Private health insurance claims for patients awaiting discharge to aged care homes have doubled in recent years, as older Australians now spend nearly twice as many days in hospitals as they did six years ago.
Data released Friday by Private Healthcare Australia (PHA) shows health funds paying up to $700,000 for a single hospital stay, highlighting the growing financial and logistical strain on the healthcare system.
The phenomenon, known as “bed block,” occurs when patients cannot leave hospitals due to limited availability in aged care facilities. It is increasingly affecting hospitals, governments, and insurers alike.
PHA analysis attributes the trend to a shortage of residential care beds and rising rates of neurocognitive and mental health conditions, including dementia, delirium, and depression, in patients over 65.
“Whether it’s state-run public hospitals, private insurers, or veterans’ services, this issue spans the entire sector,” said PHA CEO Rachel David. She suggested solutions such as expanding the aged care workforce, increasing available places, and using “step-down” hotel-style facilities to ease hospital congestion.
Australian health funds spent $16.6 million last financial year on patients in non-acute hospital care while awaiting aged care placement—more than double the $7.3 million paid in 2018-19. During this period, the number of older patients waiting in hospital rose 35 percent, from 3,363 to 4,545, while the average cost per patient jumped 66 percent to $3,647, partly due to a six-day increase in hospital stays.
University of New South Wales Adjunct Professor Kathy Eagar warned that rising bed block pressures could drive higher private health insurance premiums without targeted government intervention. “This is no longer just an old person’s problem—it’s a community-wide issue,” she said.
In 2024, claims exceeding $10,000 for patients over 65 with neurocognitive or mental health conditions rose 13 percent. One in ten of these patients had dementia, and one-third experienced depressive disorders. The most expensive private health insurance claim last year was $697,267 for a mitral valve replacement in a patient in her 70s. Other high-cost claims included $621,723 for kidney infection treatment, $486,479 for an extremely premature birth, and $355,760 for a viral herpes infection.
PHA and state governments are urging federal authorities to develop long-term solutions to aged care access, emphasizing that additional funding alone may not resolve workforce shortages or the rising costs of care.
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