Australia’s largest non-profit hospital operator says Labor is yet to fully grapple with a crisis facing the $22 billion private healthcare system, as its sustainability is undermined by soaring costs and hardline demands from insurers.

St Vincent’s – which operates 10 private hospitals in Victoria, NSW and Queensland – on Thursday told health insurer NIB it would walk away from its contract over an entrenched pricing disagreement, meaning policyholders will have to pay more for care in a St Vincent’s facility.