Two-year-old Joe Massa collapsed and died in September after he and his parents waited three hours in the emergency department at Sydney's Northern Beaches Hospital.
His heart attack - caused by significant fluid loss - followed repeated failures by hospital staff to conduct basic observations or respond to concerns of his mother Elouise.
The Massa family has called for protection of public hospital care in law to prevent further privatisation and outsourcing, claiming the 488-bed hospital used flawed IT systems that differed from those used in other emergency wards.
Northern Beaches Hospital, which opened in 2018 to replace two smaller public hospitals, is one of 38 Australian hospitals run by Canadian-controlled Healthscope, owned by a multi-national private investment fund.
The controversial public-private partnership was set up under the former coalition state government.
NSW Health Minister Ryan Park on Friday confirmed the inquiry would cover the period back to October 2018, when the hospital opened as a privately operated facility.
It will consider incidents subject to serious adverse event reviews, examine how the hospital responded, the adequacy of systems and processes and the extent to which it implemented changes prompted by those incidents.
How the hospital supports a family-led escalation pathway called REACH will also form part of the investigation.Â
That initiative, meant to ensure staff are apprised and act upon worrying changes in a patient's condition, was found to be "insufficiently accessible" in Joe's case.
Mr Park said he hoped the inquiry would reveal how the boy's parents had been let down and inform changes that could prevent such a tragedy from happening again.
"On top of this inquiry, we're also setting up a roundtable with the Massas and others and health experts and clinicians over the next month or so to examine the REACH protocol and how we get that better," he told Sydney radio 2GB on Friday.
Health Services Union secretary Gerard Hayes said the union had been raising serious concerns about the hospital's operations for the past five years.
"From renting out maternity wards to film crews while mothers struggle with understaffed services, to charging grieving families unnecessary fees to release their loved ones' bodies," he said, pointing to what the union believed were examples of the hospital of prioritising commercial interests over patient care.
Officials hoped the inquiry would uncover any conflicts between financial incentives built into the hospital's public-private partnership agreement and delivering quality care, the union said.
Healthscope chief executive Greg Horan previously vowed the hospital would "make sure that we (learn from) this tragic incident and ensure that it does not happen again".
He also expressed his condolences to the family for their loss and "for the care that Joe did not receive" during a parliamentary hearing in February.
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