Sunday Aug 20 12:02 AEST
Dr Scott he said developments in modern medicine were saving thousands of lives.
But the advances had created an "insatiable demand" for expensive new technology, more services and miracle cures.
Dr Scott said while Australia's health system was coping now, it was on the verge of collapse.
"The return on investment for modern health care may be flattening out, in an environment of growing numbers of older patients with chronic illnesses, maldistribution of services and hospital overcrowding," he wrote.
"A change in thinking is required if current medical practice is to avoid imploding when confronted with the next major economic downturn."
The country would need to make tough calls about who should be treated and who will have to miss out if this occurred, he said.
"Hard decisions will need to be made as to whether the country can afford chemotherapy for every case of advanced cancer, intensive care for every severely premature baby (and) dialysis for every patient with end-stage renal disease."
Dr Scott said decisions about who should get treatment should be based on a cost-effectiveness analysis, with priorities for those who would benefit most.
Operations with a low rate of success in extending lives should not be subsidised.
He said his ideas "while controversial, may stimulate needed debate" among the medical community.