Health Department officials have conceded that private hospitals are uninvestable and more will close, with Labor MPs increasingly concerned that the government is failing to fix a funding crisis that threatens to spill into the public system.

The preliminary findings of a review ordered into a growing crisis within the health care system by Health Minister Mark Butler, obtained by The Australian Financial Review, warn that private hospitals will close in the next 12 months. The findings also say a shift from overnight stays to same-day procedures is harming profit margins.