The Forgotten Health Spend: Time to Prioritise Rural Health Equity

Abstract

Australia prides itself on the principle of a universal health system. But that promise rings hollow when access to essential services and health outcomes are largely determined by your postcode.

The National Rural Health Alliance (NRHA) engaged the Nous Group to deliver an updated, more comprehensive analysis of rural health investment in Australia. The overall findings confirmed what regional, rural and remote (hereafter rural) Australians have long known: the health funding gap between the city and country continues to grow, placing lives, communities and the economy at risk.

In 2023–24, the health spend shortfall for people living in rural communities, compared to metropolitan areas, reached a staggering $8.35 billion or $1090.47 per person per year. Even when using like-for-like comparison with the scope of the initial 2023 report, and adjusting for inflation, the per capita gap has still grown by $110. This widening chasm reveals not only deep inequity in healthcare access but systemic underinvestment in the very people who drive our national economy.

This new report provides a more comprehensive picture than ever before. It includes public and private spending across the full spectrum of healthcare services: hospitals, the Medicare Benefits Scheme (MBS), Pharmaceutical Benefits Scheme (PBS), Department of Veteran Affairs (DVA), National Disability Insurance Scheme (NDIS), aged care, private allied health, dentistry, Primary Health Networks (PHNs), Aboriginal and Torres Strait Islander primary healthcare, Royal Flying Doctor Service (RFDS), ambulance services and Commonwealth workforce programmes. The health expenditure data has also been broken down by Modified Monash Model (MMM) and, where available, by state and territory, revealing a more accurate and granular representation to date of healthcare investment (and underinvestment) in rural Australia.

The shortfall is driven largely by lower investment in public hospitals, private hospitals, MBS services, private allied healthcare and dentistry in rural and remote regions. In Very Remote communities, targeted programmes, such as RFDS and Aboriginal and Torres Strait Islander primary healthcare are helping fill the gaps, but this highlights just how much mainstream systems are failing rural populations and require supplementation from special-purpose programmes.

Simply put, rural Australians need more care yet receive less per capita than urban populations.

There's currently no national definition of what constitutes ‘reasonable access to care’ across different regions of Australia, a glaring gap in health policy. Stakeholders agree that this lack of definition, along with disjointed policy responsibilities across federal, state and private systems, including inflexible funding models and policies, is contributing to persistent and growing inequity. Without a shared standard for access, the system defaults to urban-centric service planning and funding, leaving rural and remote communities behind.

This inequity doesn't just affect individuals; it impacts our national productivity. Poor health outcomes and reduced access to care are directly linked to lower workforce participation and higher disability rates in rural areas. People living with chronic illness are 60% more likely to be out of the labour force [1]. In regions already facing workforce shortages, this adds to the pressure and stifles local economic growth.

And yet, rural Australia is pivotal to our nation's prosperity; it produces 90% of the food we eat [2], generates 71% of Australia's exports (valued at over $460 billion) and accounts for almost half (47% or $107 billion) of tourism revenue [3, 4].

These contributions are made despite a health system that often fails to meet rural needs.

Notably, the data also reveals important distinctions between rural regions. For instance, MMM 5 areas (larger regional centres) experience the largest funding shortfalls, driven largely by workforce supply challenges. Meanwhile, MMM 6 and 7 regions (remote and very remote) have higher per capita costs due to the logistics of delivering services in small, dispersed populations.

The NRHA maintains that this all needs to be underpinned by a National Rural Health Strategy to address the poorer health outcomes, inadequate access to services, and workforce shortages in rural areas compared to metropolitan regions. A coordinated national approach is essential to improve health equity and efficiency, ensuring that rural residents receive the same standard of care as their urban counterparts.

Rural communities have always shown resilience. What they need now is fairness. Rural health is complex, highlighting the need for tailored policies and flexible funding that recognise the distinct aspects of rural culture and the inherent challenges with access to services. Investment in rural health should not be seen as a cost but rather a commitment to equity, to our shared prosperity, and to the right of every Australian to access timely, quality care no matter where they live.

The NRHA calls on all levels of government to act on the evidence. Investment in rural health is not a cost; it's a commitment to the health, wellbeing and dignity of the 7.4 million Australians who live beyond the urban fringe.

The health of people living in rural areas is not a second-tier issue. It must be a national priority. The longer we wait to close this gap, the more lives will be lost to a health system that was never designed with rural Australians in mind. Now, with the data clearer than ever, and the solutions within reach, we urge decisive action. It's time to end the funding shortfall and build a rural health system that works for everyone, everywhere.

You can read the full report here.