Bupa strikes new deal with Cabrini to make healthcare cheaper as talks with Ramsay fail

In a significant shake-up, the country’s second biggest health insurer has agreed to fund a Melbourne hospital’s alternative model of care including at home treatment.

Bupa has signed a new funding agreement with Melbourne-based hospital group Cabrini in what it says is a “landmark” deal that will make Australian private healthcare more affordable.

The country’s second biggest health insurer has agreed to fund Cabrini’s alternative models of care - including at home rehabilitation, which costs about one-third of the cost of hospital recuperation.

The new contract comes as Bupa has been embroiled in a funding dispute with Australia’s biggest private hospital operator Ramsay, with the ASX-listed group serving it with a termination notice two weeks ago.

Bupa Health Insurance managing director Chris Carroll said the Cabrini partnership was an example of providers and funders working collaboratively with a ‘patient first’ mindset.

“We’re thrilled to be partnering with Cabrini to support new models of care that improve patient experience, bring about better clinical outcomes, and importantly support greater sector affordability,” Mr Carroll said.

“This partnership shows what’s possible when hospitals and insurers work together to address the challenges in the health system, with the end-goal being affordable, high-value private healthcare which supports a strong and sustainable Australian healthcare sector.

“Cabrini is renowned for its commitment to quality care. For our members, this now means they have more choice as to where and how they receive that care.”

The need to make healthcare more affordable has become more acute, with hospital costs rising up to 7 per cent in the past two years – a sticking point in Bupa’s contractual dispute with Ramsay.

Health insurers have been exploring a range of different care models. Medibank has been partnering with doctors and buying stakes in hospitals to advance short-stay treatments as part of its strategy to slash out of pocket costs.

Bupa has taken a different tack, striking partnerships such as the Cabrini deal in an effort to build more flexibility into Australia’s health system to ensure patients have the right treatment for their needs.

“Alternative models of care help reduce unnecessary costs and drive affordability,” Mr Carroll said.

“Currently, doing rehab at home instead of in hospital is about one third of the average cost of inpatient services. On average, in-hospital rehab costs about $9000, while in contrast, it costs about $3000 for rehab at home.

“For some patients it means they can receive the care they need in the comfort of their own home, while keeping a hospital bed free for someone else that needs it.”

Cabrini Health chief executive Sue Williams said the Bupa deal would ensure patients continued to receive support after a hospital admission. Bupa members will not have to pay any out of pocket costs for this treatment.

“We’ve been developing new models of care for some time now, and this partnership with Bupa recognises our innovation in home care and support, following a hospital admission,” Ms Williams said.

“Our focus on quality and compassionate hospital care is paramount, and this partnership will ensure the care and support Cabrini patients receive continues when they go home.”

Originally published as Bupa strikes new deal with Cabrini to make healthcare cheaper as talks with Ramsay fail