Health and Aged Care (2025a).

Figure 1.5: The cost of an initial consultation with most specialties has increased

Median out-of-pocket cost for an initial consultation, 2023 dollars

Figure 1.5: The cost of an initial consultation with most specialties has increased
Notes: Median among all patients, including those who were bulk billed. Specialties with fewer than 1,000 appointments in either 2018 or 2023 were excluded. Points at zero indicate that at least half of all appointments were bulk billed.
Source: Grattan Institute analysis of ABS (2024b).

Even people with an urgent referral to a specialist can face monthslong waits (Figure 1.6). In Victoria and Queensland, one in 10 people with an urgent referral for many specialties wait much longer than the clinically recommended 30 days.

About 29 per cent of people who needed to see a specialist in 202324 said they waited longer than they felt was acceptable. And those people were more likely to be in poor health and live in disadvantaged or remote areas.25ABS (2024a)

Waiting too long for needed care can make people sicker in the long term (Section 1.4), and cause stress and frustration.26Rittenmeyer et al (2014), and Propper (1995). One patient told researchers: ‘There is a lot of despair and stress, and I suppose depression.’27Harding et al (2023, p. 979).

Figure 1.6: Wait times, even for urgent appointments, can exceed clinical recommendations

90th percentile of wait times for urgent first outpatient appointment

Figure 1.6: Wait times, even for urgent appointments, can exceed clinical recommendations
Notes: Clinical guidelines indicate that urgent first appointments should occur within 30 days of a referral. Wait times are averages across the whole state. Data are from April–June 2024. We chose Victoria and Queensland because they publish data on wait times for urgent appointments, but there is no nationally consistent way of measuring
waiting times and they should not be directly compared. We chose 10 specialties for which data were reported across both states.
Sources: Victorian Agency for Health Information (2024) and Queensland Health (2025a).

1.3 Too many patients miss out on specialist care

High costs and long waits mean one in five Australians who need specialist care delay or skip getting it. Every year, 1.9 million people miss out.28ABS (2024a).

About half of those who delay or skip specialist care – almost a million people – do so because of cost.29Ibid.

Some communities receive much less specialist care than others, suggesting they aren’t getting the care they need. People in wealthy communities receive about a quarter more services than people in poorer communities (Figure 1.7),30Mean age-and-sex-adjusted service levels for areas in the most advantaged and least advantaged population-weighted quintiles of Index of Relative Socio-economic Advantage and Disadvantage. Services include public and private specialist services and are based on the location of the patient, not the specialist. For example, if a resident of Alice Springs had a telephone consultation with a specialist in Darwin, that appointment would be captured in the Alice Springs service count, not the Darwin service count. See Appendix B for data limitations. despite being healthier. Poorer people tend to have more chronic conditions,31Duckett et al (2022). so greater need for regular specialist visits, but less in the bank to pay for them.

Figure 1.7: People in poorer areas receive fewer specialist services

Number of specialist services per person, 2022-23

Figure 1.7: People in poorer areas receive fewer specialist services
Notes: Each point represents one small area (SA3). SA3s are geographical areas typically covering a population of between 30,000 and 130,000 people. Specialist services are counts of public and private service events, adjusted for the age-and-sex profile of each community (see Appendix B). Socio-economic advantage is the Index of Relative Socio-economic Advantage and Disadvantage: ABS (2023b).
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

People in rural communities also disproportionately miss out. If there aren’t enough specialists nearby or virtual care options available, an appointment might mean extra time off work, travel, and accommodation costs.32Zucca et al (2011), Venchiarutti et al (2023), and Thorn and Olley (2023). Half of remote and very remote areas receive less than one specialist service per person, per year (Figure 1.8). There are no parts of major cities where this is the case.

Figure 1.8: People in regional and remote areas receive fewer specialist services

Number of specialist services per person, 2022-23

Figure 1.8: People in regional and remote areas receive fewer specialist services
Notes: Each point represents one small area (SA3). The larger the point, the bigger the area’s population. SA3s are geographical areas typically covering a population of between 30,000 and 130,000 people. The horizontal line indicates the median for each remoteness area. Specialist services are counts of public and private specialist service events (including virtual consultations) for residents of each SA3, adjusted for the age-and-sex profile of each community (see Appendix B).
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

The variation in access to some specialties is even wider. People in the wealthiest communities receive more than double the number of dermatology and psychiatry appointments as people in the poorest communities.33Mean age-and-sex-adjusted service levels for areas in the most advantaged and least advantaged population-weighted quintiles of Index of Relative Socio-economic Advantage and Disadvantage.

Some people also miss out because they lack culturally safe care options. Indigenous Australians’ care can be stymied by distance, communication, and cultural safety barriers.34O’Brien et al (2021). Indigenous Australians received just over half as many specialist services as other Australians, after adjusting for age, in 2017-18: National Indigenous Australians Agency (2025). And language barriers, poor cultural competency, transport difficulties, and other system factors can affect access to specialist care for people from culturally and linguistically diverse backgrounds.35Khatri and Assefa (2022).

1.4 Missed care is bad for patients and bad for the health system

A specialist visit requires a referral, which means that a doctor is concerned about a serious health condition that warrants further attention, or is uncertain about a health risk.36Referrals can be made by GPs, or within hospitals. Nurse practitioners can also refer patients to specialists. For example, a GP might have identified a suspicious mole, lump in a breast, or abnormal blood test result that needs specialist attention. The costs of missing out on this care can be high.

Patients’ conditions can deteriorate while they linger on waiting lists. Long waits or missed care can delay crucial diagnoses and treatment.37For example, delays to cancer treatment increase mortality: Hanna et al (2020). See also: Prentice and Pizer (2007), A. K. Lewis et al (2021), and Reichert and Jacobs (2018). In other cases, waiting for treatment or missing care means enduring pain and distress.38For example, people waiting more than six months for chronic pain outpatient appointments report increasing rates of distress, pain interfering in their daily life, and increased medication use: Burke et al (2020). Patients waiting to be assessed by a specialist for cataract surgery are at increased risk of falls and losing their driver’s licence: Huang-Lung et al (2022).

Long waiting lists and missed care are also costly for the health system.39Nyman et al (1998), Rolfson et al (2012), and James et al (2024). Sicker patients are likely to need more intensive – and expensive – care (such as hospital treatment) down the track. And long waiting lists gum up the health system, increasing administrative costs associated with checking that referrals, diagnostics, and contact details are up to date; booking and re-booking appointments; and managing the increased risk of patient non-attendance.

1.5 Governments need to take charge

Long waits, high fees, and missed care reflect a specialist system that is running on autopilot. Governments haven’t done enough to steer the private and public systems to deliver the best results for patients.

It is widely accepted that mixed private and public healthcare markets, such as Australia’s specialist market, must be carefully managed.40See, for example, Productivity Commission (2018, p. 79) and Department of Prime Minister and Cabinet (2023). Individual players – patients, doctors, clinic managers, and training bodies – lack the motivation, information, or system-wide perspective needed to deliver the best results.

The rest of this report shows what governments should do to steer the system towards better results:

  • Train the specialist workforce Australia needs (Chapter 2).
  • Invest in public clinics where they are needed most (Chapter 3).
  • Make public specialist clinics more efficient (Chapter 4).
  • Support GPs to do more, thereby reducing specialist referrals (Chapter 5).
  • Reduce excessive fees (Chapter 6).

Patients will benefit if governments get to work. More care could be handled by a patient’s GP, with specialist advice, avoiding the hassle of a specialist visit. More public appointments in under-served areas, and more productive clinics, will mean shorter waiting times. Severe shortages of some specialties in some regions will lessen. And patients will get fewer extreme fee shocks.

1.6 The scope of this report

This report focuses on outpatient specialist care. These are the referred consultation appointments that are typically provided in private clinics or public outpatient clinics.41Many specialists also provide treatment – for example, a patient may have an initial consultation with a surgeon, and then the doctor might operate on that patient in a hospital. We focus only on the initial consultation, not the treatment. They are not covered by private health insurance.

Access to primary care is a barrier to specialist care for many, since patients need to get a referral from a GP or other health professional to see a specialist. Governments should support GPs to manage more chronic disease (reducing the need to refer patients to specialists) and make sure patients in ‘GP deserts’ can get care. This report does not cover these topics, but they are addressed in our 2022 report, A new Medicare: Strengthening general practice.42Breadon and Romanes (2022) show how fairer and more flexible funding, multidiciplinary teams, and improved management of the system would enable general practice to do more.

IN THIS CHAPTER

2 Train the specialist workforce Australia needs

For too long, specialist training numbers have been determined by the priorities of specialist colleges and the immediate service needs of public hospitals. This has left Australia without enough specialists in some disciplines, and in many rural areas.

Specialist training places should be tied to community needs. To do that, Australia needs better workforce planning that sets clear goals based on how many specialists will be needed across the country. Training funding should be tied to those goals. And the bodies that train and accredit specialists should be accountable for their role in achieving the goals.

It will take time to change the training system. To help fill gaps in the meantime, it should be easier for specialists to migrate to Australia.

2.1 The training system is not producing the specialist workforce Australia needs

Australia’s specialist training system (Figure 2.1) isn’t responding well enough to our healthcare needs.43This report focuses on the role of specialists in outpatient clinics, but many also work in inpatient care settings, and the issues in the training system that we describe affect the supply of specialists across the whole system. Over the past decade, the number of specialists has grown, but under-supplied specialties such as dermatology, psychiatry, and ophthalmology have lagged (Figure 2.2). And there aren’t enough specialists in rural areas, in part because there are too few opportunities for rural training.

Figure 2.1: How Australia’s GPs and specialists are trained

Figure 2.1: How Australia’s GPs and specialists are trained
Source: Department of Health and Aged Care 2023a.

Figure 2.2: Under-supplied specialties are growing more slowly than the average

Growth in number of doctors from 2013 to 2023

Figure 2.2: Under-supplied specialties are growing more slowly than the average
Note: ‘All doctors’ excludes medical practitioners with no stated specialty, because this category is mostly comprised of doctors who have not completed specialist training.
Sources: Department of Health and Aged Care (2023a), Department of Health and Aged Care (2018a), Department of Health and Aged Care (2018b), Department of Health and Aged Care (2017a), and Department of Health and Aged Care (2016a).

2.1.1 Some specialties have been persistently under-supplied

Australia’s specialist workforce has doubled as a share of the population in the past two decades,44OECD (2023). but shortages of some specialties have persisted. Dermatologists, psychiatrists, and ophthalmologists have been identified as under-supplied.45Department of Health and Aged Care (2019), Department of Health and Aged Care (2018a), Department of Health and Aged Care (2017a), and Department of Health and Aged Care (2016a). Obstetrics and gynaecology specialists are projected to be under-supplied by 2030: Department of Health and Aged Care (2018b).

The problem isn’t fixing itself: under-supplied specialties have grown more slowly than average (Figure 2.3). For example, the number of ophthalmologists increased by just 19 per cent in the decade to 2023, while the number of emergency medicine specialists – estimated by the Department of Health and Aged Care to be adequately or over-supplied46Department of Health and Aged Care (2017b). – more than doubled.

Australia also needs more generalist physicians and surgeons. Generalists play a key role in regional areas that do not have the population to sustain doctors working in every sub-specialty.47Sub-specialists focus on a narrow field within a medical specialty. For example, sub-specialist electrophysiologists are cardiologists who care for patients with heart rhythm disorders. And sub-specialisation makes the workforce less flexible, which could make care more fragmented, less efficient, and less safe.48Department of Health and Aged Care (2021b). But the number of sub-specialist physicians and surgeons is increasing twice as fast as the number of generalist physicians and surgeons.49Comparing annual growth rates from 2013 to 2021: Department of Health and Aged Care (ibid). However, rural generalists will soon be recognised as a specialty in their own right: M. Butler (2025a).

A lack of training positions is a big part of the problem. Most under-supplied specialties – including dermatology, obstetrics and gynaecology, and ophthalmology – have many more applicants for vocational training each year than positions available.50RANZCO (2024), and RANZCOG (2024). For example, in 2022, 111 people applied for dermatology training, but only 40 trainees started in 2023.51Australasian College of Dermatologists (2022), and Department of Health and Aged Care (2023b).

Psychiatry is the exception, with fewer applicants than available training positions.52In 2022 there were only 1,834 current psychiatrists in vocational training but 2,112 available training posts: Department of Health and Aged Care (2023b). Programs to entice medical graduates to psychiatry have helped, but there are still too few trainees.53Nguyen and Solanki (2023).

2.1.2 There’s too little postgraduate training in rural areas

Rural health services struggle to fill vacancies. They’re often left employing temporary locum staff to fill gaps, increasing costs and reducing continuity of care for patients.54Kruk (2023), Department of Health and Aged Care (2022a), May (2023), Department of Health and Aged Care (2019, p. 26), Department of Health and Aged Care (2021b), and Kruk (2023). In 2019, there were nearly 200 specialists per 100,000 people in major cities, but fewer than 70 per 100,000 in remote communities.55The problem is even worse for under-supplied specialties such as dermatology. Fewer than 8 per cent of dermatologists work outside major cities: Department of Health and Aged Care (2023a).

More rural training would help, because students who train in rural areas are more likely to later practise in rural areas.56Malhi et al (2019), O’Sullivan and McGrail (2020), McGirr et al (2019), Playford et al (2017), and McGrail et al (2023). A study of University of Queensland graduates found that specialists with a rural background who completed two years of medical school training in rural areas were 16 times more likely to practise in rural areas than metropolitan students with no rural training. Rural-background students who didn’t do rural training were only twice as likely to practise in rural areas: Kwan et al (2017).

Figure 2.3: Psychiatry has increased its trainee numbers, but other under-supplied specialties are not catching up

Trainees by specialty, relative to 2011

Figure 2.3: Psychiatry has increased its trainee numbers, but other under-supplied specialties are not catching up
Note: Indexed for each specialty, with 2011 trainee numbers = 100.
Source: Department of Health and Aged Care (2023b).

Many undergraduate medical students have the opportunity to train in rural areas: about 34 per cent complete at least six months of their clinical training in rural areas.57Medical Deans Australia and New Zealand (2024). But there are fewer opportunities for rural postgraduate training. A third of final-year medical students say they intend to work outside the major cities, but just 14 per cent of specialist trainees actually do.58Medical Deans Australia and New Zealand (2024), and Department of Health and Aged Care (2024a).

2.2 Why we’re not training the specialists we need

Persistent shortages of some types of specialists, and in many rural areas, are caused by problems with the way we plan, fund, and accredit specialist training.

2.2.1 Poor workforce planning

Australia needs a comprehensive, long-term workforce plan to ensure we have the specialist workforce to meet our healthcare needs.59WHO (2006), OECD (2013), and Health Workforce Policies in OECD Countries (2016). At the moment, there is no comprehensive national workforce planning mechanism.

Planning is important because of the long time lags and many players involved in training specialists.

It takes at least 12 years to train a medical specialist (Figure 2.1 on page 15), so governments need to look ahead to identify what specialists will be needed to meet our future health needs.60HWA (2014).

Governments, universities, medical colleges, and health services all make decisions on how many and what types of specialists are trained in Australia. Without a plan – backed by funding and accountability – their decisions on training volumes, skills, and locations won’t be aligned to each other, or to community needs.61HWA (2014) and Department of Health and Aged Care (2019).

But, since the national planning and advisory body, Health Workforce Australia, was abolished in 2014, supply and demand modelling has been ad hoc and fragmented.62A committee, the Medical Workforce Advisory Collaboration, currently advises governments on workforce issues, but isn’t equipped to undertake comprehensive, whole-system planning: Department of Health and Aged Care (2025b). Other models have been published, but focus on individual specialties rather than the
system as a whole: Department of Health and Aged Care (2016a), Department of Health and Aged Care (2016b), Department of Health and Aged Care (2017a), Department of Health and Aged Care (2017b), Department of Health and Aged Care (2018a), and Department of Health and Aged Care (2018b).

There is very limited system-wide data on workforce supply, workforce demand, training activity, or training capacity.63Kruk (2023), and Department of Health and Aged Care (2022b). Governments, medical colleges, and regulators use different data and methods to forecast specialty supply and demand. As a result, Australia does not have a shared understanding of what the workforce should look like or the changes needed to secure it.64Department of Health and Aged Care (2021b).

2.2.2 Funding for specialist training is disconnected from workforce needs

Box 1: Hospitals’ reliance on registrars skews training places

Historically, all medical students followed a clear path from junior doctor, to registrar, to specialist. Now, health services increasingly rely on a large cohort of ‘middle-grade’ trainee doctors – rather than specialists – to deliver 24/7 acute care.aDoctors who have sufficient skills and experience to provide care under supervision but aren’t qualified specialists: Department of Health and Aged Care (2021b, p. 41).

This means that in some specialties, such as emergency medicine, hospitals fund more training positions than there is future need, or jobs, for fully accredited specialists.bRosie (2015) and Department of Health and Aged Care (2019). In contrast, training positions in under-supplied specialties such as dermatology often go unfunded.cDepartment of Health and Aged Care (2019).

Health services are also employing more unaccredited registrars who complete similar tasks but are not recognised as trainees and cannot progress towards fellowship.dDepartment of Health and Aged Care (2021b). Unaccredited registrars have fewer protections than trainees and are more likely to feel dissatisfied or burn out.eIbid.

The registrar workforce model should change, to create attractive alternatives to specialist accreditation. A new model should support sustainable, long-term, non-specialist medical roles that attract non-accredited doctors in fields with high demand for registrar workers. The Department of Health and Aged Care is developing a framework for service registrars and career medical officers to help address this.fDepartment of Health and Aged Care (2024b).

The lion’s share of specialist training funding comes from public hospital budgets.65Ibid. This funding is mostly dictated by how many services hospitals deliver — through Activity-Based Funding — and how much training they deliver, through Teaching, Training, and Research funding. Neither of these funding sources is linked to workforce planning, and both lock in the current distribution of training places, disadvantaging rural areas.

Hospitals increasingly rely on registrars (see Figure 2.1) to deliver core services. But the immediate need for hospital trainees does not match the long-term need for these specialists (Box 1). This contributes to too much training in some areas, such as in emergency medicine, and too little in others, such as dermatology.

The federal government’s Specialist Training Program (STP) aims to address these imbalances by funding new positions in under-supplied specialties and in rural, remote, and private hospitals.66 But the program is too small and inflexible to enable the training system to respond to workforce needs.67Training positions funded by the STP are just 7 per cent of the total: Department of Health and Aged Care (2017c).

Some states have their own targeted funding programs to boost training in under-supplied specialties and regions.68For example, the Victorian Medical Specialist Training Program: Victorian Department of Health (2025) and Department of Health and Aged Care (2022a). But this funding is also too small to make much difference.

2.2.3 Specialist colleges aren’t delivering the workforce Australia needs

Specialist colleges control crucial steps in the training process for Australia’s specialists.69Specialist colleges’ roles include: developing curricula and goals for training programs; accrediting hospitals and other services as training sites; selecting junior doctors for specialist training; supervising trainees; examining trainees; and assessing overseas-trained specialists: ACCC and Australian Workforce Officials Committee (2005), National Health Practitioner Ombudsman (2023), and Australian Medical Council (2023). But they are not set up to take into account the interests of the community as a whole. Their processes often add red tape and complexity, stymieing supply.70Woods (2017), Department of Health and Aged Care (2022a), and National Health Practitioner Ombudsman (2023).

Colleges’ interests and expertise don’t align with community needs

Colleges are not set up to solve workforce shortages. They are led by members, whose interests may not align with broader system goals.71Blair and Durrance (2014). And colleges’ expertise is in their specialty’s skills and knowledge, not the system-wide effects of training and accreditation decisions.72National Health Practitioner Ombudsman (2023) and ACCC and Australian Workforce Officials Committee (2005).

Colleges are accountable to the Australian Medical Council (AMC), an independent regulatory body that sets the standards colleges must meet to be accredited. But the AMC’s standards are often vague and disconnected from community needs.73For example, the AMC standards do not require colleges to consider how well trainee selection aligns with community needs, including rural background and experience: Australian Medical Council (2023). In 2024, the AMC began a review of the standards for assessment and accreditation of specialist medical programs. And an independent review of complexity in the National Registration and Accreditation Scheme is considering giving health ministers more power to direct accreditation bodies such as colleges: Dawson (2024).

Most day-to-day college work is completed pro bono by fellows, and operations are largely funded by trainee and membership fees.74See, for example, RACP (2023), Australasian College of Dermatologists (2022), and RANZCOG (2023). This means colleges have limited resources to develop new training models or adapt their practices, and their funding is not linked to clear targets or performance indicators.

To address this, the federal government provides some funding to colleges under the Specialist Training Program (STP) and the Flexible Approach to Training in Expanded Settings (FATES) program.75Australian Government (2021). But these programs are currently too small to have a big impact.76The STP partially supports just 7 per cent of training positions: Department of Health and Aged Care (2017c). The FATES program provided $29.5 million over four years (2021/22–2024/25) in competitive grants to colleges to support improvements in the distribution of specialist training: Australian Government
(2021).

Accreditation is inconsistent and inflexible

Hospitals or health services that wish to host a trainee must be accredited by the relevant specialist college, to ensure they can provide a safe, high-quality training environment.77Department of Health and Aged Care (2022a). But the process is flawed.

Colleges’ accreditation rules vary significantly. Some lack transparent policies and adequate procedures.78National Health Practitioner Ombudsman (2023). And internal politics can affect accreditation decisions.79Department of Health and Aged Care (2022a). These concerns date back decades. A joint report by the ACCC and the Australian Health Workforce Officials
Committee in 2005 said: ‘A recurring theme is that at times colleges’ processes appear to lack procedural fairness and transparency, and that they ‘unreasonably’ restrict entry to college fellowship.’: ACCC and Australian Workforce Officials Committee (2005, p. 3).

Accreditation is inflexible, with strict requirements about the types and volumes of care seen during training, and how trainees are supervised (Box 2). Requirements are often based on historical practices rather than evidence, limiting the uptake of successful flexible and remote supervision models.80Martin et al (2018), Martin et al (2022), Coleman et al (2022), Cameron et al (2015), and Department of Health and Aged Care (2022a). This puts a handbrake on new training places, particularly in rural areas.81Department of Health and Aged Care (2022a). It can also limit access to care, with rural health services that are unable to host training lacking the workforce needed for some types of care: National Health Practitioner Ombudsman (2023).

Box 2: Barriers to accreditation for training sites

There are many examples of how the inflexibility of college rules and a lack of accountability can limit training opportunities.

The Northern Territory has no accredited training sites for facial trauma, despite having a similar volume of cases to Victoria. College requirements that each training location have four trainees are not feasible for NT health services.aDepartment of Health and Aged Care (2022a, p. 38).

In rural NSW, a health service faced resistance to establishing a training position because other specialists did not believe a
regional centre was suitable for training. The site met accreditation requirements, but when the health service wrote to the college to establish the position it did not receive a response. Later, when the NSW government intervened, the college assessed the site and it was eventually accredited..bIbid (p. 71).

A proposal for an innovative Basic Physician Training in
Paediatrics and Child Health post in Far North Queensland
received positive feedback from Brisbane’s Directors of Physician Education. But the The Royal Australasian College of Physicians
rejected the post because it did not align with the existing training model.cIbid (p. 70).

Trainee selection is focused on the wrong things

Colleges put too much weight on narrow academic metrics such as publications and higher degrees when selecting trainees. These requirements are expensive and burdensome for junior doctors,82Stehlik et al (2025). and risk excluding applicants from poorer and rural backgrounds,83Brandenburg et al (2024), Glick (2000), and Larkins et al (2015). with no evidence that they make for more competent trainees.84Withers et al (2021) and Department of Health and Aged Care (2021b).

Colleges also haven’t fully integrated broader health system goals, such as increasing rural training, into their selection processes.85A 2021 study found that most specialist colleges had no rural-focused criteria for selecting trainees: McGrail et al (2021) Those that did implement rural criteria gave insufficient weight to rural background and experience. No colleges reported on rural selection outcomes.

Trainees are at risk of burning out and dropping out

Specialist trainees are at high risk of burnout and psychological distress.86Parr et al (2016), Soares and Chan (2016), and Ganes and Sunder (2024). Training program demands contribute to this risk.

Many trainees lack support at work, particularly on rural rotations and in new jobs, and bullying and discrimination are common.87Balhatchet et al (2023), and Wilkes et al (2024). Trainees often work long and unpredictable hours, while studying for high-stakes exams, increasing the risk of stress and burnout.88Balhatchet et al (2023).

These factors contribute to high rates of attrition and failure in some fields, such as surgery and ophthalmology.89Forel et al (2018), Australian Medical Council (2021), and Jessup et al (2025). And they help to explain the gender gap in some specialties.90Wasserman (2023). Long and inflexible hours are particularly difficult for people with child-caring responsibilities, which often fall to women.91Wood et al (2021).

2.3 Overseas specialists face high barriers

Changes to the training system take time, but workforce shortages are acute now. Specialists who have been trained overseas have an important role to play in ensuring Australians can get needed specialist care. But moving to Australia is complex, costly, and slow.

To practise here, internationally qualified specialists must be assessed by the relevant college.92Colleges assess candidates on their qualifications, training, and experience, to determine comparability to an Australian specialist: Medical Board of Australia (2021). Substantially or partially comparable applicants must then complete a period of supervised practise and any other requirements of the college. These assessments help ensure that they meet Australia’s high standards. But it can take up to two years, and $45,000, to be approved to practise in Australia.93Kruk (2023, p. 6). Colleges’ assessment practices and outcomes vary,94Deloitte Access Economics (2017), AMC (2023), and Medical Board of Australia (2024). Despite the Medical Board of Australia introducing standards: Medical Board of Australia (2021). One reason is ambiguity in the requirements for accreditation under the Health Practitioner Regulation National Law Act 2009. and place too much emphasis on the direct comparability of qualifications.95Sondergaard (2008) and Kruk (2023). Administrative duplication and blockages also slow things down.96Applicants must provide the same information to multiple authorities: Kruk (2023), and the Australian Health Practitioner Regulation Agency processes applications too slowly: ACT Health (2023) and NSW Health (2023).

For many applicants, individual college assessments are overkill. Countries with similar systems to Australia, such as New Zealand, Canada, and the UK, provide expedited pathways for international specialists from trusted health systems and qualifications.97Kruk (2023).

Australia has introduced expedited pathways for anaesthetists and obstetricians and gynaecologists from the UK and Ireland, and psychiatrists from the UK. Pathways for general medicine, general paediatrics, and diagnostic radiology are currently being considered.98Medical Board of Australia (2025). But there are many more opportunities. The UK, for example, recognises specific specialist qualifications from 12 different countries and the European Union.99General Medical Council (2025).

2.4 How to fix supply

Funding and accountability should be linked to a system plan, so the future specialist workforce meets community needs.

2.4.1 Plan for the future

A dedicated national health workforce planning body should be established.100As recommended by the National Medical Workforce Strategy, and supported by the Australian Medical Association: Department of Health and Aged Care (2021b) and Australian Medical Association (2025). The new body should cover the whole health workforce, including specialists, GPs, nurses, and allied health professionals. Part of its job should be to determine the necessary size and distribution of the specialist workforce, the mix of specialties, and the right balance of sub-specialists and generalists.

The new body should get sufficient funding and authority to do its job well. It should be a national body, accountable to all jurisdictions, because both the federal and state governments shape, and have a stake in, the health workforce.

It should have a well-defined, narrow role, focused on technical research and advice. It should: collect, collate, and publish a medical workforce and training dataset; publish supply and demand modelling every two years;101The supply and demand modelling should account for changes in labour supply, such as falling average hours worked: AIHW (2024c). and recommend the number and distribution of university places and training positions.102The new body should also make recommendations on migration and distribution policy settings, including District of Workforce Shortage and Distribution Priority Area measures.

If governments cannot agree to establish a new body, existing structures should be significantly strengthened. Health ministers should give the Medical Workforce Advisory Collaboration, a committee that advises health ministers, expanded expertise, ongoing funding to develop workforce modelling, and a five-year work plan.103Department of Health and Aged Care (2025b). Membership should expand to include expertise in workforce modeling, with specialist colleges taking an advisory role.

2.4.2 Tie training funding to workforce needs

A national pool of funding for training places should be established under the National Health Reform Agreement (NHRA). Training places would be eligible for funding from the pool only if they align with the recommendations of the national planning body on how many positions are needed in each specialty, sub-specialty, and location (both state and rurality).104Funding allocated to each position should reflect differences in the cost of training in remote areas and between different specialties.

Teaching, Training, and Research (TTR) funding in the NHRA should be increased by 20 per cent – an additional $155 million per year. The existing and extra TTR funding should be allocated to the national pool of training places. States and territories should receive federal funding only if they deliver the recommended training positions.105This aligns with recommendations in the mid-term review of the National Health Reform Agreement that TTR funding should be more transparent, and that regional and rural hospitals should get an equitable distribution: Huxtable (2023).

State and territory governments should develop strategies to reorient training places to align with the planning body’s recommendations. For example, this could include reducing hospitals’ reliance on registrars for service delivery (Box 1).

2.4.3 Fund colleges to shift training

Colleges should, along with states and territories, agree to facilitate the training places funded under the national pool.

The federal government should give more support to colleges to help them develop flexible training programs and expand training. The Flexible Approach to Training in Expanded Settings (FATES) program should be continued beyond 2024-25 and expanded. Funding for the program should be doubled, to $17 million per year. Colleges should remain eligible only if they sign on to the national training targets and demonstrate progress towards them.

2.4.4 Make training standards more consistent

Training standards should be more consistent and transparent. Work is underway to do this,106A taskforce is advising ministers on reforming specialist accreditation: Department of Health and Aged Care (2025c) including a review of the Australian Medical Council’s standards for colleges, and work revising the standards and procedures for the accreditation of specialist training sites.107Australian Medical Council (2025).

The revised accreditation rules should:

  • provide core standards for all specialist training sites, accounting for differences between sites, especially rural sites;
  • provide specialty-specific standards for training sites, where necessary; and
  • outline the process for the assessment of sites against the standards, as well as complaint resolution mechanisms.

As part of the broader review of standards for colleges, the AMC should give colleges clear guidance to ensure their training requirements and selection processes align with health system goals.108The AMC has a legislated objective to facilitate access to care and enable a flexible, responsive, and sustainable workforce: Queensland Parliament (2009). This should include requiring colleges to use trainee selection criteria and curricula that promote generalist and rural roles.

Once the revised sets of standards are in place, the AMC should regularly review colleges’ processes to ensure they adhere to them.

If after three years the changes haven’t made training more consistent and responsive to community needs, legislation should be amended so that health ministers can give clearer policy direction to the bodies responsible for registering and accrediting medical professionals.109As recommended by Cormack (2024), and under consideration by Dawson (2024).

2.4.5 Lower barriers for overseas specialists

Australian authorities should reduce costs and time for overseas specialist applicants and employers,110As recommended by Kruk (2023). by removing duplication, aligning standards and evidence, and allowing applicants to provide information through a single portal.

The Medical Board of Australia and the Australian Medical Council should identify trusted and comparable health systems and qualifications for medical specialists. Specialists who have sufficient experience in these systems, or recognised qualifications, should be eligible for provisional registration without having their knowledge and skills reassessed.

The number of specialties eligible for expedited pathways from countries with similar health systems to Australia, such as the UK, Canada, and New Zealand, should be expanded as a priority.

To streamline assessments, final decisions on the comparability of overseas specialists should be made by the AMC rather than specialist medical colleges. This would enable the AMC – where sufficient evidence of comparability is available – to recommend provisional registration without additional college assessments. Colleges could then assess more complex cases.111The AMC would keep drawing on expertise from specialist colleges as needed. This model has recently been proposed by Medical Council of New Zealand (2024) and was an escalation recommendation of Kruk (2023).

As part of these changes, the Health Practitioner Regulation National Law Act 2009112Queensland Parliament (2009). should be amended to allow greater consideration of the experience and skills of specialists.113In addition to the equivalence of qualifications.

Changes to skilled migration policy more broadly would also open the door for more overseas-trained specialists to work in Australia.114Coates et al (2024).The federal government should reform the points test by allocating visas to migrants – such as medical specialists – who are likely to make the biggest economic contribution to Australia. The government should also invest more in attracting skilled migrants.115Our recommended changes to the points test would result in more medical practitioners being granted points-tested visas: Coates et al (ibid, p. 58).

The federal government should make it easier for hospitals and health services to sponsor the workers they need, by simplifying and speeding up the process for employers to sponsor visas.116Grattan has previously recommended changes to temporary and permanent employer-sponsored visas. See Coates et al (2022).And state and territory governments should offer more help to hospitals and health services to recruit and sponsor the workers they need.117Coates et al (2024, p. 59).

IN THIS CHAPTER

3 Invest in public clinics where they are needed most

Public clinics provide essential specialist care. For many Australians, private specialists simply cost too much, or are too far from where they live. But governments have not invested enough in public clinics where they are needed most, leaving too many gaps.

Governments should commit to a national minimum level of specialist access. Over the next five years, they should target the worst gaps, and spend $470 million a year to provide an extra 984,000 public specialist services in the most under-served areas. After this, governments should continue to expand public specialist care, to keep cutting waiting times and improving access.

3.1 Public care doesn’t make up for big gaps in private care

There are big differences in access to care across communities (Figure 3.1).118Our analysis is based on the location of the patient, not the specialist. For example, if a resident of Alice Springs had a telephone consultation with a specialist in Darwin, that appointment would be captured in the Alice Springs service count, not the Darwin service count. These results merge data from two different sources, and should be treated as indicative only: see Appendix B. After adjusting for differences in age, sex, health, and wealth, people in the worst-served areas receive about a third fewer services, per person, than people in the best-served communities.

Figure 3.1: Public services don’t make up for low private services

Specialist services per person, 2022-23

Figure 3.1: Public services don’t make up for low private services
Notes: Each bar represents one small area (SA4). SA4s are geographic areas that typically encompass a population of between 100,000 and 300,000 people in regional areas and 300,000 to 500,000 people in cities. Numbers are actual service use, not adjusted for age, sex, health, or wealth. See Appendix B.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

In a universal health system like Australia’s, public specialist clinics should plug the gaps left by the private market. But public investment could be much better targeted to the areas missing out on private care.

The communities that receive the least private services receive about 26 fewer private services, per 100 people, than the median.119Bottom fifth of communities for total private specialist services, weighted by population. These figures are not adjusted for age, sex, and other drivers of healthcare demand and should be interpreted as only crude indicators of access.But those same communities only receive an additional three public services, per 100 people.

The gaps are even bigger for some specialties (Figure 3.2). There are very few additional public dermatology, endocrinology, cardiology,
and psychiatry services in the communities with the fewest private appointments for each of those specialties.

Figure 3.2: Public services only partly compensate for missed private services – and not at all in some specialties

Number of services per 100 people in bottom private quintile, relative to median

Figure 3.2: Public services only partly compensate for missed private services – and not at all in some specialties
Notes: Bottom quintile is the bottom 20 per cent of SA3s for private specialist services, weighted by population. SA3s are geographical areas typically covering a population of between 30,000 and 130,000 people. Data are from 2022-23.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

3.2 Target the worst first

Governments should expand services in the areas that have the worst access to care. We recommend a national target to pull the bottom quarter of the country up to the 25th percentile of services per person, for each specialty, within five years (Figure 3.3).120The estimates of service use and target threshold should be adjusted for each community’s need and non-need characteristics, as we outline in Appendix B.

Our estimates – adjusted for age and sex only – point to 81 communities that require additional investment in at least one specialty.121Almost all of the 88 SA4s included in our analysis. SA4s typically have a population of 100,000-300,000 in regional areas and 300,000-500,000 in cities. Our cost estimates are conservative (Appendix B) and would be reduced by reforms to increase productivity in public clinics (Chapter 4).An additional 984,000 appointments every year to expand public services to fill all of these gaps would cost approximately $470 million.

The communities that need the biggest increase in services are remote and regional communities, such as outback NT, SA, WA, and Queensland (Figure 3.4). But other places, including parts of major cities, are missing out on particular specialties – for example, people in North East Perth receive far fewer paediatrics appointments than average, and residents of South West Sydney receive far fewer psychiatry appointments than the rest of the country (Figure 3.5).

Sicker and poorer communities need more care than average, so governments should use more sophisticated models of access to each specialty to decide where to invest. They should also validate and improve the underlying data if required (these data were not originally collected for the purpose of service planning).

To show how needs-adjusted estimates of service use could inform system planning, we adjusted each community’s overall specialist service use (that is, not split out into individual specialties) to account for health and wealth, as well as age and sex. We found that adjusting for need is important. Areas that are missing out, typically poorer areas, have even greater need for care than average, so the access gap is even starker than it initially appears (Appendix B).

Figure 3.3: More services are needed to help the least-served communities catch up to the 25th percentile

Specialist services per person

Figure 3.3: More services are needed to help the least-served communities catch up to the 25th percentile
Notes: Each bar is one SA4. SA4s are geographic areas that typically encompass a population of between 100,000 and 300,000 people in regional areas and 300,000 to 500,000 people in cities. Adjusted for community age-and-sex profile only. Based on 2022-23 data. Services required to catch up to 25th percentile for each specialty. See Appendix B.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

3.3 Commit to filling the biggest gaps

The minimum level of specialist care should be enshrined in the National Health Reform Agreement, setting a new level of accountability for providing an effective safety net in all communities.122This could be included as an addendum to the Agreement. The minimum level of services should be adjusted for need: see Appendix B for more information.

The Agreement should commit to new funding from both levels of government to achieve the target.123Public specialist clinics are jointly funded by the federal and state governments, with the rules set out in the National Health Reform Agreement.The new funding should be tied to regions that are below the target and should not be counted towards any cap in the growth of public hospital funding.

3.4 Making it happen

Public services should be expanded to meet the 25th percentile target. Governments have few levers to direct private specialists to work in particular areas. Any efforts to encourage them to do so are likely to be expensive and ineffective (see Box 9 on page 49). And public clinics have broader benefits for the system, such as modelling best-practice multidisciplinary models of care, and training the next generation of specialists (Chapter 4).

Targeting the 25th percentile is a balanced goal that reflects the urgency of filling healthcare gaps, but acknowledges workforce and budget constraints.124Our recommendations on migration (Chapter 2) and public clinic productivity (Chapter 4) will help address these constraints.

Figure 3.4: Rural and regional communities require the biggest proportional increase in specialist services

Percentage change in total services to reach 25th percentile for each specialty

Figure 3.4: Rural and regional communities require the biggest proportional increase in specialist services
Notes: Chart shows the top 20 SA4s by percentage change. SA4s are geographic areas that typically encompass a population of between 100,000 and 300,000 people in regional areas and 300,000 to 500,000 people in cities. Adjusted for community age-and-sex profile only. Based on 2022-23 data.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

Figure 3.5: Some communities need big increases in cardiology, paediatrics, and psychiatry care

Percentage increase in total services to reach 25th percentile

Figure 3.5: Some communities need big increases in cardiology, paediatrics, and psychiatry care
Notes: Based on 2022-23 data. Adjusted for community age-and-sex profile only. See Appendix B.
Sources: Grattan Institute analysis of AIHW (2024b) and ABS (2024b).

State governments should have flexibility in how they meet their targets. Standard models may not be practical or efficient, especially in rural areas. New investment is an opportunity to do things in new and better ways (Chapter 4). Governments might build and staff new clinics in under-served areas, but the target could also be met through virtual care (Box 3), fly-in-fly-out workers, or patient transport.125Our costings include recurrent costs, but not capital costs, because this would require detailed service planning: see Appendix B. Since new care is a small share of current services in most regions, and some new care could be virtual, new infrastructure may not be needed in many regions.

Governments should also consider the broader health infrastructure in each community. They could invest more in existing providers, such as Aboriginal Community Controlled Health Organisations, regional outreach programs, or private providers, rather than building new services from scratch.126Breadon and Romanes (2022).

To account for the additional costs of providing care in some under-served communities – particularly rural communities – our cost estimates include a 20 per cent loading relative to the average cost of delivering services, as well as the standard rural loadings that are applied to public hospital service delivery (Appendix B).

Box 3: Virtual care can reduce access gaps

Virtual consultations can improve access to specialist care. They eliminate the time, cost, and effort associated with travelling to see a specialist in person, and can reduce wait times.

Rural and Indigenous communities can particularly benefit from virtual care. A study of virtual renal care in rural Queensland found a significant improvement in attendance rates, from 80 per cent to 90 per cent, for follow-up visits.aVenuthurupalli et al (2018).

In Western Australia’s Fitzroy Valley, a virtual Ear, Nose, and Throat (ENT) program increased the number of children able to be screened every 18 months from 148 to 710, and reduced median wait times from 141 days to 22 days.bReeve et al (2014).

Beyond improved access, studies of telehealth services for Indigenous communities have reported improved social and emotional wellbeing, better clinical outcomes, and fewer inter-hospital transfers.cCaffery et al (2017).

3.5 What next?

Our five-year target is conservative, and the Agreement should allow states to go further if they can.

In five years, it will be easier to expand public specialist care further due to fewer unnecessary referrals (Chapter 5), more specialists (Chapter 2), and greater clinic productivity (Chapter 4). And in five years, it will be time for governments to agree a new national health funding deal.

Governments should use that agreement to chart the next stage of investment and reform. That should include raising the minimum level of specialist care guaranteed for all communities, and it could include goals for the share of all specialist care that is free to patients.

Continuing to expand public specialist care will keep cutting waiting times and expanding capacity to train specialists. It will also give consumers meaningful choices to avoid high-fee specialists, putting downward pressure on out-of-pocket costs. Through these staged investments, governments will move closer to population health budgeting, where healthcare resources are allocated according to each community’s needs (Box 4).

Box 4: Population health budgeting is the long-term aim

Australian governments’ ultimate goal should be population health budgeting: allocating funding for public outpatient clinics based on measures of health need in each area.

Population health budgeting is used overseas, including in England, Scotland, the Netherlands, and parts of Canada and Sweden.aPenno et al (2013). These models allocate funding according to an area’s demographic characteristics (such as age, sex, and socio-economic status), morbidity, mortality, and costs of provision.

One study of this resource allocation approach in England found that it reduced the mortality gap between affluent and deprived areas.bBarr et al (2014).

IN THIS CHAPTER

4 Modernise public clinics

As explained in Chapter 3, public specialist clinics should be expanded to improve access to care in the worst-served parts of Australia. But to meet growing demand, drive down wait times, and get the best value for taxpayers, public clinics must also be more productive.

Governments should lay out clearer roles and goals for public specialist clinics, fund them differently, and help them improve. This would help make the whole system work better.

4.1 There is room to improve public clinic productivity

There is limited evidence on how productive public specialist clinics are. Clinics’ staffing and processes vary widely, making it difficult to compare. And it is hard to measure how efficiently they perform some of their roles, such as clinical training.

But many studies and successful pilot programs point to opportunities to improve, such as by changing workforce roles, improving scheduling and triage, and better using technology (Box 5).127In our consultation with clinicians, hospital executives, and state health departments, we commonly heard that productive practices are not systematically scaled up across hospitals, so that public clinics operate in inconsistent ways.

Box 5: Productivity improvements are possible

Our literature reviews suggest that changes to workforce roles and improvements to processes can increase specialist clinic productivity and cut wait times.

Changing workforce roles, typically making greater use of allied and other health professionals, are a promising approach. All of the studies we considered, across a wide range of clinic types,aOrthopaedic, surgical, ear nose and throat, geriatric, gastroenterology, neurosurgery, and urology. For citations and limitations see Appendix C. found reductions in average wait times, in several cases by months. No study found that the quality and safety of care was worse, and four of the five studies that assessed costs found that they fell.bThe other study reported higher costs, but only because of forgone MBS revenue for specialist care, which we recommend removing (Section 4.5).

Studies of other projects to improve productivity – such as improved scheduling and triage, better use of technology, and new models of care – are also encouraging.cAlthough the quality of evidence is lower: see Appendix C. Our findings align with a previous systematic review of interventions to reduce waiting times in outpatient clinics: Naiker et al (2018). They found that the new approaches reduced wait times, resulted in fewer missed appointments, and lowered cost. None found that patient satisfaction or the quality of care deteriorated.

And the huge variation in how clinics operate strongly suggests that best practices could be shared much more widely. Even within single specialties in major cities, there is big variation in the share of appointments that are review appointments (Figure 4.1) and the uptake of virtual care (Figure 4.2).

Missed opportunities to work more effectively are partly the result of a policy vacuum. Specialist clinics have little clarity on their role and their goals, funding models block change, and there is too little support for clinics to improve.

Figure 4.1: There is big variation in the share of review appointments…

Proportion of total appointments that are review appointments, by metropolitan Primary Health Network, 2022-23

Figure 4.1: There is big variation in the share of review appointments...
Notes: Each point represents the patients residing in one metropolitan Primary Health Network (PHN). PHNs coordinate and commission healthcare in an area. Only PHNs whose residents received more than 100 consultations in that specialty are shown. Our data only contain data on patients’ usual residence, not the location of providers. But patients’ residence should be a reasonable proxy for provider location for large, metropolitan geographic catchments like PHNs. We excluded consultations where it is unknown whether the consultation was new or review. Only publicly funded services are included. The eight specialties with the highest public volume are shown. ‘Oncology’ is medical oncology consultation.
Source: Grattan analysis of AIHW (2024b) and ABS (2024b).

Figure 4.2: …and in the share of appointments delivered virtually

Proportion of total appointments that are delivered virtually, by city, 2022-23

Figure 4.2: ... and in the share of appointments delivered virtually
Notes: Each point represents patients residing in a major city. Our data only contain data on patients’ usual residence, not the location of providers. But patients’ residence should be a reasonable proxy for provider location for cities. Only publicly funded services are included. The eight specialties with the highest public volume are shown. ‘Oncology’ is medical oncology consultation.
Source: Grattan analysis of AIHW (2024b) and ABS (2024b).

4.2 There is no vision for the system

Some states have strategic plans for improving outpatient services,128See, for example, Tasmanian Department of Health (2022).but there is no national vision for the role of these services within the broader health system.

Without agreement on the basics, it’s no suprise that each clinic does things in different ways.

4.3 Accountability for performance is weak

Accountability for performance is weak. Data are collected on only a few measures, such as outpatient activity.

Other important performance measures, such as appointment wait times and patient outcomes, are inconsistently defined and measured across the country. For example, NSW, WA, NT, and ACT do not report outpatient appointment wait times, and the states that do report them measure them differently.129Victoria and Queensland report median and 90th percentile wait times, Tasmania reports the 75th percentile, and South Australia reports the median and maximum.

4.4 Funding models don’t promote efficient care

Public hospital specialist clinics are funded in one of two ways. About 88 per cent of services are funded through Activity-Based Funding (ABF), where the federal and state governments provide funding based on the average cost of care.130Some programs and services are also block funded. The terms of this funding are
agreed in the National Health Reform Agreement.The other 12 per cent of services are funded on a fee-for-service basis through the Medicare Benefits Schedule (MBS), with patients bulk billed.131AIHW (2024d).Each funding method has flaws.

4.4.1 Activity-Based Funding doesn’t encourage the most efficient models of care

Activity-Based Funding (ABF) reflects the average cost of how care is delivered now, not how it should be delivered. It doesn’t take into account whether care should take place in a different part of the health system. For example, some care currently provided by specialist clinics could instead by delivered by GPs (Chapter 5), but ABF rewards clinics seeing these patients.

Similarly, ABF doesn’t factor in whether care can be delivered in a better way. For example, its prices are based on average workforce costs. But a different mix of clinicians, such as allied health workers playing a bigger role, might be able to deliver the same care more cheaply (Box 6).

4.4.2 Medicare funding for public clinics is inflexible, and adds complexity and risk

Allowing public outpatient clinics to operate as bulk-billing Medicare clinics has some advantages. It can give clinics an additional source of revenue, assist with staff retention, and provide patients with more choice.132See Department of Health and Aged Care (2023d). But the purpose and benefits of these arrangements are not always clearly defined or measured: Victorian Auditor-General’s Office (2019).But MBS funding models can also be a barrier to efficient care. To receive Medicare funding, patients need a referral to a named specialist, rather than a general referral.133The service does not need to be provided by the particular named specialist, but it must be provided by a clinician of the same specialty exercising a right of private practice: Victorian Department of Health (2023).This makes it hard for clinics to use innovative workforce mixes, even when they are clinically proven and more efficient.

MBS funding also adds administrative complexity and cost, and creates opportunities for fraud. The National Health Funding Body estimates that governments pay twice – once through ABF, and once through MBS – for close to $400 million worth of services a year.134Huxtable (2023, p. 63).Audits and investigations in several states have reported inadequate monitoring and risks of non-compliance.135Concerns about private practice rights leading to inappropriate conduct and maladministration risks were reported by the Independent Commission Against Corruption in South Australia: Lander (2019) and Vanstone (2023). Queensland Audit Office (2013) and Victorian Auditor-General’s Office (2019) found evidence of lost revenue. And a survey of NSW doctors found that most respondents did not have the opportunity to review MBS billings before they were submitted by their hospital, many did not understand how billing was done, and some respondents were concerned about inappropriate billing practices: Australian Medical Association (NSW) (2023).

4.5 A comprehensive reform agenda for public specialist clinics

A comprehensive reform agenda is needed that makes it clear what public clinics are for, how they should operate, and what they should achieve. And it should give them funding and support to help get there.

A clear role, and directions for change

The National Health Reform Agreement (NHRA) should set out a clear role for specialist clinics within the broader health system, and outline how they should improve.

Public clinics’ role should include filling gaps in access to care (Chapter 3), modelling best-practice care,136Meagher et al (2022), and Klumpp and Su (2019).supporting GPs (Chapter 5), training junior specialists (Chapter 2), and research.

The NHRA should set out clear directions for how clinics can improve their productivity. These directions could include shifting to virtual care delivery where it is safe and effective to do so, making better use of the workforce through full-scope and generalist roles, and connecting better with primary care (Box 6).137Another future reform direction is integrating artificial intelligence, which has the potential to improve efficiency through task automation, screening and diagnosis, and patient monitoring: Productivity Commission (2024) and Alowais et al (2023).

Box 6: Three ways to improve specialist clinic productivity

1. Virtual care
Virtual care can be safe, effective, and cheaper than in-person care. Virtual follow-ups have been shown to be safe and effective for
cancer surgery, general surgery, arthroplasty, and cardiovascular ambulatory-sensitive conditions.aMcAlister et al (2023), Xiao et al (2023), Oates et al (2021), Healy et al (2019), and El Ashmawy et al (2021). Virtual appointments save patients
waiting time and transport costs; most people prefer them for follow-up appointments.bSnoswell et al (2022) and Oates et al (2021). And it may be cheaper for the health system in the long run, by avoiding the need for new capital investment.

rpavirtual in NSW uses multidisciplinary teams and virtual delivery models to provide high-quality care to patients outside hospitals.cSydney Local Health District (2024). The service frees up hospital beds and has high patient satisfaction.dWilson et al (2025).

2. Full-scope roles
Allowing doctors, nurses, and allied health professionals to work to the top of their scope can improve the quality and timeliness of care, and boost satisfaction for workers.

The Gold Coast University Hospital implemented a top-of-scope model in a gastroenterology clinic in 2016. Dietitians assessed and provided diet and lifestyle management strategies for low-risk patients.eMutsekwa et al (2019b). Wait times were reduced and there was no change in re-referral rates compared to traditional models.fMutsekwa et al (2021).

3. Better connecting with primary care
Better referrals make specialist clinics more efficient. Several states have developed, or are developing, simple and consistent digital referral systems for public specialist clinics.gQueensland Audit Office (2021), eHealth NSW (2024), and SA Health (2023a).

These systems increase efficiency, avoid errors and waste from manual processing, and cut wait times.hAzamar-Alonso et al (2019), Hendrickson et al (2016), Clarke et al (2010), and
Tobin-Schnittger et al (2018). In future, they could integrate artificial intelligence to triage patients and check that approprate diagnostic tests are completed.iAbdel-Hafez et al (2023), Wee et al (2022), and Nobes et al (2024).

All states should introduce these systems, and GPs should be required to use them when referring patients to public clinics.

Specialist clinics can also do more to help GPs. Chapter 5 explains how public specialist clinics can free up capacity and make the whole system more efficient by providing quick, written advice to GPs.

More intensive knowledge sharing initiatives can also pay dividends. For example, the Diabetes Alliance in NSW aims to support general practices to better manage diabetes. Specialists conduct case conferences with GPs and practice nurses, and provide feedback on
each clinic’s processes and outcomes. Patients who are part of the case conferencing record improvements in metabolic markers.jIncluding haemoglobin, blood pressure, and cholesterol: Acharya et al (2019).

The benefits also spill over to other patients. Diabetes screening rates increase for all patients at participating clinics, and there are
improvements in key metabolic markers across the board.kAcharya et al (2024).

Performance reporting

The NHRA should also set out a nationally consistent framework to measure and report states’ and clinics’ performance. There should be measurable targets and clear definitions, to enable monitoring and comparisons.

The performance measures should include the share of patients seen within clinically recommended times. They should also reinforce the directions for change, for example by including the share of care that is delivered virtually and the number of secondary consultations.

Better funding models

Funding for public specialist clinics should encourage the right care, in the right settings, from the right people. The national hospital pricing body138The Independent Health and Aged Care Pricing Authority (IHACPA). should ensure its pricing model encourages best practices. New prices should reflect the cost of optimal workforce mixes and care delivery models, rather than the cost of current practices.

There should also be loadings or penalties to encourage clinics to deliver care in ways that make the whole health system more efficient. For example, there should be a small decrease in funding for review or follow-up appointments, from the second follow-up appointment onwards. This would encourage clinics to shift ongoing, straightforward care to GPs, and provide support through secondary consultation.139There is good evidence that many patient follow-ups can be managed just as effectively in primary care (with specialist support as needed through secondary consultation), or virtually. See Chapter 5.

Governments should replace MBS funding for public specialist clinics with Activity-Based Funding. This replacement funding, like the investment in new services we recommend (Chapter 3), should be excluded from any cap on funding growth in the NHRA. The change should start with hospitals in major cities, since MBS funding may help retain clinicians in rural areas where workforce supply is limited and fragile.140Several experts we consulted suggested that specialists share in MBS specialist clinic income, and that withdrawing it could jeapordise retention of specialists in rural areas, where replacing them will often be difficult and costly. While the switch to ABF is done for metropolitan hospitals, states should assess the risks for rural workforce retention, along with how to manage this risk, ahead of applying the policy nationwide.

Support to change

Changing how specialist clinics work will be complex and will take time. Clinics can’t be expected to go it alone. Support from health departments, local health networks, and hospital administration will be essential for success.141Horne (2004) studied the factors influencing the adoption of clinical evidence into hospital practice across four Victorian hospitals. He found that a commitment from administrators to provide necessary resources (both knowledge and financial) was essential for changes to be embedded in clinical practice.

States should outline clear standards and guidance for clinics on best practices in areas such as triage, workforce roles, and appointment and wait-list management. They should also provide change-management support,142Le-Dao et al (2020).and share lessons from leading clinics. Clinics should have some flexibility to adapt approaches to local needs, but the standards would be a useful default.143A lack of local ownership and insufficient engagement with clinicians can be barriers to successful implementation: Francis-Auton et al (2024).

And governments must properly fund clinics to undertake this modernisation work. The NHRA should provide $60 million in grants for projects that target measurable improvements in productivity.144These grants could be allocated and managed through the Innovation and Reform Agency proposed in the Mid-Term Review of the National Health Reform Agreement, if it is established: see Huxtable (2023). They should be accompanied by specific performance targets.

These changes should not be yet more short-term, small-scale trials. Instead, funding should be provided for a menu of changes linked to the agreed national vision for specialist clinics. It should be used to spread best practices across multiple clinics, and those practices should be sustainable without ongoing funding.

IN THIS CHAPTER

5 Reduce unnecessary referrals

Specialist referrals for patients whose care could be managed by their GP with some quick advice chew up time and money. State governments should set up a system that enables GPs to seek written advice from specialists, and the federal government should fund GPs to use it.

Our proposal would avoid more than 60,000 referrals and save patients $4 million in specialist fees per year, without compromising the quality of care. It would free up specialists to focus on more complex cases, and cut waiting times for patients who do need to see a specialist.

5.1 It’s hard for GPs to get advice from specialists

GPs can manage most aspects of ongoing patient care.145GPs have the most consistent contact with patients. In Australia, 83 per cent of people saw a GP in 2023-24, whereas only 39 per cent saw a non-GP specialist: ABS (2024a).But as chronic diseases increase, care is getting more complex, making it harder for GPs to diagnose and decide on treatment plans without advice from specialists.146Tzartzas et al (2019).

At present, GPs have few easy options for getting a second opinion. They must use their own professional network or independently find the right support. And they are not directly paid for time spent planning or discussing complex care with other doctors.

As a result, GPs may refer patients to specialists even when they could manage their care more quickly, more cheaply, and just as well, with some quick advice. This adds cost and time for patients who don’t actually need a referral, and adds to wait times for those who do.

5.2 Secondary consultation systems help GPs manage care

Secondary consultation is a safe and efficient way for GPs to get a second opinion on patient care.147Liddy et al (2019a).

Secondary consultation is a doctor-to-doctor discussion about a specific patient question. GPs ask a question and share relevant patient information. Specialists then provide detailed recommendations on diagnosis and care, or advise that a referral is necessary.148Alternative models connecting GPs and specialists, including co-location or co-consultation, also offer potential benefits for patients. But evidence on the efficiency, impact, and cost-effectiveness of such models remains unclear: S. Smith et al (2017) and Winpenny et al (2016).

In Australia, most secondary consultation happens informally, often through existing professional networks or by junior staff at public hospitals.149Tzartzas et al (2019). But more formal systems have been developed. Queensland’s eConsultant Partnership Program provides advice from multiple specialties to GPs across the state.150Job et al (2022). The Western Australian Government has committed to trialling a similar program: RACGP (2025).

Secondary consultation systems in the US and Canada have reduced referrals, helped GPs develop their skills, and cut wait times and costs for patients (see Box 7 for an example).151Secondary consultation has been successful in several regions of the US and Canada, with examples including Champlain eConsult BASE™, Ontario eConsult, and Los Angeles Safety Net eConsult: Liddy et al (2019a), Liddy et al (2018b), Singh et al (2022), and M. L. Barnett et al (2017).

Evaluations of these systems suggest they make many referrals unnecessary, with 70-to-90 per cent of cases able to be managed by a GP (Figure 5.1).152Liddy et al (2019a).

5.3 States should set up secondary consultation systems

Drawing on successful examples here and overseas, states and territories should develop secondary consultation systems that enable GPs to quickly and easily get specialist advice. The systems must be easy for GPs and specialists to use, widely available, and trusted as a source of timely, high-quality advice (Box 8).

Each state government should engage a public hospital to deliver secondary consultation, and that hospital should roster specialists to staff the system.153Public hospitals have diverse staff, administrative capability, and a lower cost base than private specialists. The typical model should be for a single public hospital in each state to manage the system, but smaller jurisdictions could share resources, and the lead hospital could engage specialists working in other hospital systems. Primary Health Networks and other stakeholders should be engaged in planning and delivery.These systems should be underpinned by national clinical guidance, and funding from the federal government to compensate GPs for using the system.154In the longer term, GP funding should be reformed to cover indirect care, including secondary consultation: Breadon and Romanes (2022).

We calculate that this could provide at least 140,500 secondary consultations a year across Australia. This could avoid about 68,000 referrals a year, split across the public and private system, reducing wait times and saving patients $4 million in out-of-pocket costs. And, based on specialist advice, an additional 4,700 patients would receive a referral that the GP was not otherwise planning to make, providing essential specialist care.

The system would cost governments about $26 million a year (see Appendix E).155Costs and benefits would be split across federal and state governments. An estimated $4 million worth of avoided specialist visits could be redistributed to patients awaiting care.

Figure 5.1: After secondary consultation, most cases can be managed by GPs

Outcome of secondary consultation, proportion of cases

Figure 5.1: After secondary consultation, most cases can be managed by GPs
Notes: The proportion is of cases for which GPs sought advice, not all referrals. The examples differ in structure of service delivery and methods of measuring patient outcomes. Reported results have been interpreted to maximise comparability.
Sources: Wrenn et al (2017), North et al (2015), Job et al (2021), Fort et al (2017), Singh et al (2022), and Liddy et al (2018a).

Box 7: Electronic secondary consultation in the Champlain eConsult BASE™ model

In Canada, Champlain eConsult BASE™ provides large-scale secondary consultation. In Champlain, where the program started, more than 75 per cent of GPs – about 1,600 practitioners – are registered in the program.aChamplain eConsult BASE (2020) and Canadian Institute for Health Information (2023). It has since expanded to five other Canadian provinces.bChamplain eConsult BASE (2020).

GPs provide patient information and ask a clinical question through a web-based platform. The case is assigned to a specialist, who replies with recommendations within a week. It is available to all GPs and patients in active regions, and covers 152 specialty groups.cIbid.

Assessments of the program have found:
∙ up to 60 per cent of planned specialist referrals can be managed by GPs with the advice provided;dLiddy et al (2018a).
∙ health system costs are lower because more care is managed by GPs;eLiddy et al (2015b).
∙ some patients, whom GPs would have otherwise not referred to a specialist, are referred as a result of the advice; andfLiddy et al (2018a).
∙ GPs see value in the program for the quality of patient care and their own professional development.gLiddy et al (2015a).

Box 8: Delivering secondary consultation in Australia

Secondary consultation should be embedded into GPs’ everyday practice.

To maximise the chances of success, secondary consultation systems should be:
∙ Digital and asynchronous: A digital system should be set up that enables GPs to send relevant written information and receive a response within a set number of business days (‘asynchronous’). This avoids the need to match GP and specialist schedules, and mimics existing referral processes.aLiddy et al (2013).
∙ All-inclusive: It should include all commonly referred specialties, to maximise usefulness for GPs.
∙ Fully funded: GPs and specialists should be compensated for their time spent engaging in secondary consultation.
∙ Free and widely accessible: Secondary consultation should be considered a tool to support clinical decision-making, accessible for all patients without added cost.bThis is distinct from telehealth or other patient-to-specialist communication, where the patient is receiving an additional service.
∙ High-quality: Advice should be provided by specialists with a specified minimum qualification, who are trained in delivering care in this new way. Responses should be monitored against quality standards.

See Appendix D on page 76 for further detail on how the system should be designed.

Federal government

1. Work with clinical bodies to set standards for use and participation.

2. Fund GPs to use the system, through MyMedicare.

State and territory governments

1. Engage select public hospital(s) to deliver and manage secondary consultation, allocating specialists to staff the system.

2. Coordinate or procure digital systems to enable secondary consultation.

3. Monitor program delivery, with quality and use metrics tied to program funding.

4. Work closely with Primary Health Networks and other stakeholders to recruit and support GPs.

Primary Health Networks

1. Deliver tailored support to GPs to encourage uptake.

2. Work with states to identify areas of need and ongoing improvement.

IN THIS CHAPTER

6 Reduce extreme fees

Even with more public services, and more specialists, excessive fees will still be a problem. That is because neither market forces, nor government policy, are constraining them.

More than one in five Australians who saw a specialist in 2023 were charged an extreme fee156We define extreme fees as those more than triple the Medicare schedule fee, on average. For each specialist, we calculate the ratio of fee charged to the schedule fee for each service, then take the average of these ratios. We also calculate the average fee charged across all services relative to the average schedule fee. Specialists who have a ratio above 3 for either measure are designated extreme-fee chargers. The first definition captures specialists who consistently charge extreme fees, and the second captures those who charge a subset of their services at exorbitant rates.at least once. One in 10 Australians who paid to see a psychiatrist was charged $400 in out-of-pocket costs for their initial consultation alone.

There is no good reason for these extreme fees. They aren’t needed for specialists to be fairly compensated for their skills, or to provide quality care. They don’t cross-subsidise care for poorer patients. But they do stop people from getting care they need. And most patients lack the information or ability to shop around to avoid them.

The federal government should remove public funding from specialists who charge extreme fees, and name them publicly.

6.1 Some specialists charge very high fees

Specialists are paid by the government and patients for their services. From the government, they receive the ‘schedule fee’: a fixed payment for a particular type of service, specified in the Medicare Benefits Schedule. For example, in 2024 the schedule fee for an initial specialist consultation was at least $99, and $300 for an initial psychiatry consultation.157Department of Health and Aged Care (2024c).

Specialists typically charge patients a fee on top of the schedule fee. Those fees are often double, and sometimes triple, the schedule fee. This means patients pay hundreds of dollars for a single consultation.

The average out-of-pocket cost for a single consultation with an extreme-fee-charging specialist exceeded $200 for almost every specialty in 2023.158Except oncology.Some are even higher. A single consultation with an extreme fee-charging psychiatrist was $670 in 2023, and $350 for endocrinologists and cardiologists (Figure 6.1).

Hundreds of thousands of people see specialists who charge extreme fees every year. In 2023, 240,000 patients saw a dermatologist charging an extreme fee; 132,000 people saw an extreme-fee obstetrician or gynaecologist, and 92,000 people saw an extreme-fee ear, nose, and throat specialist.

There are six specialties where more initial consultations attract an extreme fee than are bulk billed (Figure 6.2). More than a third of initial dermatology consultations are charged at more than triple the schedule fee.

6.2 There is no valid justification for extreme fees

Some variation in fees is warranted. Patient complexity and the clinic location affect the cost of providing services, and a specialist’s skills or experience may affect their value.159Sabanovic et al (2023) found that specialist fee variation in Australia reflects patient- and system-level factors, as well as the specialist’s gender, values, and perception of their own experience and skills.But these factors don’t justify extremely high fees, which are not supported by industry bodies such as the Australian Medical Association.160Australian Medical Association (2024).

Specialists can run a profitable business and earn a high income without charging extreme fees. Medical specialties are the highestearning occupations in Australia: nine of the top 10 occupations by income are medical specialties (Figure 6.3). The median specialist clinic is more profitable than the median GP, legal, finance, or construction business.161A. Scott (2022).

These high profits and incomes reflect the average specialist. Those with extreme fees, who charge up to 65 per cent more for an initial consultation than the average specialist, earn a great deal more. That puts their income well above the level needed to attract or reward even professionals with the most extensive skills and experience.162In fact, when doctors’ total incomes are high, further increases to the hourly wage rate have no effect, or even reduce hours worked: Cheng et al (2018), Kalb et al (2018), Lee et al (2019), and McRae and J. R. G. Butler (2014).

There is no evidence that extreme fees are linked to better performance or quality. Australian and international studies have found that higher fees and higher hospital costs are not robustly associated with better surgical or patient-reported outcomes, or decreased mortality.163For example, see Hussey et al (2013), Gutacker et al (2013), Sankaran et al (2024), and Hillis et al (2017). Unpublished analysis by the Royal Australasian College of Surgeons and Medibank found no correlation between out-of-pocket costs and surgery quality, as proxied by length of stay: Hillis et al (2017).

Figure 6.1: Extreme fees can reach hundreds of dollars for a single consultation

Average out-of-pocket cost per consultation, among extreme-fee-charging specialists, 2023

Figure 6.1: Extreme fees can reach hundreds of dollars for a single consultation
Notes: Cost for an initial consultation: Medicare Benefits Schedule items 104, 110, and 296. See Appendix F for more detail on data.
Source: Grattan Institute analysis of ABS (2024b).

Figure 6.2: More than a third of dermatologist initial consultations are charged at more than triple the schedule fee

Share of initial consultations

Figure 6.2: More than a third of dermatologist initial consultations are charged at more than triple the schedule fee
Notes: Initial consultations are Medicare Benefits Schedule items 104, 110, and 296. See Appendix F for more detail on data.
Source: Grattan Institute analysis of ABS (2024b).

Figure 6.3: Most of the highest-earning occupations in Australia are medical specialties

Mean pre-tax income, by occupation, 2021-22

Figure 6.3: Most of the highest-earning occupations in Australia are medical specialties
Notes: Mean total taxable income. Only occupations with at least 30 individuals are shown. Results are substantially similar if income is adjusted for average hours worked. Medical specialties were still 9 of the top 10 highest-earning occupations.
Source: ATO (2024).

Many specialists do cross-subsidise, charging higher-income patients more than lower-income patients.164Johar (2012), and Abiona et al (2024).But our analysis shows that specialists charging extreme fees do this less. That is, they offer poorer patients even less of a discount than other specialists, despite charging much more on average (Figure 6.4).

6.3 Extreme fees reflect an uncompetitive market

In most markets, extreme prices would fall over time, as new providers enter the market and people choose options that offer better value for money. But that’s not the case for specialist care.

Problems with specialist training mean new providers can’t easily enter an in-demand field, even if they see the opportunity to serve patients currently paying excessive fees (Chapter 2). And patients lack the information they need to shop around for better value.

Governments aren’t stopping extreme fees either. There are no policies or regulations limiting specialist fees.165The Constitution allows the federal government to make laws with respect to medical services, but not to authorise any form of civil conscription. This has been interpreted by some as limiting the ability of the government to regulate fees directly (for example, see Department of Health and Ageing (2009)), though others argue that this clause does not prevent fee regulation: McDonald et al (2023).

6.4 Help patients shop around

The government has set up a fee disclosure website, and announced plans to publish average fee data on it.166M. Butler (2025b).This is a positive step: reliable price information should be available for patients who want it. The government should also add information on specialists’ bulk-billing rates, and whether they provide services via telehealth.

Figure 6.4: Specialists who charge extreme fees offer a smaller discount than other specialists to their lower-income patients

Discount on out-of-pocket costs for lowest-income group, relative to costs for the highest-income group

Figure 6.4: Specialists who charge extreme fees offer a smaller discount than other specialists to their lower-income patients
Notes: Average out-of-pocket cost for initial consultations. ‘Lowest-income group’ is people whose equivalised household income is less than $500 per week. ‘Highest income group’ is people whose equivalised household income is more than $3,500 per week. Specialists who charge ‘normal fees’ charge fees up to double the schedule fee, on average. Specialists who charge ‘high fees’ charge between double and triple the schedule fee, on average. Specialists who charge ‘extreme fees’ charge more than
triple the schedule fee, on average. See Appendix F for more detail.
Source: Grattan Institute analysis of ABS (2024b).

But making price information available isn’t enough to guarantee effective patient choice. GPs are the biggest influence on which specialist a patient visits, but they are not obliged to provide patients with any cost information, beyond the truism that they could face out-of-pocket costs.167RACGP (2019), Chernew et al (2018), Yahanda et al (2016), and Victoor et al (2013). There is no requirement that referrals name a specific specialist, but convention dictates that they often do: The Medical Republic (2018).

Patients’ rights should be clearer. The federal government should amend the regulations for referrals,168The Health Insurance Regulations 2018 (Cwlth).to require that each include a prominent and easy-to-understand statement that patients can use an alternative to the specialist named on their referral, and directing them to the Medical Costs Finder website.169The former was recommended by the Productivity Commission: Productivity Commission (2018, p. 307).

6.5 The government should directly tackle extreme fees

While efforts to strengthen patients’ ability to shop around are positive, transparency alone won’t be enough.170A fee transparency tool is unlikely to cause a significant drop in out-of-pocket costs. Usage of these tools tends to be low, though patients who use them do pick cheaper options: Mehrotra et al (2018) and Zhang et al (2020). There is also the risk that prices increase due to tacit collusion (as happened with fuel prices through FuelWatch: Byrne and Roos (2019)), which the government should monitor.The federal government should legislate to claw back Medicare funding from specialists who charge extreme fees. Other ways to control fees have significant drawbacks (see Box 9).

Specialists who charge extreme fees should be required to repay the government the value of the Medicare rebates paid for their services that year.171The benefits should not be clawed back from patients; rather, the value of the benefits associated with that specialist’s services should be repaid by the specialist.

The government should publish a list of extreme-fee specialists, to give patients and GPs more information and discourage extreme fees.

If current practices were continued, we estimate this would affect fewer than 1,500 specialists across 29 specialties – less than 4 per cent of all specialists. Dermatology, obstetrics and gynaecology, and sport and exercise medicine have the highest share of specialists who would be affected (Figure 6.5). But even in these fields, most specialists would be unaffected.

We estimate this measure would raise up to $170 million in revenue, which could be directed towards the expansion of public clinics we proposed in Chapter 3.172Grattan Institute analysis of ABS (2024b)

These changes would create an incentive for clinics charging extreme fees to under-report what they charge.173Reporting of fees charged is required by regulations: Commonwealth Of Australia (2018).To reduce the risk of inaccurate reporting, the federal government should implement the recommendations of a 2023 review of Medicare integrity and compliance.174The review found extensive vulnerabilities, that non-compliance may cost $1.5 billion to $3 billion a year, and that the compliance regime needs a structural overhaul: Philip (2023).

6.5.1 Schedule fees and price setting should be reviewed

The main cause of extreme fees is specialists’ market power, not low schedule fees. Extreme fees are so many times greater than schedule fees, and so rare, that it’s unlikely they are mainly a response to an inappropriately low schedule fee. But schedule fees and specialists’ price setting should still be reviewed.

Schedule fees are rarely reviewed and often hotly contested.175Department of Health (2020, pp. 39–42). Schedule fees are typically indexed annually, based on growth in wages and prices, though indexation can be frozen, as was done in the 2010s.The 2020 MBS review recommended that the federal government streamline fees and introduce a standardised approach to fee setting.176Department of Health (ibid), recommendation 12.The federal government should initiate an independent review of schedule fees to test whether they reflect the cost of care. The review should initially focus on specialties and services, such as dermatology, where extreme fees are most common.

At the same time, the federal government should direct the Australian Competition and Consumer Commission to study how specialists set prices, including how closely their prices reflect the costs of providing care.

Better understanding the costs of care could allow a new, broader definition of excessive fees which targets more than a few extreme outliers. If the reviews find that schedule fees are too low, they should be increased. After that, or if the reviews find that schedule fees are appropriate, the government should tighten the definition of extreme fees.

Figure 6.5: Nearly half of dermatologists charge extreme average fees

Proportion of doctors who charged extreme fees in 2023, by specialty

Figure 6.5: Nearly half of dermatologists charge extreme average fees
Notes: Charging extreme fees is defined as charging triple the Medicare schedule fee on average per service, or in total across all services. Specialists who saw fewer than five patients in 2023 are excluded from this analysis. Top 10 specialties are shown. See Appendix F for more detail on data.
Source: Grattan Institute analysis of ABS (2024b).

Box 9: Other ways to control fees have significant drawbacks

Raising Medicare rebates or expanding Medicare Safety Nets
Increasing Medicare rebates or expanding Medicare Safety Net arrangementsaThe Original and Extended Medicare Safety Nets provide higher rebates to people whose out-of-pocket healthcare costs exceed a particular threshold. But the arrangements encourage specialists to increase fees, and most safety net spending supports the most well-off consumers: Department of Health (2020, p. 24). These arrangements are currently under review: Department of Health and Aged Care (2024d). are unlikely to be the best way to address extreme fees for specialist appointments. Doctors tend to increase fees when they know patients will be eligible for additional benefits.bYu et al (2019). For example, about 43 cents of every dollar spent on increased rebates through the Extended Medicare Safety Net in 2008 flowed to doctors.cCentre for Health Economics Research and Evaluation (2009).

Introducing bulk-billing incentives for specialists
Introducing bulk-billing incentives for specialists would be a costly and
inefficient way to tackle out-of-pocket costs. Specialists are unlikely to bulk bill unless the value of the incentive exceeds the value of the
fee they would otherwise have charged. This means a new incentive would have the most effect where it is needed least: appointments with relatively small fees. The extreme fees that we discuss in this chapter would probably remain untouched, unless the incentives were very generous. But any such changes would be very costly.dFor example, as a back-of-the-envelope calculation, it would cost at least $1.8 billion just to provide sufficient incentive for half of the appointments that currently attract a fee to be bulk billed. (This estimate is based on 2023 data. It assumes that the government must also pay the incentive for appointments that are bulk billed under existing arrangements, and can’t tailor the incentive by specialty provider or Medicare item.)

Instead, governments should make more free specialist care available by expanding public clinics. Further subsidising private specialists
would entrench existing workforce models, whereas public clinic investment should come alongside productivity improvements
(Chapter 4).

Kicking extreme-fee-charging doctors out of Medicare
Another approach could be to make all services provided by extreme-fee doctors ineligible for a Medicare subsidy. But this would expose patients to even larger out-of-pocket costs: they would not receive a rebate at all. In contrast, under the clawback mechanism we propose, the specialist would pay the penalty at a later date, making it more difficult to pass on to consumers.

Direct fee regulation
Directly regulating extreme fees, such as by setting fee caps, is similar to imposing penalties, but could be open to legal challenges.eIt would outlaw extreme fees rather than simply making them unattractive, so we expect it would be more likely to constitute civil conscription. However, this should be considered if our recommendations are implemented and do not reduce extreme fees.

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