The Productivity Commission says Australia’s healthcare system is delivering some of the best value for money anywhere in the world.

However, productivity growth in the sector is being driven mostly by improvements in quality rather than reductions in cost, the commission says.

“Australia’s healthcare spend is big and getting bigger, but we are seeing significant return on that investment through better health outcomes,” Commissioner Catherine de Fontenay said as she released the commission’s latest research paper.

It’s the first time the quality of Australia’s healthcare has been considered in an assessment of productivity, the commission says.

“Previous research assessed the productivity of our healthcare system by looking at how much it costs to provide a service, such as a visit to hospital,” Commissioner de Fontenay said in a statement.

“This research looks at how much it costs us to treat a particular disease and the outcomes of treatment.”

The research shows productivity grew by about 3 per cent a year between 2011-12 and 2017-18 for the diseases studied, which account for around one-third of healthcare expenditure.

“Productivity growth was particularly strong for the treatment of cancers, likely due to the introduction of new cancer therapies in the 2010s. This highlights the importance of quickly integrating new treatments as they emerge,” Commissioner de Fontenay said.

The commission notes that while quality-driven productivity improvements are welcome, the nation’s growing healthcare bill remains concerning.

“Healthcare spending already accounts for 10 per cent of GDP and this is only going to increase as our population ages,” the Commissioner said.

“Our challenge moving forward will be to provide services more cheaply and efficiently without comprising on quality.”

The report finds that reducing our risk factors like obesity and alcohol consumption will help the healthcare sector to do more with less.

The report also says integrating emerging digital technology into healthcare can help contain the spend.

“Digital records, new models of remote care, and new technologies, such as AI, can make healthcare more efficient and less costly if integrated safely and effectively.”

The Commission has been looking at the potential of technology in healthcare in a follow-up paper to be released in coming weeks.

The research due for release this month, will consider how governments can leverage digital technology to improve patient outcomes and productivity in healthcare, based on a selection of case studies.