This article seeks to review the Australian healthcare system and compare it to similar systems in other countries to highlight the main issues and problems. A literature search for articles relating to the Australian and other developed countries' healthcare systems was conducted by using Google and the library of Victoria University, Melbourne. Data from the websites of the Commonwealth of Australia, the Australian Institute of Health and Welfare, the Australian Productivity Commission, the Organisation for Economic Co-operation and Development and the World Bank have also been used. Although care within the Australian healthcare system is among the best in the world, there is a need to change the paradigm currently being used to measure the outcomes and allocate resources. The Australian healthcare system is potentially dealing with two main problems: (a) resource allocation, and (b) performance and patient outcomes improvements. An interdisciplinary research approach in the areas of performance measurement, quality and patient outcomes improvement could be adopted to discover new insights, by using the policy implementation error/efficiency and bureaucratic capacity. Hospital managers, executives and healthcare management practitioners could use an interdisciplinary approach to design new performance measurement models, in which financial performance, quality, healthcare and patient outcomes are blended in, for resource allocation and performance improvement. This article recommends that public policy implementation error and the bureaucratic capacity models be applied to healthcare to optimise the outcomes for the healthcare system in Australia. In addition, it highlights the need for evaluation of the current reimbursement method, freedom of choice to patients and a regular scrutiny of the appropriateness of care.