Scalpel meets the bottom line: Healthscope collapse spurs sector-wide call for reform

The collapse of private hospital giant Healthscope has sent shockwaves through the healthcare community, reigniting urgent concerns about the future of the country’s dual health system and prompting powerful responses from patient advocates, clinicians, insurers, and unions.

Two-thirds of all planned surgeries in Australia are performed in private hospitals and day surgery centres. For Patients Australia CEO Lisa Robins, this fact underscores the gravity of the situation.

“The collapse of Healthscope is not just a financial matter – it signals the urgent need to rethink how our private health system operates to protect patient trust and preserve choice when it comes to hospital stays. We need bold, sustainable models that ensure private care remains accessible and affordable. Short-stay elective procedures in private hospitals are a critical part of that future,” Robins said.

The potential failure of Healthscope, a major private equity–owned provider, has highlighted structural weaknesses that many say have been long ignored. With over 90,000 members, Avant Mutual, Australia’s largest medical indemnity insurer, is closely watching the unfolding crisis.

Avant’s Chief Medical Officer, Professor Steve Robson, said the rescue bid is symptomatic of broader instability plaguing the system.

“Our health system is underpinned by a balance between our public hospitals and the private sector,” he said. “Australia’s public hospitals have been overwhelmed for years, with unacceptably long waiting lists for specialist clinics, surgery and in emergency departments.”

Professor Robson, who is also the immediate past President of the AMA, warned that collapsing private capacity poses real risks to patient care.

“These risks to patient safety, will be further exacerbated, if the private hospital sector is to collapse irretrievably,” he said. “There is little, to no, capacity for Australian public hospitals to deal with patient and treatment overflows.”

Beyond clinical pressure points, workforce and governance issues are also under scrutiny. The Australian Nursing and Midwifery Federation (ANMF) has weighed in strongly, questioning the role of private equity in the provision of health services.

“This [Healthscope’s receivership] announcement is a clear reminder that we need better regulation of the private health sector,” said ANMF Vic Branch Acting Secretary Maddy Harradence. “We will be urging the Federal Government to review the types of companies they allow to participate in the delivery of health services and prevent unethical and unscrupulous parties that have no regard for patients or the health workforce from entering the system.”

Meanwhile, clinicians are demanding answers on the growing financial disconnect between insurers, hospitals, and patients.

“It seems that while private insurers are posting billion dollar profits, private hospitals are going broke and patient out of pocket costs increase year on year,” said obstetrician and gynaecologist A/Professor Gino Pecoraro. “While insurance company premiums rise annually, frequently above CPI, their rebates to patients and hospitals don’t appear to and this needs to be addressed.”

Patients Australia Health Reform Ambassador, Dr Nicholas Coatsworth, agreed that affordability must be central to any reform.

“The most visible cost burden for patients remains the out-of-pocket fees charged by specialist doctors. We urge insurers, doctors, and private hospitals to work together on care models that minimise these costs. Private health insurance in Australia needs to mean something for patients.”

Avant Mutual is currently collaborating with the Federal Government and other key players, including hospital owners, specialists and patient advocates, to develop policy solutions that can restore stability and trust in the private sector.

“We need to ensure patients remain the focal point for all discussions on the future of private hospitals. This is particularly urgent now, against the backdrop of the financial uncertainty, created by the Healthscope collapse,” Professor Robson said.

“If we are to deliver safe, reliable and world class quality health care for all patients, then we have no choice but to develop reforms to support the private hospital system. There’s no plan B.”

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