Hospitals weigh in on Health Minister’s ultimatum to insurers: Pay up or face regulatory action

Health Minister Mark Butler has issued a stark ultimatum to health insurers: ramp up payments to private hospitals within three months or brace for potential regulatory repercussions.

During a line of questioning at Senate Estimates last week, Blair Comley, Secretary of the Department of Health, acknowledged the uncertainty surrounding the proposed private health reforms which was circulated by Minister Butler in December.

“As yet, that hasn’t been worked up into a formal recommendation for government,” Comley confirmed.

However, Minister Butler emphasised the urgency for health insurers “to take immediate action to increase payments to hospitals to ensure patients are able to access important services”. This directive will be under scrutiny at the Private Health CEO Forum on Friday, convened to address proposals aimed at sustaining the $22 billion private hospital sector.

Brett Heffernan, CEO of the Australian Private Hospitals Association (APHA), hailed the development as long-awaited and essential.

“This development is overdue and much-needed. It comes too late for some hospitals and services. Nevertheless, it is important positive recognition that the funding system needs reform and that the health insurance industry has a responsibility to meet hospital costs.” Heffernan remarked.

“The Minister’s call mirrors our policy for 88 cents in the dollar on premiums be returned to healthcare providers. But the health insurance industry has not hit the 88-cent benchmark since 2019-20. In fact, the shortfall in funding from insurers to healthcare providers has been $3 billion over the last three years.”

Catholic Health Australia (CHA) Director of Health Policy, Dr Katharine Bassett, stated “For several years health insurers have been making enormous profits and returning less to patients and hospitals. This imbalance has put private hospitals under severe pressure and led to the closure of services across the country, heaping extra pressure onto the public system.

“The government is right to focus on ensuring patients are the priority in private health insurance. Australians who pay for private cover expect that their premiums will go towards funding their care, not boosting insurer profits.”

Since 2022 almost 20 private hospitals have closed their doors entirely and more than 70 services in other private hospitals permanently cancelled.

Heffernan added, “That means patient clinical needs are disrupted in having to relocate to another private hospital to get the care they need – often much further away, or go public. Local communities lose much-needed healthcare assets. It compounds in regional areas where public and private hospitals often tag-team to provide complementary care.”

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