Thousands of patients face massive cost hikes as hospitals pull plug on NIB

Thousands of patients face massive rises in out-of-pocket costs at St Vincent’s private hospitals after funding negotiations with major health insurer NIB collapsed amid a deepening crisis in the $22 billion private hospital industry and an urgent federal government review of the health insurance sector.

On Thursday, St Vincent’s Health Australia – the country’s largest not-for-profit healthcare provider – gave notice that it would terminate its contract with NIB within 65 business days.

St Vincent’s chief executive, Chris Blake, accused NIB of failing to put a fair offer on the negotiating table.Credit: Flavio Brancaleone

St Vincent’s chief executive, Chris Blake, said NIB had refused to make a fair offer that recognised the rising costs of providing hospital care, leaving St Vincent’s no choice but to end the agreement, which would affect thousands of patients.

“This is not a decision we take lightly. This is the first time in our 176-year history that St Vincent’s has given notice to a private health fund that we intend to end our agreement. It’s an indication of how seriously we treat this matter,” he said.

NIB chief executive and managing director Mark Fitzgibbon said in a statement that the insurer was “sympathetic to St Vincent’s financial position” and had made a “very fair and reasonable offer”.

“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.”

Failure to reach an agreement means NIB-insured patients who book procedures or treatments after October 3 face paying hundreds if not thousands more, including chemotherapy and cancer surgery.

The extra out-of-pocket costs could run well into the thousands for a multiple-night hospital stay at one of St Vincent’s 10 hospitals, which include St Vincent’s Private Hospital Sydney in Darlinghurst and The Mater in North Sydney.

Australian Medical Association President Dr Stephen Robson said the situation was a slap in the face to patients who had paid their premiums for private health insurance and expected to be able to use it.

“When we have these ridiculous disputes between insurers and hospital groups, it is always the patient who suffers,” Robson said.

“Running hospitals is one of the most expensive activities in the country now … it is a national embarrassment that health insurers are strangling off funding just when we have a public hospital crisis where waiting lists for planned surgery is at unprecedented levels.”

What this means for St Vincent’s patients insured by NIB

Patients who have started or scheduled their procedure or treatment before October 3 will still be covered under transitional agreements. For instance:

• Rehab, mental health, oncology and renal services started before October 3 will be covered until April 4
• Pre-booked pregnancy and birth will be covered until July 2025

What are my options if I need an admission after the agreement is terminated?

• Stay with your insurer and potentially pay significant out-of-pocket expenses for hospital accommodation, theatre and labour ward fees
• Transfer to a new health fund that has an agreement with the hospital
• Choose a different hospital that has an agreement with your insurer

Dr Paul Jansz, a cardiothoracic surgeon at St Vincent’s public and private hospitals in Darlinghurst, said private patients no longer fully covered will be pushed to the already overburdened public system.

“Unless the community and governments are willing to spend a large proportion of our GDP on our public healthcare system, we still need a strong private sector to take the pressure off,” Jansz said.

In June, Federal Health Minister Mark Butler launched a rapid review into the private hospital sector amid skyrocketing costs and intense financial pressure threatening its viability. The Department of Health expects to report back at the end of August.

More than 70 private hospital services have closed in the past five years as inflation dramatically increased costs, including wages, food, energy, personal protective equipment, IT and maintenance.

St Vincent’s electricity bill will almost double between 2023 and 2024, from $6.5 million to $12 million, Blake said.

“We’re in a symbiotic partnership with health insurers, and there needs to be a fair sharing of the costs, so we’re hoping that they’ll come back to the table,” Blake said.

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