Australia sliding into US-style managed care by stealth

“Should we let insurers and retailers shape the future of Australian healthcare, or is it time for Parliament to step in with clear rules?” The warning from Dr Claire Campbell, Vascular and Endovascular Surgeon, comes as private hospitals grapple with mounting financial strain and health insurers tighten their grip on healthcare.

She argues that rather than reforming hospital funding, governments and regulators have quietly opened the door to insurers and retailers embedding themselves directly into the delivery of care. Medibank now co-owns hospitals and mental health facilities. Bupa is rolling out its own clinics and Mindplace centres. Wesfarmers has expanded from retail into healthcare with a national pharmacy network and telehealth business.

Yet, doctors remain locked out of pharmacy ownership. Patients, in turn, face narrowing choice and the risk of being steered into facilities owned by the very insurers funding their care.

This is vertical integration: when one corporate controls the money, the decisions, and the service. While it may prop up private hospitals in the short term, critics argue it carries long-term risks of monopoly, data capture, and the erosion of clinical independence.

Brett Heffernan, CEO of the Australian Private Hospitals Association (APHA), said the trend is already reshaping care delivery.

“US-style managed care isn’t just a threat anymore, it’s already here. When health insurance companies promote their own low cost health services, patients have to ask what corners are being cut in their healthcare. The conflict of interest in insurers as funders of healthcare now providing healthcare is so blatant. Patients always lose in that equation,” he said.

International evidence adds weight to those concerns. A Harvard University study led by Soroush Saghafian analysed more than 2.6 million patient visits.

“Analysing more than 2.6 million patient visits, we found that physicians significantly alter their care process after they vertically integrate. Although integration improves operational efficiency measured by physicians’ throughput, it negatively affects quality and overall spending. What is more, this results in a substantial increase in patients’ post-procedure complications,” Saghafian stated.

Dr Campbell believes reform must start with clear limits on ownership. Just as pharmacy laws restrict who can own a pharmacy, she argues there should be caps on the extent to which health insurers can own hospitals, clinics, or pharmacies. Without such boundaries, insurers gain unchecked power over both funding and service delivery.

She also calls for the introduction of strict no-steering rules. These would prevent insurers from designing benefits, apps, or marketing campaigns that funnel patients into their own clinics or hospitals when independent alternatives are available. For patients, this would help safeguard genuine choice and avoid subtle manipulation of healthcare pathways.

The handling of data also requires attention. According to Dr Campbell, insurers who own providers should be legally required to maintain strict firewalls between claims and clinical data, with explicit bans on using this information for anticompetitive purposes. Without this protection, sensitive patient data could be exploited to entrench corporate dominance.

Dr Campbell stresses that this is not about blocking innovation. Short-stay hospitals, virtual care, and community clinics all have a role to play. But without strong protections, she warns, Australia risks drifting into a US-style managed care model by default – a system built not on patient needs, but on corporate interests.

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