The way healthcare should work isn’t just about payment models or survey scores. It’s about creating a system that remembers why it exists in the first place: to heal, to empower, and to listen.
Something quietly remarkable is happening in Australian healthcare.
Amid debates about hospital funding, workforce shortages and rising costs, a new signal has emerged from the private health sector, one that could reshape how our entire system defines value.
The Australian Health Service Alliance has recently announced that a private hospital group was reimbursed not just for how many procedures it performed, but rewarded for how well it listened to and cared for its patients through a performance-based rate increase.
In a sector where activity has long dictated the payment received, this is more than an operational tweak. This is a paradigm shift. It redefines what success in healthcare actually means.
This isn’t a milestone for just private hospitals either. It represents the early architecture of a transformational model that could move Australian healthcare, both public and private alike, into a future that’s built on outcomes, experiences and trust.
The turning point: from counting activity to measuring value
For decades, the financial scaffolding of healthcare has been designed around volume. Hospitals are funded by number of admissions, length of stay and activity levels. This is a structure that rewards throughput, not value.
This bold move could signal the beginning of the end for that model.
By introducing a performance-based payment linked to patient-reported experience measures, AHSA is declaring that what truly matters isn’t how much care was delivered, but how it was delivered, and how it felt for the person receiving it.
Through their “Voice of the Patient” program they’ve collected insights from over 100,000 patients. This data has already guided hospitals to implement meaningful change: better pre-admission communication, improved coordination with allied health, patient advisory committees, and enhanced recovery planning.
The result? Hospitals that listen, adapt and evolve, guided not by spreadsheets, but by human stories. That’s how transformation begins.
The broader implication: redesigning the DNA of the system
The implications of this extend well beyond one insurer-hospital partnership. What AHSA is doing could reshape the very DNA of Australian healthcare in three powerful ways.
Rebalancing power towards the patient:
For too long, patients have been spectators in their own healthcare journey. This new framework gives them a measurable voice.
When hospitals are assessed and rewarded based on patient feedback, the dynamic actually changes. Patients become real partners beyond just the rhetoric. Their lived experience becomes the data that informs and drives reform. Their satisfaction becomes a metric of success, which is what modern healthcare leadership should looks like – data with empathy.
Aligning incentives with outcomes:
It’s no secret that Australia’s healthcare costs are rising faster than inflation. Simply funding more activity won’t solve that, but funding better activity just might.
When hospitals are rewarded for safe, coordinated, patient-centred care, waste and inefficiency reduces. Readmissions decline. Unnecessary interventions drop.
This isn’t cost-cutting, it’s value creation. It’s healthcare that finally aligns moral intent with economic logic.
Driving transparency and accountability:
With 100,000+ voices feeding into a national dataset, we’re generating unprecedented visibility into what good care feels like. Imagine a future where this data informs not just insurer contracts, but also public transparency, allowing patients to make provider choices based on the quality of their services and experience, not just based on convenience and price.
That would be quite a revolution in itself, in terms of consumer trust in the system.
A vision for the next stage: the system we could build
If we zoom out, this innovation could be the first move in a broader transformation.
Imagine what happens if we apply this approach across the entire health ecosystem, from public hospitals to general practice to aged care.
Beyond the bedside:
True value isn’t created within hospital walls; it’s created across the entire continuum of the patient journey at the multiple touchpoints with the health system.
We need systems that can measure and reward outcomes right from the first GP visit through to the recovery at home. The data to inform such a model exists, what’s missing is the alignment.
Related
Real-time feedback and improvement:
Static annual surveys are fast becoming a relic.
With the increasing capability of digital tools and analytics, this feedback can be continuous, allowing health leaders to course-correct in real time. A patient’s experience today could improve care for another patient as quickly as tomorrow.
That’s the future of agile health management we ought to be aiming for.
Predictive and personalised experience design:
With large-scale patient experience data, hospitals can identify who is most likely to have communication challenges, anxiety about discharge, or gaps in continuity.
Predictive models could then trigger proactive and targeted support.
It won’t be just precision medicine anymore, it’ll be precision experience.
Integration across sectors:
If this transformation is to reach its full potential, insurers, hospitals, community services and policymakers must align around a single definition of success: patients who are healthier, safer and more confident in their care.
That level of integration and vision is how we can move from fragmented delivery to true system integration.
Why this matters now
Australia’s health system is now at an inflection point.
Workforce fatigue, rising demand, constrained budgets and increasing consumer expectations are forcing health leaders to rethink the fundamentals. The old models that are built for volume, not value, are running out of road.
At AIHE, we believe this move has arrived at exactly the right time. It demonstrates a practical, proven template for how funding, data and empathy can work together. It offers something healthcare rarely sees – a way forward that feels both visionary and achievable.
The new era of healthcare leadership
Ultimately, this is about health leadership transformation as much as health system transformation.
Hospital executives, funders and clinicians who now embrace this change won’t just be improving their patients’ satisfaction scores, they’ll be redefining the moral contract of healthcare itself.
Because in the end, “the way healthcare should work” isn’t just about payment models or survey scores. It’s about creating a system that remembers why it exists in the first place: to heal, to empower, and to listen.
Australia now has a real opportunity to lead the world in this evolution, and to build a healthcare system that values the human experience as much as it values efficiency.
And that’s not just a policy shift.
That’s a transformation.
Dr Sidney Chandrasiri is the CEO of the Australian Institute of Health Executives.