Public hospitals wasting $1.2b a year and hindered by 'bogus budgets', Grattan Institute says

Public hospitals are wasting $1.2 billion a year on avoidable costs such as unnecessary procedures, according to a new report which has landed amid a funding stoush between the states and Commonwealth.

The Grattan Institute report warned Australia's approach to funding hospitals was "broken" and unrealistic state budgets put hospitals on a yearly "rollercoaster" of blowouts and bail outs.

The report found that while funding had increased by 50 per cent in the last decade, public hospitals were under immense strain with ambulance ramping, longer surgery wait times and burnt-out staff.

The report comes a day after the ABC revealed the prime minister had written to state governments, telling them to rein in hospital spending if they wanted funding agreement honoured.

The letter inflamed