We can’t build more hospitals

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We can’t build more hospitals

In late October, Healthscope, one of Australia’s major hospital providers, opened Northern Beaches Hospital.  It has costed $1.1b to build which is an eye-watering amount for 488 beds.   Over $2m per bed just for the capital.

Last year, New Royal Adelaide Hospital opened and at $2.2b for 800 beds – or $2.75m per place - it makes Northern Beaches look like a bargain.

I mention this, because Australians have to change where we die in the next few decades.  Currently just over half of Australians (54%) die in hospitals with the rest dying in residential aged care (32%) and their own homes (14%).[1]

If we don’t think about changing where we die – if we continue to predominantly die in hospitals – then, with the annual death rate in Australia projected to double to more than 300,000 in the next 40 years, we’ll need the equivalent of an extra 9 New Royal Adelaide Hospitals, or 15 new Northern Beaches Hospitals in the next 40 years – JUST for people to die in.[2]  For capital costs alone, we’d need $10-16b. And that’s not counting the need for hospital services that treat the increased demographic demand for chronic conditions of an ageing population.

Add on the annual operating costs of which, for these dying patients alone, would be in the order of $3.6billion more annually.[3]

I wouldn’t be surprised if some of you are saying, “I came to this DEATH session a little reluctantly to begin with…and this bloke is really doom and gloom!   Billions need to be spent and at the end of it all we get to show for it is to die!”

Well No.   We won’t be all rooned!

We simply have to change what we are doing. And if we do, we can save the health budget at least $300m per annum in recurrent expenditure and save billions in capital expenditure by constraining the demand for new hospitals.

So, how do we save $300m per annum? 

Historically, death was an event that occurred within the home, rarely with a doctor in attendance.[4]  Advances in medicine over the 20th century saw the development of evidence-based curative treatments that were both effective and accessible.  The concentration of clinical knowledge and increasingly sophisticated medical technology (ICUs, diagnostics, pathology etc.) made hospitals the place for treatment – but also for death.[5]

Now I am not suggesting that we should go back to all deaths being at home.  

But at a miserable 14%, Australian home deaths occur at less than half the rate of similar countries like Ireland, France, USA and New Zealand.[6]

For a good safe death in the place where most of us– the patients – wish to die, we must increase the number of people dying outside of acute hospitals:

  • In sub-acute hospitals or hospices;
  • In nursing homes and other residential aged care facilities; and
  • In their own home in the community.

Let me briefly go through the economics of each environment

  1. Bring back hospices

As more and more resources were committed to expensive acute hospital environments in Australia, we saw less focus and less public funding committed to sub-acute services like palliative care.

Unlike St Christopher’s in South London, or St Giles in Birmingham, Australian hospices have been allowed to wither on the vine, starved of public funding. The financial demands of a stretched Area Health Service has dictated that all available funds should be thrown at what I call Health’s Hungry Hippos – Emergency Departments, Acute medical as well as post-operative general beds.

The economic madness of this is that the cost of a palliative care bed is half of what a standard hospital bed is. [7]  And, at any one time, a large teaching hospital will have 20+ patients who would be better cared for receiving palliative care elsewhere.     

Want to increase hospital capacity?   Opening the back door of a public hospital – and having palliative patients supported in a more suitable and less expensive environment  – frees up resources for the front door. If 5% of annual deaths were in hospices/sub-acute hospitals rather than in acute hospitals (7,500) we would save $100m a year.[8]  

What does that require?   Fewer than 400 additional hospice beds nationally.[9]  And the capital expenditure to create that infrastructure is a fraction of that spent in hospitals – less than $180m.    The payback is in less than two years.  

  1. Avoiding hospital admissions of Residential Aged Care residents who need palliative care

About one-third of all deaths in Australia – 55,000 - occur in nursing homes.    Too often, families want their elderly relative wizzed off to hospital for futile treatment and an indifferent death in an unfamiliar, clinical environment.   Or untrained staff, fearful or lacking in confidence, send a dying resident to hospital, perhaps at the direction of after-hours medical practitioners not familiar with the person and without clear advance care directives in place.

Amazingly, residential aged care has not been recognised as a site for palliative and end-of-life care.  

To improve palliative care in nursing homes requires increased and upskilled staff and better co-ordinated primary care as well as access to specialist palliative care expertise.  It requires round-the-clock access to controlled drugs.  I know of only one nursing home in NSW that has such a licence.  But the cost per day for such additional supports and skilling is small:  about $120pd. 

If, we actually did that, the resulting net benefits from inappropriate hospital admissions would be about $27m per annum.  More importantly, it enables people to die safely and well in familiar environments.[10]

  1. Back to the Home

This brings me to where the big savings can be made.  I mentioned earlier that, at 14%, Australia has a home death rate of less than half of that in New Zealand or France or the US.   If we focus on providing appropriate palliative home care services so that 28% of deaths occurred at home we can save about $175m per annum.[11]

For the past five years, NSW Health has funded a Palliative Care Home Support Program with two consortiums, one led by Silver Chain, which is well-known in WA, and another led by HammondCare.  The objective of the programs is to support people in the deteriorating or terminal phase of care to die at home.

An evaluation by UNSW academics of the HammondCare program after three years of operation found that:

  • 3 out of every 4 patients on the program died at home;
  • the program was delivered at a THIRD of the cost of substitutable in patient palliative care (4,000 v $12,000);
  • the reach was only 4% of deaths with significant potential to up-scale by as much as 8 times to 35% of all deaths.
  • Interestingly, the patients had been in almost 300 towns as well as metropolitan areas, with a much higher reach in rural districts than metropolitan ones.
  • the program was enthusiastically supported by families, patients and clinicians alike. There was a strong sense of ‘safety’.

If these sorts of programs were rolled out nationally there would be a significant reduction of people needing palliative care dying in hospital.   Moreover, the savings are significant; approximately $8,000 per patient on the program.

A national program that did not extend the reach by 8 times but merely increased the number of home deaths to that of the US and France and NZ – 28% of all deaths through home-based palliative care -  would save close to $175-200m per annum


Hospital substitution by the provision of palliative care in the home, in sub-acute services or hospices and in residential aged care is not only meeting the wants and desires of Australians, but it’s an economic no-brainer.

It will save > $300m per annum from annual health budgets and free up acute hospital capacity, saving billions in future capital expenditure.

We have to focus on ensuring that there are not un-necessary admissions to hospital;

We have to focus on getting people out of hospital.

And getting people out of hospital is not always easy. 

There’s a saying that all politics is local.  Well, I think all health is personal.  Let me tell you a story about my brother-in-law Mark Robinson.

From birth Mark had a connective tissue disorder with regular and long stints in hospital over his 55 years. 

Finally he had bladder cancer and his kidneys packed it in.  As his sister and brother were around his ICU bed, the renal specialist spoke to Mark about his poor prognosis but said, “of course, your renal function may improve”.  Mark, an experienced hospital ‘frequent flyer’, said “I don’t think so….I want to go home”.   The specialist quietly muttered her approval at the decision.

But, even so, it took days to get Mark out of hospital.   Said the ICU NUM:   “Normally, we only discharge from ICU to a general ward bed.  Full hospital discharge could take 3 days”

“Ma’am.   Mark doesn’t have three days!”

Getting Mark Robinson out of that ICU was worthy of an SAS extraction of a downed airman from behind enemy lines.   I enlisted the help of a senior nursing professional with huge experience in the acute and sub-acute health and hospital system.   Even for her, it was tough.

 But we got Mark back home. He received support from the Palliative Care Home Support Program.  He was surrounded by friends and family who visited him.  And he died within three days, happy in his own familiar environments, with his much-loved music playing.  Not Mission Impossible - Mission Accomplished.  Let’s do it for more than just Mark.


[1] Swerisson and Duckett, 2015, cited in Poulos et al evaluation report

[2] 150000 extra deaths per annum x 15 days’ stay in hospital = 2.25m hospital bed days per annum

[3] 2.25m hospital bed days @ $1600per day (in Agar paper it was $950pd in the Senate report in 2012).  This seems v conservative as average standard hospital-based palliative care unit which is $1660pd (Agar report p.10)

[4] Kellehear, 2007 cited in Poulos et al evaluation report.

[5] Poulos et al.  

[6] Broad et al 2013 cited in Poulos et al.

[7] $770 compared to $1660 per bed day

[8] 5% of 158504 deaths p.a. = 7925 but calculation is 7,500 x (1660-770) x 15 days.

[9] 5% of deaths x  15 bed days = 118,878 hospice beds days divided by 365 and 85% occupancy = 383 places at $400k per place for capital expenditure.

[10] Economic Research Note 4:  The Economic Benefits of Palliative and End of Life Care in Residential Aged Care.   Palliative Care Australia July 2017.

[11] 158504 deaths x (29%-14%) x $8000 = $177m.   Estimates vary on the number of people who need palliative care. According to Palliative Care Australia, 90% of cancer patients and half of non-cancer patients could benefit from palliative care services (Palliative Care Australia, 2003). Murtagh et al 2014 suggest that between 69% – 82% per cent of people who die in high income countries are likely to need palliative care.