Hospital price hike to hit NIB members who are patients St Vincent’s private hospitals

Health fund members will be slugged with a price hike for private hospital care after contract negotiations between a major insurer and a major hospital group broke down.

NIB says many of its members won’t face new out of pocket expenses for treatment at St Vincent’s 10 private hospitals until next year.

Contract negotiations between the fund and the major private hospital group broke down this week with the hospitals announcing they would end their deal with the fund on October 3.

When this happens NIB members who use the hospitals will face new out of pocket expenses of up to many thousands of dollars.

People already booked in to receive treatment at St Vincent's hospitals should not be affected, the fund said.

“Treatment can go ahead for any member with a booking, and in some cases for some months after termination of an agreement with the hospital, if that occurs,” said NIB managing director Mark Fitzgibbon.

Treatment started before October 3 will continue until discharge.

A pre-booked pregnancy and birth will be covered until July 2025.

Nib members facing increased costs if they use St Vincent’s hospitals.

Rehabilitation, mental health, oncology, and renal services, started on or before October 3, 2024, will be covered until April 2025, the fund said.

Mr Fitzgibbon said he hoped to resume negotiations with St Vincent’s would resume.

St Vincent’s, Australia’s largest not-for-profit health and aged care services provider, owns 10 hospitals in NSW, Victoria and Queensland.

It had told NIB it will walk away from its contract within the next 65 business days, unless a new fairer funding agreement is reached.

This means from October 3 patients insured with NIB will be required to contribute more to the cost of their care when using a St Vincent’s private hospital. Currently hospital costs are fully covered by their health fund.

“It could be hundreds of dollars, in some cases in highly complex operations it could well and truly be thousands of dollars,” St Vincent’s CEO Chris Blake said.

St Vincent’s, Australia’s largest not-for-profit health and aged care services provider, owns 10 hospitals in NSW, Victoria and Queensland.

Private hospitals are facing a severe funding crisis as health funds squeeze their rebates and operating costs for hospitals including wages, food, energy, personal protective equipment (PPE), IT, and maintenance soar, Mr Blake said.

In 2023, St Vincent’s electricity costs were $6.5 million but in a year have doubled to $12 million, he said.

“There is a crisis in private healthcare in Australia,” Mr Blake said.

“Over the last five years, more than 70 private hospital services have closed.”

Private hospitals made a collective loss of more than $611 million last financial year and Health Minister Mark Butler has ordered his department to conduct a financial viability check on the sector.

There is a growing danger the sector which conducts 70 per cent of elective surgery in Australia could soon become unviable.

NIB has engaged a third party called Honeysuckle Health to conduct funding negotiations with private hospitals.

St Vincent’s said it had negotiated new agreements with Medibank, HCF, and the Alliance group of health funds over the last 12 months but NIB was taking a more hardline approach.

Even an appeal to NIB managing director Mark Fitzgibbon did not produce a result.

“It is momentous. This is the first time in our 167-year history that St Vincent’s has given notice to a private health fund that we intend to end our agreement. So it’s absolutely a last resort. It’s not what we want to do,” Mr Blake said.

Private hospitals around the country are in under financial stress. Picture: iStock

NIB CEO and Managing Director, Mark Fitzgibbon said: “NIB has a long partnership with St Vincent’s, is sympathetic to St Vincent’s financial position, and that of other private hospitals, and has made a very fair and reasonable offer to St Vincent’s”.

“It’s disappointing they have elected to argue their position publicly. But we will continue discussions with them, noting our partnership has several months remaining.”

The Australian Medical Association and private hospitals are calling for health funds to be required to repay 90 per cent of the premiums they receive back to their members as benefits.

They also want the government’s independent hospital pricing authority to regulate pricing of private hospital services.

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And Mr Blake said annual health fund premium hikes approved by the minister must take account of rising private hospital costs and provide enough money to pay for them.

Dr Katharine Bassett, Director of Health Policy at Catholic Health Australia said this year year nib had one of the highest premium increases at 4.1 per cent, “yet in 2022–23 only returned 79 per cent of premiums back to patients - well short of the industry’s 90 per cent gold standard and the lowest of the major insurers”.

“It is totally unacceptable for insurers to put the squeeze on patients and hospitals while increasing their large profit margins and bank balances,“ she said.

“Today St Vincent’s is rightly taking a stand against insurer power and greed. Other hospitals may need to do the same”.

The private health industry reported a net profit of $2.1 billion for the year to June 2023, double the previous year. Yet at the same time, 71 private hospital services have closed in the past year due to financial difficulties from insurers returning less and less to patients and hospitals, she said.