Imagine paying A$39 per day to park your car, while you visit your ailing child in the Royal Children’s Hospital in Melbourne. For Australian families already struggling in a cost-of-living crisis, hospital parking fees are piling further agony, especially during a health crisis. Parking at hospitals is a significant source of income. Let’s call it “Parking Syndrome.”
In 2024, public hospitals in New South Wales received nearly $51 million from parking fees. That was more than the $30.02 million in 2023. As per RMIT University’s senior faculty members Lisa Farrell and Meg Elkins, while the move may have sounded tempting for health infrastructures to exploit a captive market, the reality is much more complex, if one brings disciplines like economics, finance, and behavioural business into play.
Mismatch between supply and demand
Price is the means by which supply and demand are balanced, according to basic economics. This price is referred to as the equilibrium price. When supply cannot keep up with demand, prices increase.
“Due to the limited number of parking spots, urban hospitals face market conditions that, predictably, result in higher prices. In certain situations, however, suppliers may charge more than the equilibrium price if there is still a need for parking despite the cost, according to economics. In short, this ‘inelastic demand’ implies that a captive audience can be charged more,” said Farrell and Elkins.
“Hospital visitors and patients could be considered a captive audience. Although public transportation is well-served by many hospitals, patients and visitors are frequently too ill or time-constrained to utilise it. They are therefore forced to pay for parking. Visitors must drive because public transportation is either non-existent or very limited in rural hospitals. Do hospitals have a reason for charging such high prices, or are they price gouging, setting prices above what is deemed fair or reasonable, or are they exploiting the inelastic demand for parking?” asked the duo.
Hospital parking lots in desirable areas attract not only patients and visitors but also city workers and tourists seeking convenient parking. Parking spaces are kept available for hospital users by discouraging these users with high fees. High costs discourage overstaying in hospitals. Because of this, they are unable to engage in non-hospital activities (like shopping) following their hospital visit or appointment and before getting back to their cars.
Hospitals also charge high prices to raise revenue for health care. NSW Health said in a statement to the ABC earlier this year that additional funds generated from parking are used to fund medical facilities and services.
Makes sense to encourage visitors
“However, it might be a false economy to increase parking fees in order to fund hospital budgets. We are aware that hospital visitors play a significant part in patients’ recuperation. Therefore, extended hospital stays for their loved ones may result if high parking fees discourage guests or caregivers. More visits could result from less expensive parking, which would cut down on hospital stays and save a lot of money per patient,” remarked Farrell and Elkins.
Lisa witnessed this firsthand when her father, who has dementia, was admitted to the hospital.
“The hospital provided free hospital parking and round-the-clock visitor access for caregivers, like my mother, in this instance. For dementia patients, who frequently become confused while in the hospital, access should be available around the clock. Known as sundowning, this disorientation usually gets worse in the evening. The presence of carers allowed staff to concentrate on medical concerns. It made it easier to visit during off-peak hours, when parking is less of a problem and dementia patients usually require additional assistance,” she noted.
The high demand for a limited number of parking spots, which are rationed to those with the most money, is reflected in the high parking prices. Rationing based on need, or improving patient well-being, is a better option. Charging different users different prices is the economic solution.
By making concessions, the majority of hospitals have already accomplished this. However, concessions may vary by state or hospital. It can be difficult for some people to determine whether they qualify for concession-rate parking, and not everyone is aware that it is available.
“Therefore, before parking at a hospital, be aware of the fees and any available discounts if you are worried about the cost. The websites of most hospitals have this information. At the moment, most concessions are determined by income, including having a concession card. However, we must make a bigger change to offer need-based concession rates. For instance, accommodations are needed for long-stay patients to promote their well-being. Hospital parking fees for regular users should be capped nationwide, according to the media campaign,” Farrell and Elkins observed.
Although most parking lots have a daily cap, frequent visitors may soon accrue substantial bills from hospital visits for weeks or months. Many patients incur yearly parking expenses, especially those who need frequent treatments like dialysis.
Concession rates for hospital visitors should be granted based on need rather than just income. Patient welfare and the value of visitors to the healing process should guide needs. Proper rules are required towards this direction, especially for those who use the hospital parking lot, to streamline the procedure.
Considerations for long-term solutions, such as relocating hospitals away from desirable locations, are important when building new facilities or expanding existing ones. This approach could reduce the appeal of parking for individuals who do not use hospitals. Healthcare systems face the challenge of balancing the ethical principles of access and equity, which are vital for providing essential care, with the operational necessity of cost recovery.
“Meanwhile, with 1,190 parking spaces, Blackpool Victoria Hospital was ranked seventh in the UK. Costing £2.70 per car for two hours of parking, the car park can earn a potential revenue of £3,213 within two hours at maximum car park occupancy. This placed Blackpool Victoria, after Salford Royal, Darent Valley, Furness General, and Poole, as the fifth cheapest hospital in the UK to park at,” said Farrell and Elkins.
Moreover, there are 3,388 parking spaces at Manchester Royal Infirmary, which has the most parking spaces and could make over £10,000. Because it serves a large area and has a high volume of patients, staff, and visitors, this Manchester hospital, one of the biggest in the UK, needs a sizable parking facility. At £7.00 for two hours, Chelsea and Westminster Hospital has the highest parking fee. Given that the hospital is situated in one of London’s wealthiest neighbourhoods, the cost of parking there might be a reflection of both the area’s high parking demand and the hospital’s location.
Hospital parking fees, while justified as revenue sources, can impose emotional and financial burdens on vulnerable families. A shift to need-based concessions and ethical pricing is urgently needed.