Patients avoid paying hundreds of dollars in out-of-pocket fees after Ramsay and Bupa end stalemate

The 11th hour peace deal will avoid Bupa customers paying potentially hundreds of dollars in out of pocket costs.

Bupa customers will avoid paying hundreds of dollars in out-of-pockets costs on admission to a Ramsay hospital after the companies ended a bitter stalemate over a patient funding deal.

The agreement comes after Ramsay – Australia’s biggest private hospital operator – terminated its contract with Bupa last Tuesday, prompting a week-and-a-half of negotiations.

The pair said the deal, struck late on Friday afternoon, finds a balance between the challenges faced by hospital operators in the current environment, while recognising the cost of living and affordability challenges for health insurance customers.

“This means Bupa members won’t have to pay any additional out of pocket expenses when they attend a Ramsay hospital,” the two companies said in a joint statement. “Both companies have committed to working collaboratively in service of their joint customers and patients.”

Bupa and Ramsay expect the key terms of the formal agreement will be finalised in the next two weeks and to enter into a new contract before October.”

Ramsay was understood to have been looking to split the difference on a 7 per cent increase in hospital costs, while Bupa had offered around 1.5 per cent.

There was little movement from both sides for months, prompting call-wait times to Bupa’s customer support centre to blow out by hours as customers called to check their coverage. Meanwhile, Ramsay had created its own website aimed at helping Bupa members switch funds. But in the past week, both parties moved their respective offers considerably, finally finding middle ground.

The agreement followed doctor warning that Bupa’s four million members would face spiralling out-of-pocket costs if it failed to strike a new funding agreement with Ramsay. Meanwhile, Fitch Ratings said the Bupa termination may delay Ramsay’s de-leveraging but not “immediately impact” its rating.

A war of words erupted between the two companies late one evening on May when the health fund accused the ASX-listed hospital group of seeking “unreasonably high rates of increase” to “increase the value of its business”; in the wake of a $20bn takeover offer from KKR.

Bupa health insurance managing director Chris Carroll said at the time: “Ramsay’s refusal to negotiate in any meaningful manner arguably reflects a desire to increase the value of their business, which is currently the subject of a private equity backed takeover offer”.

He added the “decision by Ramsay is an affront to Australians who are facing growing cost of living pressures. Bupa is standing to support its members during this challenging time”.

Bupa was aiming to ensure premiums are kept low to maintain private health membership, which in turn takes pressure off the public system and taxpayers.

Ramsay argued hospital costs had increased during Covid-19, while the entire health insurance sector booked a record $1.8bn profit last year. The health insurance lobby retaliated, warning of double-digit premium hikes if Bupa caved to Ramsay.

Bupa and Ramsay declined to comment on the final agreed figure, saying only they were happy a deal had finally been reached.

The stalemate came as both parties continued to successfully negotiate funding deals, with Bupa striking agreements with not-for-profit hospital groups Epworth and Cabrini.