The Hobart Clinic will shut its doors by the end of October, leaving Tasmania without a major private inpatient mental health facility.

The 27-bed Rokeby hospital faces a $3 million deficit this financial year due to poor private health fund payments and patients unable to afford rising gap fees.

Acting CEO Dr Stephen Ayre said the 40-year-old clinic’s board made the “difficult decision” after cash flow projections showed the facility was no longer viable.

“This had occurred as a result of low private health fund reimbursement and the inability for private patients to pay the increasing gap fees,” he said.

The clinic’s 100 staff will receive full entitlements, while its Hobart CBD outpatient service will continue operating.

The Hobart Clinic will close by the end of October. Image / Supplied

Health Minister Bridget Archer expressed disappointment but said the closure reflects nationwide struggles facing private health facilities.

“While this decision was made by The Hobart Clinic and its board, I want to reassure Tasmanians of our commitment to mental health services across Tasmania,” she said.

The government insists expanded public services can absorb displaced patients through facilities like The Peacock Centre and planned mental health hubs.

The closure comes just months after Tasmania ended its public-private partnership with the clinic in May, which allowed public patients to access beds.

Dr Ayre said the clinic had attempted a business transformation, switching from employed psychiatrists to visiting medical officers to cut costs.

Health Minister Bridget Archer expressed disappointment over the closure. Image / Pulse

However, the changes ran 18 months behind schedule due to recruitment difficulties and financial uncertainty.

“It is a well-documented fact that inpatient mental health services across Australia are under increasing financial stress,” he said.

The government previously provided $1.4 million in 2024 and $2 million this year to keep the clinic afloat.

The Department of Health will assist with patient transitions and encourage affected staff to apply for public sector positions, Archer said.

Mental health support remains available through Access Mental Health on 1800 332 388 or Lifeline on 13 11 14.