Health Minister’s deadline falls flat on health insurers

Federal Health Minister Mark Butler drew a line in the sand on 4th March, issuing a blunt ultimatum to health insurers: improve payments to private hospitals within three months or face regulatory action. The deadline has now passed. The threat? Still just words.

While Minister Butler has hinted at “some evidence of an uptick” and is reportedly awaiting fresh data from the Department of Health, both the Australian Private Hospitals Association (APHA) and Day Hospitals Australia confirm that the insurers have not moved. The benefit payment ratio to private hospitals have not seen an increase since the ultimatum was issued by the Health Minister.

The latest Australian Bureau of Statistics (ABS) figures paint a grim picture. Private hospitals are operating at a loss, recording a staggering -$34 million in 2023–24.

“Just how many more months do the insurers have before the Minister will act?” asked APHA CEO Brett Heffernan. “Three months ago private hospitals on the brink of collapse put a lot of faith in the Minister’s word that he would act, as promised, ‘within three months’.”

Jane Griffiths, CEO of Day Hospitals Australia, told Health Industry Hub, “We support Minister Butler’s position in requesting that the private health insurers act on appropriate payments to all private hospitals. It is important that all stakeholders involved in private healthcare work together to address the funding of private hospitals.”

But optimism is hard to justify when the data continues to trend in the wrong direction. According to APRA’s latest quarterly report, the payment ratio from insurers to private hospitals has dropped even further, from 83% to 80.7%. That means nearly 20 cents of every dollar Australians pay in premiums never reaches the hospitals actually delivering care.

“It’s a far cry from the traditional 88% benchmark, which is an annual threshold the insurers have not paid since 2019–20. All this comes despite private hospital admissions increasing by 3% over the last year (from 4.9 million to over 5.1 million), yet private hospitals face an existential crisis,” Heffernan noted.

Meanwhile, health insurers continue to boost their own profitability and management expenses. On ABC News Breakfast, Minister Butler again warned, “I’ve been as clear as I possibly can with the insurers. If they don’t come to the table and deliver a better deal for private hospitals, I will act.”

But the clock ran out two weeks ago, and the private hospitals are still waiting.

“Why won’t the Minister make good on his own commitment?” Heffernan pressed.

In reimagining healthcare across the entire patient journey, Health Industry Hub^TM is the only one-stop-hub uniting the diversity of the Pharma, MedTech, Diagnostics & Biotech sectors to inspire meaningful change.

The Health Industry Hub^TM content is copyright protected. Access is available under individual user licenses. Please click here to subscribe and visit T&Cs here.