A private hospital planned for Newcastle would be a welcome investment despite the sector's troubles, University of Newcastle Professor Francesco Paolucci says.
Professor Paolucci, a health economist, said "demand for high quality health hasn't diminished".
"It has grown and will keep growing in the future," he said.
"Any investment in boosting and increasing our delivery system of healthcare services is welcome."
Fortius Hospitals has secured a 20-year lease for the hospital at a new building at 291 King Street in Newcastle.
It had committed to occupying more than 3000 square metres in property developer Hunter Group's recently upgraded former car park site, near Wests City.
The company specialised in integrative musculoskeletal care, along with orthopaedics, neurosurgery, plastic surgery, pain management, bariatric surgery and allied health.
Agent Adam Leacy, of Commercial Collective in Newcastle, said the company was working on the project's design.
It planned to lodge a complying development certificate with City of Newcastle for the project.
Mr Leacy said Fortius Hospitals would have more to say once the design was complete.
The plan has emerged at a tough time for the private hospital sector.
The rise in uptake of private health insurance has not translated to greater revenue for private hospitals.
The Australian Private Hospitals Association warned in November that more people were "being convinced to buy" health insurance products that were "not fit for purpose".
This meant they could "find themselves unable to access the care they need".
The association's CEO Michael Roff said then that private hospitals were "managing challenging economic conditions".
Australian Bureau of Statistics data showed that only 30 per cent of private hospital businesses were reporting a profit or just breaking even in 2021-22
This was down from 89 percent in 2019-20.
The association believed this situation had deteriorated in 2023.
In October, two private hospitals announced they would close.
This included Healthe Care's $23-million Tuggerah Lakes Private Hospital at Kanwal on the Central Coast, which opened in 2019.
The company cited cost increases for wages and medical supplies as factors in the closure.
Private hospitals had also been affected by cost of living issues and nurse shortages.
Professor Paolucci said a new strategy was needed to enable the health workforce to "grow in a more competitive setting".
He said this would "positively impact the cost of care".
He added that new investments in the sector need to come with new financing arrangements to prevent further increases in out-of-pocket costs.
These costs, he said, had reached "alarming levels".
Fortius Hospitals is linked to the Sydney-based DPA Health.
Both companies list private hospitals planned at Eastwood and Maroochydore as their projects.
It was reported last year that the $100 million 10-storey private hospital in Maroochydore city centre on the Sunshine Coast was under construction.
The hospital will also be a medical and teaching centre, with University of Sunshine Coast involved.
Its partner for that project was fund manager Barwon Investment Partners.
The Eastwood Private Hospital in Adelaide will include five large orthopaedic theatres.
