Tasmania’s hospital costs are rising faster than the nation’s and we need to know why.
Every state budget forces us to confront familiar questions about our health system what it costs, whether we are putting in enough to meet demand, whether we can sustain the system we have, and whether it delivers the outcomes Tasmanians deserve.
But this year, another question demands equal attention why does it cost so much more to run our system than comparable systems elsewhere in Australia, and why is that gap widening rather than narrowing?
National hospital cost data for the three years to 202324 paints a clear picture. The cost of treating a patient in a Tasmanian public hospital is now significantly higher than the national norm, and the difference has grown noticeably in just two budget cycles. Emergency care shows an even sharper divergence, with Tasmania paying far more per presentation than other states for the same category of care.
The increases and divergence cannot be considered minor fluctuations or the usual year-to-year noise. They show sustained trends, moving in one direction only. Tasmanians are entitled to ask what is driving them, rather than accepting the oft-cited broad explanations about demographics, remoteness or scale, as if they fully account for the pattern.
When we look more closely at what sits inside those costs, one area stands out clinical supplies. Tasmania consistently spends more than double the national average on the supplies used in both admitted care and emergency departments.
Nursing and medical staffing costs are also higher than elsewhere, likely due to our high reliance on locum doctors and agency nurses, but it is clinical supplies that show the largest and most persistent gap across multiple years.
A one-off spike could be explained by a procurement issue or an unusual casemix. But a multi-year, across-theboard gap of this size points to something structural whether that is supply chain costs for an island state, procurement arrangements, stock management practices, reliance on locum and agency staff, or genuine differences in clinical practice.
Without transparency, neither the public nor policymakers can know which of these factors is at play and where the real pressures are.
Not every part of the system behaves the same way, and that contrast is instructive.
Subacute care costs, while still above the national average, have actually been moving closer to it.
By contrast, admitted mental health costs have swung dramatically from well below the national average to well above it in a short period.
We need to understand that volatility, and it certainly deserves an explanation. Tasmania also relies more heavily than other states on transferring public patients into private hospitals, while at the same time carrying a larger share of public patient bed days within its own system. In other words, our public hospitals shoulder more of the load than most states, yet we also lean more heavily on private capacity to manage demand. That combination complicates any simple claim that the system is “inefficient”.
Some argue that the solution lies in extracting more revenue from private health insurers by identifying insured patients in public hospitals. But that depends on patients choosing to be treated as private patients. Where public patients have limited alternatives, or little real choice about their care, many understandably choose to remain public.
The Treasury’s Fiscal Sustainability Report made one thing clear: no single lever including blunt expenditure restraint can repair the state’s finances on its own. Yet health, like every portfolio, is being asked to find savings against a broad target, without a clear public explanation of where the real cost pressures lie.
If Tasmania’s higher clinical supplies costs are unavoidable the price of distance, freight, or maintaining stock redundancy in a small, dispersed island state then the public deserves to know that and plan accordingly.
Cost differences at this scale require close scrutiny, and all factors that feed into this problem need to be fully explored and understood. If these costs are high for reasons that can be addressed, then the minister should act, and the public should be informed, as we may all have a part to play in the solutions.
Regardless, effective cost control should not begin, as we have seen in the recent budget, with a savings target and then a requirement to work backwards. It must begin with understanding why costs sit where they do, which of those costs are fair and proportionate, and which can be changed without compromising patient care.
Tasmanians deserve that clarity before they are asked to accept another round of cuts.
The Mercury, Monday 29 June 2026