Improvements to the measurement of health care and social assistance in the Australian National Accounts

• New ABS data released in the Australian System of National Accounts, 2025-26 shows the Health Care and Social Assistance industry is now Australia’s largest industry in current price terms.[1]
• The economic value generated by the industry is $13.9 billion higher than previously estimated, based on the 2023-24 comparison year.
• Household spending on categories such as health services, other services (disability) and accommodation services (care facilities) has also been revised higher across the time series.
• The Health Care and Social Assistance industry was confirmed to be predominantly market-based, with market producers accounting for close to 60% of value added in recent years.

The Health Care and Social Assistance industry has undergone substantial change over recent decades in Australia. Growth in aged care services, the expansion of private health providers, and the introduction of the National Disability Insurance Scheme have transformed both the size and composition of the industry. These developments have contributed to the Health Care and Social Assistance industry more than tripling in size over the past 30 years in real terms. 

In nominal terms it has become Australia’s largest industry in 2025-26 contributing $265.2 billion in gross value added, or 9.6% of all economic activity. Health Care and Social Assistance is also Australia’s largest employer with 2.58 million filled jobs accounting for 15.8% of all filled jobs in the economy.[2]

This article outlines improvements to the measurement of health care and social assistance introduced in the Australian System of National Accounts, 2025-26 and the 2024-25 Supply-Use tables. The changes improve estimates of production, consumption and income by incorporating historical revisions across the time series.

The Health Care and Social Assistance industry includes a range of activities, among them hospitals, general practice, dentistry, allied health, diagnostic imaging, aged care and nursing homes, disability services and childcare and comprises both market and non-market activity. 

Health Care and Social Assistance services flow through the economy via various channels. The summary diagram below shows how the expenditure approach to GDP measure and records these transactions.

In the national accounts, market output is measured by the value of goods and services produced, while non-market output is measured using production costs. 

Historically, the ABS had assumed most of the activity within the Health Care and Social Assistance industry was non-market so adopted a demand side approach based on expenditure data. This approach did not distinguish between market and non-market production and was inconsistent with methods used elsewhere in the Australian System of National Accounts. 

To better understand the Health Care and Social Assistance industry, the ABS conducted a supplementary survey through the 2018-19 Economic Activity Survey. The survey collected detailed industry information on income generating activities, service delivery models, funding arrangements, and occupations. 

Survey information, combined with Government Finance Statistics and the ABS Business Register, showed that market producers accounted for 50% to 60% of Health Care and Social Assistance activity in recent decades. These findings challenged the assumptions of the previous demand side approach and highlighted the need to estimate output of market and non-market producers separately. 

These improvements do not change how the national accounts classify institutional units or distinguish between market and non-market producers. Instead, the revisions improve measurement of activity already occurring within these sectors by drawing on new survey evidence, administrative data and supply-side estimation methods. 

The ABS has adopted a supply-side approach to measure market output within Health Care and Social Assistance. Market output is now measured directly using information collected through the Economic Activity Survey and related business collections and is valued as the goods and services supplied at economically significant market prices. Non-market output continues to be valued using a sum-of-costs approach. 

The supply-side method estimates higher industry output than the previous demand-side approach. For 2023-24, the last year compiled under the old method, output was revised up by $49.1 billion.  Most of the revisions to output were concentrated in hospital and allied health services, reflecting the significant role of private hospitals, medical clinics, allied health practices and profession medical contractors in service delivery. 

The supplementary Health survey also provided new insights into secondary production activities that were not visible in standard business surveys. The survey showed that office administration, property operations, education and recruitment services generated around 5% of services output, substantially higher than the less than 1% previously attributed to these activities. 

The demand-side approach provided limited information on the costs incurred by market providers. To better measure these costs, the ABS expanded its use of expense data from business surveys and reporting by state and territory health departments. This information improved estimates of intermediate inputs used in production, including pharmaceuticals, medical aids, cleaning and waste disposal, technology services and agency staff. The data also showed that Health Care and Social Assistance providers frequently purchase services from within the industry. For example, hospitals engage external clinical services like pathology, or a disability services providers, contracting occupational therapists, and public sector medical professionals may also work as independent contractors. Capturing these intra-industry transactions is essential to accurately measure value added. 

The supply-side approach revised intermediate use up by $35.3 billion in 2023-24. As a result, the output to intermediate use ratio was revised lower through the time series, bringing it more into line with other labour-intensive services industries. 

Gross value-added (GVA) estimates the economic production by Australian industries and is derived as output minus total intermediate use. The revisions to the Health Care and Social Assistance output and intermediate use increased GVA levels across the time series, culminating in an upward revision of $13.9 billion to Health care and social assistance GVA in 2023-24, in current prices.

The revised methodology produced some changes in annual growth rates but did not change the broad picture of industry performance. Revisions to Health Care and Social Assistance GVA annual growth rates in current price terms were generally less than 2.0 percentage points. The ABS implemented the changes through Supply-Use tables from 1994-95 onwards, and used statistical techniques, known as splicing, to link the revised estimates with the historical series back to 1974-75 while preserving historical growth rates.

Consistent with the revisions to industry production, the ABS used business survey and administrative data to improve industry profits, measured as gross operating surplus and mixed income (GOSMI). The improved measurement of market activity resulted in higher GOSMI estimates throughout the time series. 

Many Health Care and Social Assistance providers operate as unincorporated businesses, such as sole traders (e.g. a self-employed physiotherapist) and partnerships (e.g. a GP clinic). As a result, most of the revisions to GOSMI flowed through to gross mixed income (GMI), often referred to as small business profits. GMI contributes directly to household sector income and saving. 

These small business profits account for around two-thirds of total profits in the Health Care and Social Assistance industry. In absolute terms, the industry generates the second largest amount of GMI in the economy after Construction.

As part of the improvements to health care and social assistance measurement, the ABS reviewed the methods used to estimate related expenditure components.

The ABS has strengthened the measurement of macroeconomic statistics by using new data sources and methods that reduce reliance on infrequent surveys. The ABS now makes greater use of administrative data including Australia Prudential Regulation Authority (APRA) information on private health insurers and the Medicare Benefits Schedule to better measure the size and composition of health services consumed by Australian households. 

The richer information has allowed the ABS to address known shortcomings and absence of the Household Expenditure Survey (HES), which had been the primary data source. 

The HES collects what households directly report spending out of pocket, but it does not fully measure the value of health services households consume. Many health services are partly or fully funded through private health insurance claims. For the purposes of National Accounts, Household Final Consumption Expenditure (HFCE) should capture the full service consumed by the household. For example, if private health insurance covers part of the cost of a hospital procedure, the full value of the hospital services is captured in HFCE, not just the amount paid directly by the household. 

To better address this, the ABS incorporated annual information from APRA on private health insurance claims and from the Australian Institute of Health and Welfare (AIHW) relating to services funded through injury compensation insurance schemes. 

The HES covers people living in private dwellings but excludes residents of many non-private dwellings such as residential aged care facilities. As Australia's aged care sector expanded, this limitation became more significant for measuring expenditure on residential care and related social assistance services. 

To address this limitation, the ABS previously relied on simple modelling and population-based adjustments. The ABS now uses annual supply-side information and industry data to measure consumption of these services. This approach better captures the services delivered to aged care residents and recipients of social assistance services.

The HES is conducted periodically rather than annually and was last run in 2015-16. Annual estimates increasingly relied on indicators to extrapolate benchmark values forward each year. The revised approach reduces reliance on extrapolation by drawing on annually available administrative and industry data sources from APRA, AIHW, Medicare, the Economic Activity Survey and other health collections. 

Household expenditure estimates are now more consistent with the new and independent measures of industry supply as granular administrative data enables improved product-level reconciliation.  For example, new volume indicators based on aged-care residents, ambulance responses and in-home care packages provide a closer representation of the underlying services being delivered. 

Health care and social assistance services are covered in the following HFCE categories. 

• 6.0 Health (hospitals, allied health services, aged care, pharmaceuticals)
• 11.1 Accommodation services (residences for disabled persons, mental health patients, drug and alcohol rehabilitation)
• 12. 5 Other services (disability services, in-home care, child care) 

The improvements increased HFCE levels across the three consumption categories. In the 2023-24 comparison year, the HFCE level was revised up by $14.2bn, or 1.0% higher, in current price terms. Over the time series, annual growth rates of HFCE were revised between 0.0 and 0.3 percentage points in chain volume measures. 

Details on the new methods and data sources are included in the update to Australian System of National Accounts: Concepts, Sources and Methods. 

The changes outlined in this article do not affect the current scope of ABS productivity statistics, which continue to treat the Health Care and Social Assistance, Education and Training and Public Administration and Safety industries as part of the non-market sector. The improved measurement of market and non-market output of Health Care and Social Assistance provides a foundation for more detailed productivity analysis. The ABS will release experimental productivity estimates with market and non-market activity separately identified in December 2026.

1. Ownership of Dwellings is excluded from the ranking because it is a notional industry representing the housing services of owner-occupied dwellings.
2. Australian Bureau of Statistics (June 2026) Labour Account Australia, ABS Website, accessed 19 October  2026.