Health Minister rules out taxpayer bailout for private hospitals amidst financial crisis

MedTech & Diagnostics News: Australia’s largest day and short-stay hospital provider is calling on the Federal Government to address funding disparities and ensure a fair playing field between private hospital operators, regardless of size.

Nexus Chair, Dr Michael Stanford emphasised that the sector’s financial viability is at stake, urging for more equitable support.

“We have welcomed the recent Private Sector Financial Viability Health Check and the creation of a better fact base. It is clear that health insurer funding for patient care has fallen significantly behind the cost of health service delivery, and this is compounded in day and short-stay facilities due to low price indexation and lack of bargaining power,” Dr Stanford said.

Dr Stanford commended the Federal Government’s scrutiny of private hospitals’ financial stability but stressed the urgency for practical solutions.

“The Federal Government was right to look into the financial stability of private hospitals as the future is unsustainable for many in the sector. It’s now time for solutions,” he said.

Federal Health Minister Mark Butler MP said in a press conference yesterday, “That work has finished, but the analysis hasn’t been provided to me yet.

“I’ve been really clear with insurers and with private hospital operators that there’s no simple fix from Canberra or no bailout from taxpayers that are going to deal with pressures in the private hospital system. These operators, many of them very large, need to work together in a way that serves the national interest as well as their own commercial interests.”

Dr Stanford highlighted the significant role of day and short-stay hospitals, which account for 54% of the private sector and are growing at 6-7% annually.

“Short-stay hospitals provide high-quality, efficient care at less cost to health insurers and patients than similar care in overnight stay hospitals.

“Health insurers need to increase funding for this part of the sector to ensure the commercial viability of procedures in a short-stay setting. Otherwise, these volumes will be redirected to an overburdened public system or a higher-cost private overnight setting. The market power of health insurers and lack of pricing transparency for second-tier default benefits is restricting innovation and growth,” he emphasised.

Minister Butler acknowledged the complexity of the issue, stating, “The sector itself is going to have to provide that leadership. There is no one answer to a sector that’s facing a whole myriad of diverse challenges.

“This has always been a sector where these operators, many of them quite big, pretty influential, powerful operators, play it hard and they negotiate hard. And that’s not particularly surprising given the nature of these commercial relationships.”

A recent Day Hospitals Australia paper, “A Fork in the Road,” underscores the potential for day and short-stay hospitals to alleviate the strain on the system.

The report reveals that if minor complexity procedures currently performed in overnight hospitals were shifted to day hospitals, private health insurers could collectively save $133 million annually.

“It’s a similar situation for other critical procedures including cataracts, chemotherapy, children’s dental as well as others such as knee or hip replacements where long wait lists exist in the public and higher fees are charged in the overnight facilities,” Dr Stanford noted. “The burden and cost can be readily taken out of the system with the move to high-quality and safe day and short-stay hospitals provided the work is properly funded.”

Dr Stanford concluded, “Day and short-stay hospitals have a key role to play in delivering high-quality clinical care and better value for money for payors and patients, yet today they compete on an uneven playing field that is stifling their growth.”

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