Mental Health and Suicide Prevention Agreement Review

With just over 1 in 5 people (21.5%) in Australia aged 16-85 years experienced a mental disorder in the previous 12 months. This represents a very significant section of the population.

Australia's private acute psychiatric hospitals complement the public psychiatry hospital system, which treats a different caseload mix - meaning they are not interchangeable, nor do community clinics and out-patient services meet the same acute needs. When private psychiatric hospitals close, wind down services or have empty beds, a huge need in the community goes unmet.

According to the Australian Institute of Health and Welfare, over 2023-24 private acute psychiatric hospitals accounted for 61% of all acute mental health admissions - a decline of 0.4% to 217,047 (down from 217,851 the previous year).

Mental health care in Australia is under immense strain from funding and workforce availability that are unable to keep pace with rising caseloads and an increasing complexity of cases. These challenges are crippling the national health system and the ability of the public and private sectors to continue to serve all those that need care.

The 2024 Private Hospital Financial Viability Health Check (the Health Check) undertaken by then-Department of Health and Aged Care highlighted declining mental health as a critical concern for the government and the viability of private hospitals. Despite providing 61% of all separations for mental health in 2023-24, the ever-increasing pressure has brought the sector to its breaking point.

The closure of Toowong Private Hospital in Brisbane in June 2025 underscores the issues around viability and sustainability. The Health Check confirmed chronic underfunding of private hospitals by health insurance companies. It cited that one-third of private hospitals were/are operating at losses. Of the remainder, most were breaking even and just a few who were making margins were recording 1-2% profits. An EY study for the Australian Government showed private hospitals must make a minimum 5% to be able to invest in procedures, treatments, technologies, service and staffs to maintain quality.

More recent data from the Australian Bureau of Statistics (ABS) has shown a fall from $298 million in operating profit before tax in 2022-23 to $-34 million in 2023-24 for the whole private hospital sector.

As mental health continues to deteriorate around the country and the risk of suicide continues to increase with challenges such as the cost-of-living crisis, the loneliness epidemic in young people, global events and international conflict, climate change, and a whole host of other issues, it essential to have in place a sound, robust, and well-resourced mental health ecosystem.

Get the full submission at Mental Health and Suicide Prevention Agreement Review.

Previous Submissions:
24/7/2025 Economic Reform Roundtable