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Ageing population driving hospital demand

AAP logoAAP 25/07/2016 Megan Neil

Australia's ageing population is driving growth in demand for the nation's hospitals.And, it will continue to stimulate demand for public and private general hospitals, as the pool of high-risk patients widens, industry analysts IBISWorld say."The ageing population requires a greater level of service, as chronic disease and illness becomes more prevalent, and this has helped the industry maintain revenue growth," IBISWorld analyst Jem Anning said.Rising private health insurance membership had provided a further boost for private hospitals, IBISWorld said.The lift had contributed to an expanding client base and resulted in patients being more willing to undergo elective procedures because of shorter waiting times, Ms Anning said.IBISWorld predicts the general hospitals industry will continue to grow steadily over the next five years, driven by the ageing population and an associated increased prevalence of chronic conditions such as diabetes and heart disease.Industry revenue is expected to reach $74.9 billion in 2021/22.Ms Anning said private hospital revenue would grow as the pool of potential patients expanded and private health insurance coverage continued to increase.However, continued premium increases may prompt some consumers to downgrade their insurance coverage."The increases in the premiums might encourage private health insurance members to downgrade to basic coverage, meaning a reduction in private hospital services they can claim benefits for," Ms Anning said.The mix of state and federal funding for public hospitals remains an issue for the industry, although IBISWorld expects government expenditure to grow at a faster pace over the next five years after the reinstatement of funding arrangements that had been cut in the 2014/15 federal budget."The community has high health expectations, which puts pressure on the federal and state governments to provide adequate hospital funding, resulting in public hospital revenue growth," Ms Anning said.The report notes that the revenue share generated by public tertiary hospitals - the industry's largest segment - is projected to have risen over the past five years."Public tertiary hospitals have grown faster than private hospitals because older patients increasingly require complex procedures that can't be performed elsewhere," Ms Anning told AAP.But, while the overall number of patients visiting general hospitals have increased, bed numbers have grown only minimally.Ms Anning said hospitals had become more effective at managing capacity, increasing throughput rates by decreasing patients' average length of stay .AGEING POPULATION BOOSTS ES DEMAND FOR GENERAL HOSPITALS:* Industry revenue $63.8 bln in 2016/17* 3.6 pct compound annual growth over five years* 3.3 pct annual growth over five years through 2021/22, to $74.9 bln* 11.33 mln people with private health insurance (hospital treatment) at March 2016* 47.2 pct of population, up from 45.7 pct in March 2012.Factbox source: IBISWorld, Australian Prudential Regulation Authority.

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