As Australians prepare to go to the polls, the cost of living continues to dominate commentary and there are ongoing concerns about the sustainability of the private hospital sector. Now is the time to genuinely debate reform ideas including introducing a national private pricing mechanism to protect accessible and sustainable healthcare for the benefit of patients. Everyone needs to come to the table and work together to achieve the best possible outcome.

It has been ten months since the private hospital financial viability review and the Private Health CEO Forum was established.

In March this year, Federal Minister for Health and Aged Care, Mark Butler, called for the forum to focus on getting insurers to increase the percentage of premiums paid to hospitals and get it done by the end of this fiscal year. At Calvary, we welcome the minister’s proposal. The reality is profit margins for insurers are growing through the reduced percentage of premium payment to hospital providers. Any suggestion that improving the benefit ratio will force a rise in premiums for consumers should be run to ground, because the proposed increase is within the existing envelope.

Since 2019, about 70 hospitals have closed, and those that have opened are restricting their service offering to high-margin activity. In the last three years, about a dozen private hospitals have shut down their high-cost, low-margin maternity services. The most recent announced in February this year.

In November last year, another hospital in administration was acquired by a joint venture made up of a consortium of doctors and a private insurer, but it closed its low-margin oncology services, putting profits before patients. All these decisions are adding pressure to already stretched public hospitals and not-for-profit operators which make room for these services.

Consider Calvary’s recent experience of picking up maternity services in Hobart; where we received government funding to support some capital work and most, not all, insurers have failed to answer the call for improved benefits for maternity services. Maternity is a high-cost activity, and not one a private hospital provider makes money. However, if we did not step up mothers and family choice is gone. This is unacceptable in a country that prides itself on its healthcare system.

We need to reform the system if we want to keep it. The funding model is broken, and genuine reform is necessary. The benefits ratio is one way, but more needs to be done. We also need to look at the antiquated contracting system. It is still based on a model designed in the 1980s around a system of certificates and paper signoffs. Models of care have changed; it’s about time we changed how we pay for them.

I believe a national private pricing mechanism is something we need to pursue. This is not something that can happen overnight. Experience shows, introducing the National Efficient Price for public hospitals took time, but it created a level playing field and transparency about funding. Private hospitals and private patients deserve the same certainty.