Buying thousands of operations from private hospitals may cut waiting lists temporarily, but it does little to solve the workforce shortages constraining Victoria’s public surgical system.
On 4 October the Victorian Opposition Leader Jess Wilson promised that a Coalition government would spend $1.27 billion over four years buying 25,000 extra elective procedures a year from private hospitals and day surgeries, and would halve a waiting list that had reached about 68,730 people by June. Public patients would be offered surgery in a private hospital at no cost. The program would be paid for by winding up Breakthrough Victoria, the state’s investment fund. The Australian Private Hospitals Association described it as a ‘win-win’.
Putting aside the fact that the sale of Breakthrough Victoria could not possibly realise the sort of revenue required, it is worth asking who the winners from the proposal are. The patient who gets a knee replaced in March instead of next year gains, and nothing here is an argument against that patient. The other winner is the private hospital sector, along with the specialists who operate in it, and the price at which they will do the work is where the proposal starts to come apart.
The cost driver nobody mentions
One of the largest cost pressures in Australian health care is private specialist fees. Anyone who has recently paid $500 for a brief consultation knows the market has drifted a long way from the scheduled fee. That drift has a direct consequence for public hospitals. Surgeons and anaesthetists can earn far more in private rooms and private theatres than in public sessions, and public hospitals find it hard to fill their lists. Theatres stand idle for want of staff, not for want of buildings.
Now place a $1.27 billion purchasing program on top of that market. The procedures will be bought from private hospitals, and the surgeons and anaesthetists who perform them will be paid at private rates. There is no other rate on offer in a private theatre. Public money will flow to the private side of the differential, enlarging the reward for private work at the moment the public system most needs specialists to choose public sessions. A program designed to shorten the public waiting list could, over four years, make the public system’s staffing problem worse. When the contracts end, the state will own nothing it did not own before, and the specialists will have had four more years of reasons to stay private.
Labour is the heart of it. Public and private hospitals do not employ two separate workforces. They share one, and in many places the same surgeon operates in both buildings in the same week. Buying private activity does not add a surgeon. It moves the surgeon’s time to the more expensive setting. Private hospitals do have empty beds and theatres at times; what they cannot supply from nowhere is the clinical labour the public system is short of.
There is a second problem, familiar to anyone who has watched purchasing programs before. Private providers do best with predictable, lower-complexity procedures. The patient with heart disease, diabetes and a failing hip, who needs an intensive care bed on standby, stays in the public queue. The private sector takes the straightforward cases at a price that looks reasonable because the hard cases have been left behind, and the public hospital is left with a waiting list that is shorter on paper and harder in fact. Complications that come back through a public emergency department in the small hours are another cost the announcement does not mention.
The funding source carries its own warning. Winding up an investment fund yields a one-off sum, while surgery bought with it is a recurring commitment. After four years either the contracts are renewed from a budget the auditor-general has already described as running sustained cash deficits with rising debt, or the private capacity is withdrawn and the list grows back. A program with no answer to its fifth year is a campaign promise more than a health policy.
Labor has been here too
None of this makes Labor’s record a model. In 2022 the Andrews government’s $1.5 billion COVID Catch-Up Plan set aside $548 million to send public patients to private hospitals, aiming at 51,300 extra procedures by mid-2024. In April 2024 the auditor-general counted 67,207 people on the list. Two years later the figure is about 68,730. The pandemic and population growth muddy the comparison, but the list is where it was, and there has been little public account of what the $548 million bought. Labor now points to 218,000 planned surgeries in the past year and to every Category 1 patient treated within 30 days. Those are real achievements. They sit beside a list that has grown by more than 10,000 in a year.
The same Labor plan did one thing differently. It converted Frankston Private Hospital into a public surgery centre. That is a purchase of capacity the state keeps, not a rental of capacity the state hands back.
Where the money should go
Two changes would do more than any purchasing program.
The first sits with the federal government, which controls the Medicare Benefits Schedule and the settings of private health insurance through which specialist fees are paid. Canberra should cap specialist fees and build incentives that make public work financially competitive. Until the gap between private and public remuneration narrows, every state government will keep paying more to buy back the time of specialists it trained in public hospitals. No party in the Victorian campaign can deliver this reform. It is the one that would change the economics on which every waiting list rests.
The second sits with the state. Any additional money for elective surgery should go to opening the remaining theatres at the new Footscray Hospital, which opened in February, and to staffing the theatre sessions across the public system that cannot now be filled. That means paying for anaesthetists, perioperative nurses and sessional surgical time, and building the training posts that supply them. Money spent that way creates capacity the public keeps after the election cycle has moved on.
What the campaign should be about
The wider election debate shows the same confusion between activity and capacity. One Nation proposes ring-fencing elective beds, which would protect surgery lists by shifting congestion to emergency departments. The Nationals offer $10,000 to lure clinicians to the country, a sum small beside the housing, schooling and supervision that decide whether a doctor stays in Swan Hill. The Greens’ universal dental scheme would need a dental workforce Victoria does not have. Each proposal promises more of something without saying who will do the work.
The Coalition’s surgery pledge deserves scrutiny first because it is the largest and because its mechanism runs against its purpose. Before 28 November, Victorians should be told what price per procedure the Coalition has assumed, which patients will be eligible, and who pays when a purchased operation goes wrong. They should also be told why $1.27 billion is better spent renting private theatres than opening public ones that already exist.
Tom Keating
Dr Tom Keating is an Honorary Adjunct Fellow at Victoria University Institute for Health and Sport and a former senior Victorian public administrator in health, disability, child welfare and housing, and a former senior academic..
He is a Melbourne based writer and researcher. He played a major role in the reform of disability services in Victoria in the 1980s and 90s. His book, The Evolution of Intellectual Disability Policy and Administration in Victoria: From Care and Custody to Citizenship is forthcoming (De Gruyter Brill, 2026).