Australia has created a strange market for specialist care. Medicare helps pay for it. Governments subsidise it. Patients often need it. But, for much private specialist care, the final price is largely left to the provider – and patients are increasingly being priced out.
Thu 27 Aug 2026 09.00 AEST
Photo: AAP Image/Dean Lewins
Australia’s health system is exhibiting some of the worst traits of its American counterpart. We spend heavily once people are sick. Over the longer term, spending on hospitals has grown faster than spending on primary care and prevention.
A landmark Senate Inquiry into Youth Justice and Incarceration has just handed down its latest report into Australia’s youth prisons. However, we must listen to the words of the children who survive behind its pages.
Australia has created a strange market for specialist care.
Medicare helps pay for it. Governments subsidise it. Patients often need it. But for much private specialist care, the final price is largely left to the provider – and patients are increasingly being priced out.
Specialists are highly trained professionals doing important work. Many work long hours. Many combine private practice with public hospital work. They didn’t create the problems with the system they operate in, which are the result of public policy decisions made over many years.
Successive Australian governments have built a market in which patients often need care they cannot safely refuse, but have little information about price, quality, waiting times or public alternatives. Supply is constrained. Public outpatient services are often under-resourced. And private health insurance generally does not cover out-of-hospital specialist consultations.
In that kind of market, it should surprise nobody that prices rise.
Anyone who has been referred by a GP to a medical specialist has probably noticed the price difference between the two.
Seeing a specialist in their consulting room costs, on average, far more than seeing a GP. Since 2010, the amount patients pay out of pocket for a non-hospital specialist consultation has risen from about $45 to $78 in real terms.
Over the same period, the average out-of-pocket cost for seeing a GP rose from about $7 to $11.
This cannot be chalked up to ordinary inflation. Specialist out-of-pocket costs have risen faster than the Consumer Price Index, faster than health inflation, faster than wages, and faster than other common Medicare services.
Specialist care is not optional in the way many private purchases are optional. Specialist care is how many cancers are diagnosed, pregnancies managed, serious mental health conditions treated, and important operations planned.
When prices rise, people don’t simply buy a cheaper brand. They delay care, go back to their GP, wait for a public appointment, or miss out. And this can have serious health consequences.
The ABS reports that about one in 10 Australians delay or skip specialist care because of cost. Grattan Institute research suggests that almost a million Australians delay or skip seeing a specialist because of the cost.
A 2025 survey found that more than half of respondents (55%) who received a bill from a medical specialist or surgeon had cut household spending to afford specialist care. Almost half (45%) reported delaying care until they had sufficient funds.
The pressure is not limited to households already under severe financial strain. Even among respondents reporting no financial stress, 21% said seeing a specialist would cause them some degree of financial stress.
It’s little wonder that access to medical specialists is now before a parliamentary inquiry.
Specialists, like other health professionals and other businesses, face rising costs. Rent, wages, indemnity insurance, administration, equipment and technology all matter.
But rising business costs do not fully explain what is happening.
Private specialist clinics have higher gross operating profits than many highly profitable industries. A Melbourne Institute study found that private specialist clinics had gross operating profits of 49%, compared with 43% for finance, 34% for legal and accounting practices, and 26% for construction.
While this figure is a gross operating margin, not the net profit pocketed by a typical specialist (which can be affected by business structure), it still makes an important point: specialist practices are not, on average, low-margin businesses being crushed by costs.
Medical specialists also consistently rank among the highest-income occupations in Australia, according to ATO data.
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Taxable income is not the same as salary, private-practice income or net business profit. It doesn’t tell us how many hours people worked. But it does show that the group asking patients to absorb rising fees is not a low-income workforce.
Specialists should be well paid. The question is whether Medicare-subsidised specialist care should be allowed to become unaffordable for patients who need it.
In a normal market, high prices attract new suppliers. More suppliers enter, competition increases, and prices stabilise or fall.
Specialist care does not work like that.
Increasing the number of practising specialists depends on many factors: training places, specialist college accreditation, supervision capacity in public hospitals, workforce planning, immigration rules and recognition of overseas-trained specialists. Expanding supply isn’t quick or easy.
Patients are not normal consumers either.
Someone who needs a colonoscopy, a cardiologist, a psychiatrist or a hip replacement is not in the same position as someone comparing petrol prices or ordering an Uber. Patients are usually unwell, worried or uncertain. They rely on a GP referral. They may not know what the appointment will cost, whether the referral can be redirected, how long the public wait is, or whether another specialist would be just as suitable.
There is also little room for trial and error. A bad meal teaches you not to go back to the restaurant. A badly timed or unaffordable medical decision can have far more serious consequences.
That is why leaving specialist care mainly to market forces, which is what policy decisions have done, produces predictable results.
Specialist fees vary a lot.
The out-of-pocket cost for a knee replacement in Australia can range from about $300 to more than $5,000. If petrol pricing worked like that, motorists would pay anywhere between $1.80 and $36 per litre, depending on which servo they used.
Fees also vary sharply between states and territories. The average specialist fee in the ACT is $605, compared with $144 in Tasmania. These figures include consultations as well as procedures and interventions, so they should not be read as the cost of a standard appointment. But the pattern is striking.
Fees are also strongly correlated with local personal income. In higher-income jurisdictions, specialists tend to charge more.
This doesn’t prove that individual specialists consciously price according to local incomes. But it is consistent with fees being shaped by local market power and capacity to pay, not just by the cost of providing care.
That is the predictable result of a publicly subsidised but weakly regulated private market.
If Australia is going to have a health system in which people can see the right specialists when they need to, at a cost they can afford, the way the market is allowed to operate needs to change.
The Australia Institute’s submission to the parliamentary inquiry into specialist care proposes several practical reforms.
First, Medicare should be used to support fair and affordable fees. A national specialist fee and affordability framework could set benchmarks for reasonable fees, support no-gap and known-gap arrangements, and protect vulnerable patients from excessive out-of-pocket costs.
Second, patients and GPs need better information before a referral is locked in. Fee transparency is only the starting point. Patients also need information on likely out-of-pocket costs, public options, waiting times, telehealth availability and relevant quality and outcome indicators.
Third, governments need to plan specialist supply around need. That means looking at which specialties and regions are undersupplied, where public outpatient capacity is weakest, and how overseas-trained specialists can be used safely and effectively in recognised shortage areas.
Fourth, public specialist work needs to be made more attractive. Public hospitals need senior specialists to treat patients, supervise trainees, lead teams and sustain public capacity.
Finally, not every patient who needs specialist input needs a full specialist appointment. Better advice-and-guidance models could allow GPs to get timely specialist advice, helping some patients avoid unnecessary waits while ensuring full appointments are available for those who need them most.
None of this requires abolishing private practice or forcing every specialist to charge the same fee. It simply means recognising that specialist care is not an ordinary market. If public money helps fund specialist care, public rules should make sure that care is affordable, transparent and available according to need.
Is that not what Medicare is supposed to do?
