‘Repair Needed: Dealing with Shredded Contracts that Disadvantage Patients’

Millions of patients may face increased costs due to a dispute between insurance funds and a company running multiple private hospitals.

The ending of contracts between hospital operator Healthscope and the funds will impact patients at 38 private hospitals, potentially forcing them to pay higher out-of-pocket expenses for care despite having insurance.

This decision will affect customers of Australia’s second-largest health insurer, Bupa, and others in the Australian Health Services Alliance.

Health Minister Mark Butler expressed concern that canceling contracts was not in the best interests of patients.

“I expect them to return to negotiations and resolve this issue,” he stated.

“(Healthscope and Bupa) are large, sophisticated, foreign-owned commercial operators… they can continue their operations largely due to taxpayer support,” he added.

The termination of various contracts is set to occur in February and March, announced by Healthscope on Nov. 22.

The company stated that insurers have refused to address Healthscope’s funding concerns related to the financial challenges facing private hospitals.

Healthscope’s CEO, Greg Horan, emphasized their dedication to providing top-quality care but stressed the necessity of adequate funding to do so.

“In order to remain financially viable, we have no option but to terminate these contracts,” he explained.

Nick Stone, Bupa’s CEO, expressed shock and disappointment at the decision.

“It seems they are disregarding the interests of our patients and clients by jeopardizing their access to healthcare,” he said.

Heffernan from the Australian Private Hospitals Association highlighted the imbalance in the system, with insurers reaping profits while several private hospitals closed in recent years.

He emphasized the need for insurers to correlate premium increases with payments for care in private hospitals to ensure fair practices.

The lobby group Private Healthcare Australia accused Healthscope of prioritizing profits over patient care.

CEO Rachel David suggested that Healthscope should focus on negotiating affordable and sustainable solutions rather than abruptly ending contracts.

There are varying opinions on the potential costs patients may face.

Healthscope estimated that Bupa and alliance fund members could see costs increase by “potentially in the hundreds of dollars or more,” while David warned of potential increases in the thousands for patients.

Previously, NSW Treasurer Daniel Mookhey criticized certain funds for underfunding the state’s system by contributing less than the average daily cost of public hospital beds for private patients.

Data from the national health regulator revealed significant premiums paid by Australians in 2023, with insurers recording a net margin of 6.6% after management expenses.

Healthscope operates hospitals across various states in Australia.