Executive Summary
Worth around A$4.2 billion in 2024, this market is expanding fast as hospitals race to meet new digital health mandates, modernize legacy systems, and contain the rising cost of cyber risk. National interoperability requirements, billion-dollar state EMR programs, and a push toward AI-driven efficiency are reshaping where money flows and which vendors stay relevant.
A Market Defined by Momentum — and Mandates
Public sector investment remains the dominant force, representing roughly three-quarters of total spend (A$3.1 billion). Massive programs such as NSW Health's A$2.2 billion Single Digital Patient Record, built on Epic, and Western Australia's A$247 million EMR rollout, are tilting the market even further toward large-scale, state-driven purchasing. Private hospitals, while smaller in share, are moving faster on innovation, particularly in cloud, analytics, and patient engagement.
By 2030, the total market is forecast to reach A$6.8–7.9 billion, growing at an annual rate of 9–11%, with the highest momentum in AI and analytics (22% CAGR) and SaaS-based solutions (22.1% CAGR). For vendors, this is no longer a static enterprise software play — it's a dynamic ecosystem where compliance, security, and measurable outcomes drive every deal.
What's Changing on the Ground
Several forces are reshaping how Australian hospitals buy and deploy software:
Interoperability is Non-Negotiable
The federal mandate for FHIR-based data exchange by 2027 means any vendor not built for open standards will be locked out of future tenders. States like Western Australia and Tasmania have already made full FHIR compliance a contract requirement.
Public Megaprojects Are Redefining Market Share
The size of current EMR investments effectively guarantees a long-term shift in vendor power. Epic's win in NSW alone covers 228 hospitals and signals a new benchmark for statewide rollouts.
Cyber Risk Outweighs Licence Cost
With the average healthcare breach now costing A$10.9 million, hospitals are prioritizing ASD Essential Eight compliance and sovereign-cloud hosting — even if it adds 20% to total cost of ownership. Security is now a budget line item, not a checkbox.
AI Is Delivering Real ROI
Early projects, like Gold Coast University Hospital's use of AI in medical imaging, have cut clinician workload and improved patient outcomes. Yet governance frameworks still lag, leaving risk management as a critical differentiator for vendors.
Switching Costs Are Sky-High
Hospitals are locked into existing ecosystems, making modular or overlay approaches (rather than full EMR replacement) the smarter entry strategy. In the St Vincent's Health Network EMR tender, for instance, internal change costs outweighed software price differences.
The Big Picture for Vendors
Over the next five years, success in Australia's hospital software market will hinge on how well vendors can:
Build for Interoperability
Treat FHIR as core architecture, not an add-on.
Sell Security and Governance
Bundle compliance and cyber assurance into the product story.
Demonstrate ROI
Connect software capabilities to measurable outcomes, from clinician efficiency to patient flow.
Offer Flexibility
Modular, cloud-ready, and outcome-linked pricing models are the new commercial advantage.
Conclusion
Australia's digital health transformation has entered a scale-up phase. For vendors, the opportunity is clear: align with the national strategy, solve for interoperability and security, and deliver technology that proves its value — fast.