Australia’s healthcare system is heading for a crisis as the population ages while the workforce shrinks, health economists are warning.
Writing a perspective for the Australian Health Review [link here], Professors Paul Scuffham and Andrew Wilson said these worrisome demographic trends underlined the urgent need for innovation and health system reform.
They said the percentage of people aged 65 and over was projected to reach 18.9% by 2040, up from 16.3% in 2020.
At the same time, the percentage of people of working age, particularly those working in care professions, was on the decline due to decreasing birth rates, resulting in a disproportionate increase in the dependency ratio.
By 2040, the authors said 59% of Australians would be dependent – defined as aged under 15 or over 65 – supported by just 41% in the workforce.
Healthcare demand was also surging, they said.
By 2040, workforce data suggested Australia would need 560,000 full-time equivalent nurses but was projected to have only 460,000 – a shortfall of 100,000.
There would likely be similar workforce gaps for doctors and allied health practitioners, along with non-clinical staff such as cleaners, caterers and IT workers who were in demand across other service sectors, the authors noted.
“Overall, there are disproportionate increases in the ageing population, demand for healthcare services and healthcare expenditures, occurring alongside a relatively declining general workforce and healthcare workforce,” said the authors from the Centre for Applied Health Economics at Griffith University and the Leeder Centre for Health Policy, Economics and Data at the University of Sydney.
“Consequently, the tax base will struggle to sustain both the dependent population and the required healthcare workforce.
“Although this presents a broad, economy-wide challenge, the healthcare sector is expected to be most significantly impacted and subject to the greatest strain.”
The authors proposed expanding the workforce through increased fertility incentives such as childcare and return-to-work support after parental leave, increasing the retirement age and offering flexible work for older adults, as well as boosting skilled migration numbers and retaining international healthcare students.
They also suggested improving healthcare efficiency through service redesign – such as expanding the roles of nurses, allied health professionals and pharmacists, making use of digital tools like AI for diagnosing, monitoring and supporting patients as well as having a greater focus on prevention.
The pair emphasised the importance of funding research, stating that while many of their proposed solutions were short term, long-term healthcare sustainability depended on embedding innovation and evidence-based reform into healthcare.