How Can Infrastructure Solve the Health Equation?

13 February 2023

Given the continuous and increasing strain on Australia’s healthcare system, any expenditure on health infrastructure should not only lead to better health outcomes but also ensure optimal value for money both presently and in the future.

Australia is currently investing heavily in healthcare due to the growing and aging population, as well as the need to manage chronic diseases. This has resulted in a rapid increase in healthcare costs, which is expected to continue rising. The most recent Federal budget has projected significant growth in spending on medical benefits, aged care, and hospital payments. To meet this demand, public hospitals are expected to receive over 6% per annum funding from the federal government, which needs to be matched by state and territory governments.

To address this issue, New South Wales has committed to a $11.3 billion health infrastructure capital program, Queensland has announced its largest-ever capital works program of $9.7 billion, and Victoria has announced $6.6 billion in new election commitments. These programs will help update existing infrastructure and support the growing demand for healthcare across Australia.

The key challenge now is to ensure that this massive infrastructure investment leads to better healthcare access and outcomes, rather than just adding more beds. There is also an opportunity to influence the cost trajectory by spending wisely now to save more later. To achieve this, it will be essential to consider innovation in operational models, new capital planning possibilities, and potential private sector involvement.

To maximize the benefits of healthcare infrastructure spending, it will be crucial to focus on six key areas that could help bend the cost curve of delivering healthcare.



Collaboration between the government and private sector has the potential to unlock the commercial opportunities in health precincts. Although this idea has been around for some time, its implementation has been sluggish. Continued cooperation with research institutes and exploration of co-location possibilities will encourage innovation and hasten the commercialization of new initiatives.

To generate and recycle capital, stimulate complementary land uses, and create a sense of place, there needs to be an acceleration of public-private funding models. The recent commitment of the Viral Vector manufacturing facility at Westmead and the partnership of Moderna with Monash University are excellent examples of industry collaboration.



Now is the opportune moment to incorporate future flexibility into health infrastructure. As models of care continue to evolve, the structures that support care delivery must also adapt. Adaptable spaces have the potential to encourage precinct partners to collaborate towards a common goal. This approach can lead to cost savings by reducing the need for expensive adaptations, renovations, and refits in the future. Additionally, locating non-clinical activities in fit-for-purpose, cost-effective structures can also result in savings.

Since buildings are designed to last for 40+ years, they will experience multiple generations of ICT advances during their lifespan. As such, it is crucial that these facilities can adapt to technological changes and updates over time.



Over the past few years, virtual care has advanced significantly, and its effectiveness has been demonstrated. Virtual care models allow for the maintenance of practitioner-patient connections while optimizing the physical work environment. The COVID-19 pandemic resulted in increased adoption of telehealth and remote monitoring, establishing momentum towards virtual care. The current challenge is to optimize and scale virtual care to its full potential.

Creative virtual care models are emerging across the world, such as the Humber River Hospital in Canada. In Australia, the Sydney Children’s Hospital is another excellent example that can serve as a learning opportunity for the broader health sector. Another exciting opportunity is to digitally connect precinct partners, breaking down silos (both in infrastructure and location) and establishing virtually enabled health partnerships.



Our connection to green spaces, fresh air, and natural light is ingrained in our DNA, yet health settings have historically not prioritized access to these basic human needs. The COVID-19 pandemic has highlighted the importance of engaging with the community and providing access to positive spaces for living, working, and socializing to promote overall well-being.

The physical amenities of health facilities are crucial to the well-being of patients, workers, students, and researchers who utilize them daily. It is time to remove barriers and transform health precincts into permeable and enjoyable spaces that support better health outcomes, attract communities and workers, and potentially generate future revenue opportunities.



Decisions on capital expenditure have a direct impact on recurrent costs. The health sector has the potential to improve asset management to extend the lifespan of health infrastructure and manage the costs associated with it.

Infrastructure planning should take a whole-of-life approach, aiming to achieve sustainability targets and net zero carbon objectives. This involves maximizing the lifespan of existing assets, considering asset renewal and refurbishment options before resorting to complete replacement. The creation of flexible and adaptable spaces, where feasible and without compromising services, can encourage more efficient asset management over time.

The sector can also benefit from risk-based maintenance strategies that prioritize investment in areas where it is most needed and effective. Leveraging asset condition data, alternative procurement strategies, and the use of remote sensors and monitoring can lead to smart solutions and efficiency gains in maintenance spending.



Around 75% of healthcare expenditure goes towards the health workforce. Shortages in the workforce have contributed to crowded emergency departments and longer waiting lists, and adding more beds could worsen the problem if proper planning is not implemented. Therefore, it is crucial to prioritize attracting and retaining a highly skilled, productive, and engaged workforce, and the quality and appeal of health precincts can play a vital role in achieving this. Co-locating teaching and research spaces in health precincts can promote excellence and cooperation between organizations.

Incorporating these elements of success into infrastructure master-planning is more important now than ever. With a future of rapidly increasing health needs and higher patient expectations, the available capital investment should be leveraged to create innovative, flexible, and integrated facilities that can optimize health service delivery for decades to come.