Day hospitals warns of closures as reforms stall

Day Hospitals Australia (DHA) is sounding the alarm on the spiralling health insurance costs and the looming threat of day hospital closures. DHA Chair, A/Professor Anthony Lynham, and CEO, Jane Griffiths are calling on Health Minister Mark Butler and Shadow Health Minister Senator Anne Ruston to take immediate action to stem the bleeding in the private health system.

Private hospital operators recently rejected the one-off “hardship package” proposed by health insurers during the Private Health CEO Forum earlier this month.

“The health system is in crisis,” said Griffiths, clearly exasperated. “We need real reform to stop hospitals from closing and ensure the long-term viability of the healthcare system in Australia.”

The Australian Private Hospitals Association (APHA) also echoed the urgency, with CEO Brett Heffernan saying “Federal Health Minister Mark Butler’s public commitment to addressing the massive shortfall in funding by insurers, and ending their dominance in contracting over hospitals, is the core issue that is causing the viability crisis impacting hospitals, their services and, ultimately, patients.”

He added, “Nothing less than insurance companies paying their way will do. The insurers are making record profits. They can afford to meet their responsibilities to fund the healthcare of their members in full without any increase in premiums.”

In the face of this crisis, DHA has proposed a series of reforms to tackle the unsustainable financial pressures currently suffocating the sector. The first is the introduction of equitable pricing for hospital procedures. Under the current system, payment disparities are rampant, with some overnight hospitals receiving far higher reimbursements than day hospitals for similar procedures. In some cases, diagnostic endoscopy reimbursements are up to 90% higher for overnight hospitals.

The second reform is the creation of a new ‘Type D’ category for day hospitals, aimed at slashing healthcare costs by hundreds of millions of dollars. DHA suggests implementing this category for specific procedures, pushing them into day hospitals where they can be performed more efficiently and at a significantly lower cost. A proposed pilot program in ophthalmology and gastroenterology could demonstrate an immediate cost savings of $300 million to private health insurers and, in turn, benefit the broader health system and consumers.

Finally, DHA advocates for the establishment of an Independent Private Health Authority to oversee these reforms. They support calls from the Australian Medical Association (AMA) and APHA for a regulatory body that ensures fairness, transparency, and accountability in private hospital funding.

The APHA, Medical Technology Association of Australia (MTAA) and Catholic Health Australia (CHA) are also calling for private health insurers to pay at least 88 cents per dollar to private hospitals and ensure medical device savings of $290 million from the Prescribed List (PL) reforms are passed on to patients, in full, through public reporting.

“These reforms are essential to making healthcare more affordable, sustainable, and efficient for all Australians,” Griffiths concluded.

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