Millions of Australians are expected to be impacted as Healthscope, Australia’s second-largest private hospital operator, terminates its agreements with two major health insurers, Bupa and the Australian Health Services Alliance.
Healthscope, which runs 38 private hospitals across Australia, announced last month it planned to charge members of several health funds a ‘hospital facility fee’ of $50 for same-day services and $100 for overnight services.
But after Bupa and Australian Health Services Alliance (AHSA) refused to pay the proposed fee, Healthscope said it had no choice but to end its contracts with them.
‘Healthscope cares for over 650,000 patients every year and we are absolutely committed to providing the best possible care. But we can only do this if we are adequately funded,’ Healthscope CEO Greg Horan said.
‘In an environment of rising costs and private hospital closures, it is unacceptable for insurers to fail their core purpose – funding the care of their members, particularly those like Bupa who are boasting of record profits.’
Horan claimed that while private hospitals were losing money, health insurers were ‘banking record profits’.
It means that Bupa and AHSA members could be forced to pay hundreds of dollars more to be treated in a Healthscope hospital.
The changes will take effect on February 20, 2025, for Bupa, and on March 4, 2025, for AHSA funds.
Healthscope CEO Greg Horan said Bupa and the AHSA’s ‘refusal’ to maintain funding for its hospitals at sustainable levels had forced it to end the contract
It means that Bupa and AHSA members could be forced to pay hundreds of dollars more to be treated in a Healthscope hospital
These terminations will impact all Bupa customers and those insured by AHSA members, including Australian Unity, GMHBA, Health Partners, Westfund, and HIF.
Bupa has 4.1 million health insurance members and the AHSA collectively covers more than 2.5 million people.
Healthscope is owned by North American private equity group Brookfield.
Dr Rachel David, the CEO of Private Healthcare Australia, the peak body for health funds, accused the company of ‘unethical behaviour’.
‘This is another unethical tactic from a $1 trillion North American private equity firm that appears intent on holding health fund members hostage, while also trying to bully health funds into paying them more so they can increase their profits,’ Dr David said.
‘If Healthscope was serious about delivering patient care to Australians in a cost-of-living crisis, it would negotiate an affordable and sustainable outcome, rather than throwing its toys out of the cot.
‘There is no scope for health funds to pay across the board, above-inflation increases to private hospitals.
Northern Beaches hospital is one of 38 private hospitals operated by Healthscope
People struggling with the cost of living will simply drop out or downgrade their health cover, which leaves Healthscope worse off as its customer base dries up.’
Dr David said if Healthscope followed through with its contract termination, patients could be charged thousands of dollars to receive care at a Healthscope-owned hospital.
‘This is just not done in Australian health care. We don’t rip up contracts, we don’t hang patients out to dry and we don’t directly gouge patients like the American system,’ she said.
‘It’s really sad to see this North American private equity firm prepared to throw Australian patients, doctors, nurses and hospitals under the bus to enrich their investors.
Australian Health Services Alliance CEO Andrew Sando accused Healthscope of ‘gouging’ the public.
‘Healthscope is driven by one thing – maximising returns for their investors, regardless of the impact upon the Australian private health care system,’ he said.
‘If the member-owned and not-for-profit insurers are forced to pay more to Healthscope to improve the profit of its Canadian private equity owners, then it inevitably stands that premium prices will be impacted, further compounding the cost of living pressures facing ordinary Australians.
‘Higher premiums create greater affordability challenges for ordinary Australians, fewer private health insurance memberships and participation, more reliance and pressure on public services and longer waiting lists.’
Dr David said ‘health funds are doing everything possible to protect consumers against big, foreign-owned companies like this.
‘These foreign raiders are preying on Medicare and private health insurance to enrich themselves and they don’t care about rising health insurance premiums,’ she added.
‘Ripping up contracts and charging patients might be an American way of doing business, but there is no place in Australian healthcare for these unethical private equity bully boy tactics that have a direct impact on people’s lives.’
Bupa APAC CEO Nick Stone said customers would be covered at Healthscope hospitals until February.
‘We are shocked and deeply disappointed by Healthscope’s action,’ he said.
‘They appear to be disregarding the interests of our shared patients and customers by seeking to impact their access to healthcare.
‘Insurers and hospitals need to put aside their individual interests and work productively together, along with government, to ensure our joint customers and patients continue to have choice and access and our private health sector remains affordable and sustainable.’
While hospital and health fund disputes are common, it is very rare for a contract to be terminated.
