Every year 1,500 Australians pay with their lives for overcrowding in public hospitals, says the AMA's 2008 Public Hospitals Report Card.
The public hospitals are straining under the pressures of overcrowding, unacceptable waiting times in emergency departments, and elective surgery delays.
"Over time, you hear the stories state by state, ambulance ramping, ambulance bypasses, patients in corridors, patients on floors, patients in chairs being treated," AMA president Rosanna Capolingua told reporters in Sydney.
"This is a ridiculous scenario. How much more do we need to hear about this before we do something to stop it?
"We have ranked all the states, remembering of course that the overall ranking for the states is F for fail, and then it is how badly they have failed underneath that F."
In terms of the number of beds per 1,000 people, the Northern Territory comes out on top, while Victoria is the worst performer.
The Northern Territory spends the most on public hospitals per person, with the ACT second and NSW third. Queensland spent the least.
New South Wales was the top performer in emergency department performance.
Health Minister Nicola Roxon conceded the system was under great pressure, but felt some of the figures in the AMA report were old.
"These figures are from 2003, they are in a report card released today as an annual report on our hospitals and they are figures from 2003, I'm not sure that it gives us a great insight into what is happening today in our hospitals," she said.
She went on to add, "What we agree with the AMA on is that our public hospitals are under pressure, we think that they do need more attention.
"That's why we've been investing more money in them and that's why we're determined to work with the states and territories to get hospital funding on a more stable footing for the future.
"We are not going to write a blank cheque for the states and territories and I don't think any of them would expect us to. They might like it, but I'm sure they don't expect it," she said.
"We want to make sure that our significant investment and what will be an increased investment will actually deliver for the community.
"Ultimately that's our interest, how can we provide better health services and get better health outcomes for the communities."
The AMA intensified its call for a rehabilitation package as negotiations for new Australian Health Care Agreements (AHCAs) heat up, ahead of a meeting of the Council of Australian Governments (COAG) meeting, scheduled to take place in Canberra on Nov. 29.