Patients needing immediate care are not being triaged fast enough, with only 50 per cent treated and discharged within four hours, according to the Australian Medical Association's 2026 Public Hospital Report Card.
The figures show the public hospital system is being stretched beyond its limits, AMA president Danielle McMullen said.
"Patients triaged as urgent include people with chest pain, severe breathing difficulties and life-threatening conditions like sepsis, and nearly one third of these patients are still not being seen on time, which is unacceptable," she said.
Emergency departments remain under intense strain, with the report revealing wait times have increased over the past decade.
About 70 per cent of emergency department patients were seen and discharged within four hours in 2015, but the figure has since fallen sharply, with the biggest decline being recorded between 2021-22.
"The public hospital system's ability to treat emergency department presentations in a timely manner is a key indicator of its health," the report states.
"The decline in performance for this metric is worryingly consistent across Australia."
Planned surgery performance is another deep concern, according to the report.
Although median wait times have fallen for the second consecutive year, patients still face longer surgical waits than a decade ago.
"The proportion of Category 2 patients treated within clinically recommended timeframes remains well below historical levels, and patients who miss those timeframes often wait months longer than advised," Dr McMullen added.
"These are medically necessary procedures that prevent deterioration and improve quality of life."
Additional funding for the public hospitals was announced in January after a meeting of national cabinet.
States and territories were told they would be receiving $25 billion extra in funding for public hospitals under the National Health Reform Agreement.
The five-year deal, to come into effect from July, would provide more than $219 billion - triple the amount given to jurisdictions under the previous agreement.
Dr McMullen said she was worried the funding would not be enough to reverse the decline in performance across public hospitals.
"After years of campaigning through our Clear the Hospital Logjam campaign, the federal government announced an additional $25 billion in funding for the new agreement and that is, of course, very welcome," Dr McMullen said.
"But our costings suggest it may not be enough to get our public hospitals out of the cycle of crisis they've been in.
"AMA modelling showed that at least $34 billion was the type of investment required," she said.
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