A meeting of major private health players, the DoHAC and the AMA led to some grim conversations.
If the secretary of the Department of Health and Aged Care has his way, Australia’s private hospitals could be subject to a fixed-price funding model after the next federal election.
At a meeting last Friday of health officials – including Ramsay Health Care’s Carmel Monaghan, Healthscope’s Greg Horan, Medibank Private’s CEO David Koczkar, Calvary Health Care’s Martin Bowles, HBF Health’s Lachlan Henderson, and a representative from the Australian Medical Association – Blair Comley said the federal government would rather let more private hospitals close than subsidise facilities that were not economically viable.
Minister for health Mark Butler commissioned a review into the viability of the country’s private hospital sector over two months ago.
That review is due to hand its recommendations to Mr Butler any day now, but nothing has yet been made public.
According to the Australian Financial Review, Mr Comley told the meeting that there were more private hospital beds than needed, and that one option was a “national efficient price” to set a baseline price for services.
One thing he did not tell the meeting, according to the AFR, was what the recommendations from the review were. But in a slide presentation he made it clear that regional private hospitals were essential and may be given “special consideration”.
Private hospitals have been struggling. According to HSD’s sources, at least 79 facilities — including day surgeries, endoscopy centres, private hospitals, wound care centres, cosmetic surgery centres, dental centres, respiratory and sleep disorder clinics, dialysis clinics and mental health centres — have either closed or revoked their declaration as a private hospital since 2019, including 17 in 2023 alone, and eight so far this year.
HSD has reported previously on troubles at Sunshine Private Hospital, St John of God, Healthscope and The Toowoomba Clinic.
An EY report which came to light in March said private hospitals’ energy and utilities bills were up 13.8% compared with a year earlier, insurance was up 10-15%, interest rate-driven debt costs were up 6% while workforce costs were up by 3.5-4.5%.
The report found private hospitals’ revenue streams were not matching operating costs, with private health insurance indexation rising about 1.5-2.5% per year. Industry sources told the outlet off the record that “about 30% of private hospitals and clinics were forecast to shut down if the government failed to act”.