HCF signs five-year funding deals with Healthe and Adventist Healthcare despite Healthscope stalemate

Australia’s biggest not-for-profit health insurer HCF has engaged in a flurry of deal making as its contract with Healthscope is set to expire next week.

HCF chief executive Sheena Jack said the new contracts with HealtheCare and Adventist Healthcare would deliver its members ‘greater access to a range of services and savings’. Picture: Hollie Adams

HCF has signed five-year funding deals with two private hospital groups and a new agreement with Ramsay Pharmacy, but has yet to find a breakthrough in a stalemate with Healthscope.

A week before its contract with Healthscope expires, forcing its members to pay higher out-of-pocket costs if they are treated at any of the group’s 39 hospitals, HCF has engaged in a flurry of deal making.

The country’s largest not-for-profit health insurer has sealed new agreements with HealtheCare, which operates 1200 beds across 17 hospitals, and Adventist HealthCare, which runs the 700-bed Sydney Adventist Hospital on Sydney’s North Shore.

HCF has also struck an agreement with Ramsay Health Care to allow its members to receive discounts across the ASX-listed group’s 61 pharmacies. This builds on a five-year funding deal signed with Ramsay last year.

But HCF has yet to reach an agreement with Healthscope, Australia’s second-biggest private hospital group acquired by Canadian private equity firm Brookfield for $4.4bn in 2019.

HCF’s agreement with Healthscope is set to expire next week. Picture: Bloomberg

HCF’s current agreement with Healthscope expires on January 31. This means about 1.8 million HCF members will have to pay an extra $1000 on average if they are treated at any of Healthscope hospitals, which ­include Melbourne Private, Northern Beaches Hospital in Sydney and Brisbane Private.

Healthscope has been warning patients on social media that they “may face additional out-of-pocket expenses if they remain insured with HCF” – a subtle way of encouraging people to switch health funds.

HCF chief executive Sheena Jack said the new contracts with HealtheCare and Adventist Healthcare would deliver its members “greater access to a range of services and savings”.

She said this included multidisciplinary home-based or remote care to ease patients with their transition back to their residence, saving members from hospital treatment.

“I couldn’t think of a better way to start the New Year than boosting our commitment to our 1.8 million members by extending partnerships with these private healthcare providers in the Sydney Adventist Hospital and HealtheCare hospitals,” she said.

“Access to these high-end ­facilities teamed with adding an extensive number of services available to members at home during their treatment or while in recovery through Ramsay after our groundbreaking five-year collaboration announced last year is an exciting prospect.”

HealtheCare operates 17 hospitals, including Epping Private.

It comes as the net margin of the entire health insurance industry eased to 6.3 per cent in the September quarter, down from 7.2 per cent in the same period in 2021, according to the Australian Prudential Regulation Authority’s latest statistics. Macquarie said “negative jaws” were returning, with premium growth falling below claims growth for the first time in five quarters.

HealtheCare chairman Ben Thynne said the newly signed agreement with HCF was part of a longer-term strategy. This contrasts with Healthscope and Ramsay saying health insurers need to pay more to help recover soaring hospital costs, which are up 7-10 per cent.

“By working closely with our funders like HCF over time, we’re able to secure sustainable agreements as the industry tackles the many challenges that lie ahead, such as workforce shortages and reforms to the private health sector in areas such as prostheses,” Mr Thynne said.

“The private health sector offers a highly valued choice for consumers and close partnerships with our funders like HCF provide us with the opportunity to create more value for patients through new models of care, initiatives like gap free orthopaedic surgery and more seamless transition to services like rehabilitation in the home.”

Adventist HealthCare chief executive Brett Goods said the group’s agreement recognised increased hospital costs.

“Our strategic partnership has already achieved significant success and demonstrated our willingness to innovate,” Mr Goods said. “We’re looking forward to working with HCF to provide affordable access to excellent private health care for our patients. Our five-year agreement acknowledges the increased costs hospitals are facing and commits to explore further initiatives that will help to achieve affordability, better care and great outcomes for patients.”