Australia’s second-largest private hospital operator, Healthscope, has announced its decision to terminate contracts with two major private health insurers, Bupa and the Australian Health Services Alliance (AHSA).
This move is set to affect over 6.6 million Australians who rely on these insurers for private health coverage.
Key Details of the Decision
- Contract Termination Dates: Healthscope’s agreement with Bupa will end on February 20, 2025, while its contract with AHSA will cease on March 4, 2025.
- Reason for Termination: Healthscope cited the insurers’ refusal to pay a proposed hospital facility fee as the primary reason. The fee was intended to bridge the gap between rising hospital care costs and current insurance payouts.
- Impact on Patients: Members of Bupa and AHSA may face increased out-of-pocket costs or need to seek care at alternative hospitals. AHSA members, however, retain access to over 500 other private hospitals across Australia.
The Financial Dispute
Healthscope claims that private hospitals are grappling with unsustainable economic conditions due to rising costs and insufficient funding from insurers.
According to CEO Greg Horan, the proposed hospital facility fee—ranging from $50 for same-day services to $100 for overnight stays—was a modest attempt to address chronic underfunding.
However, both Bupa and AHSA opposed the fee and threatened legal action.
Horan emphasized the broader challenges facing the private healthcare sector, noting that over 70 private hospitals have closed in the past five years due to financial pressures. He criticized insurers like Bupa for prioritizing profits while failing to adequately fund patient care.
Reactions from Insurers and Industry Bodies
- Bupa’s Response: Bupa described Healthscope’s decision as “unprecedented and unfair,” arguing that it penalizes everyday Australians amid rising living costs. The insurer maintained that the proposed fee offered no tangible benefit to its members.
- Private Healthcare Australia (PHA): The peak body for health funds accused Healthscope of employing unethical tactics. PHA CEO Rachel David argued that paying above-inflation increases would lead to higher premiums for policyholders, potentially forcing many to downgrade or drop their coverage.
- AHSA’s Position: AHSA CEO Andrew Sando criticized Healthscope for prioritizing investor returns over patient care. He questioned why foreign-owned entities like Healthscope’s parent company, Brookfield, are allowed to extract more profits from Australia’s already strained healthcare system.
Broader Implications for Private Healthcare
The fallout between Healthscope and these insurers underscores a growing viability crisis in Australia’s private healthcare sector. Rising operational costs and stagnant funding have led to hospital closures and reduced services in recent years.
For patients, this dispute highlights the delicate balance between maintaining affordable insurance premiums and ensuring adequate funding for quality healthcare.
What Patients Should Do
Patients insured by Bupa or AHSA are advised to:
- Contact their insurer or healthcare provider for guidance on alternative care options.
- Review their policies to understand potential changes in coverage or out-of-pocket expenses.
- Consider switching insurers if necessary to maintain access to preferred healthcare facilities.