Private healthcare too big to fail

Australian Medical Association president Steve Robson is correct when he says Australia’s private hospital sector is “too big to fail”. Private hospitals provide one-third of all hospital admissions and 60 per cent of all surgery nationwide. And as at March 31, 12.1 million people – 44.8 per cent of the population – were covered by hospital treatment policies, Australian Prudential Regulation Authority figures show. About 14.8 million Australians, 54.8 per cent of the population, had general treatment (ancillary) cover taking in dental, optical, physiotherapy and chiropractic treatments. The industry is also important to patients who are not insured, to avoid as much overcrowding in public hospitals as possible.

The private health insurance sector is approaching a crunch point, health editor Natasha Robinson reported on Saturday. Doctors complain that even patients with top cover are being denied surgery or in-patient care, with hundreds of private facilities around the nation on the brink of bankruptcy. As private hospitals approach a “critical mass” of private beds disappearing, policyholders could face the unprecedented prospect of waiting lists for surgery in the private system. Reform is essential.

The health insurance industry is facing a growing prospect of government intervention in its contracting with hospitals. And the AMA is campaigning for an independent regulator to govern the sector

As Robinson reported, more than 70 private facilities – day hospitals, overnight hospitals, psychiatric hospitals and rehabilitation hospitals – have closed since 2019. Covid disruptions aside, a major part of the problem is that benefits paid to hospital operators under contracts with health insurers are falling behind health inflation and rising staff and equipment costs. As one senior ENT surgeon told The Australian, private insurers need to realise that without private hospitals, their products would be pointless. Other issues also need to be resolved. Many patients believe top-cover policies should cover the gaps in fees of surgeons, anaesthetists and other doctors in hospitals not covered by Medicare. These gaps can amount to thousands of dollars, deterring some patients from using their private hospital insurance.

Some government intervention to help fix problems would be beneficial but given the shortcomings of central planning, insurers, hospitals and medicos would do well to resolve key issues within the sector, with as little heavy-handed government command and control as possible.