Doctors fed up with contracting failures between private hospitals and insurers

MedTech & Diagnostics News: The government is yet to fully grapple with the sustainability of the $22 billion private healthcare system. UnitingCare Queensland, a member of Catholic Health Australia (CHA), has announced its decision to end its contract with the Australian Health Service Alliance (AHSA) after the alliance refused to present a fair offer during negotiations.

Australian Medical Association (AMA) President, Professor Steve Robson, said that doctors are getting fed up with the constant contracting failures and that something needs to change.

“This is yet another example of a private hospital group at loggerheads with private insurers over contracting arrangements that will leave policyholders of more than 20 insurers caught in the middle and potentially facing higher out-of-pocket charges.”

He added, “The AMA has been calling for sector-wide reform that ensures the private system delivers value for patients and maintains clinical independence while ensuring the long-term viability of hospitals and insurers and has welcomed the Department of Health and Aged Care’s establishment of a Private Hospital Sector Financial Health Check as an initial step in examining growing concerns about the sector. 

“It is critical for all parties to keep patients and clinicians informed, explaining the complex transition arrangements that apply once the current agreement ends.”

Dr Katharine Bassett, CHA Director of Health Policy, said “The private health insurance sector is enjoying record profits and needs to collaborate with the non-government health sector to deliver sustainable funding arrangements that serve the needs of our patients, communities, clinicians, and service providers.”

St Vincent’s, a member of CHA, which had threatened to walk away from its contract with NIB over a pricing dispute, said last week that both sides had reached a new deal, which recognised the rising costs of providing private hospital care.

“Times have never been harder for private hospital providers in Australia. As a not-for-profit social enterprise, St Vincent’s needs to be able to cover its costs,” said St Vincent’s chief executive Chris Blake.

Dr Bassett added, “We know these types of disagreements will continue as long as insurers continue to squeeze patients and hospitals.

“Hospitals across the country are closing their doors as funding from insurers fails to keep up with the soaring costs of delivering healthcare. After all, there is no private health insurance industry without viable private hospitals.”

The private health industry reported a net profit of $2.1 billion for the year ending June 2023, double the previous year. Yet over 70 private hospital services have closed over the last five years due to financial difficulties.

However, in a recent interview with Health Industry Hub, Sheena Jack, CEO of HCF unpacked the nuances that are impacting the current private hospital ecosystem. She expressed optimism that the review of private hospitals viability announced by Federal Health Minister Mark Butler could lead to significant reforms.

“Many Australian Health Service Alliance members return well short of the industry’s 90% gold standard and have some of the highest management fees,” continued Dr Bassett.

CHA is Australia’s largest non-government, not-for-profit group of health, community, and aged care providers.

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