Insurers maternity pitch fails to deliver

THE health insurance industry has a lot to answer for when it comes to hospital's shutting down services.

The real problem is private hospitals are unable to cover the losses in services like maternity (where low birth rates and more privately insured parents opting for public hospital deliveries because of obstetrician out-of-pockets are factors) because private hospitals are being short-changed by insurance companies across almost all services.

"When people's premiums are being banked by insurance companies instead of covering the actual costs of healthcare in private hospitals, is it any wonder services are closing?" Brett Heffernan, CEO of the Australian Private Hospitals Association, said.

"The health insurers posing solutions to the maternity crisis is a bit rich. They've been raking in people's Gold level premiums for years pretty sure they will never use their maternity cover due to the massive out-of-pockets charged by obstetricians.

"Still, let's assume obstetricians are free and there are midwives aplenty, how does that stop more maternity units from closing? It doesn't.

"Even allowing for more throughput of patients, if you're operating at a loss on each birth due to insurers not keeping pace with the actual costs of care, whether you deliver 10, 100 or 1,000 babies, the viability of the unit isn't helped.

"Nor do the proposals address the on-call requirements for paediatricians and anaesthetists or the everescalating costs of care that are not adequately covered by insurers.

"The Australian Prudential Regulation Authority (APRA) reports that over the last three years the shortfall in funding to private hospitals from insurance companies across all treatments is more than $3 billion. That means marginal services cannot be offset and are under increasing pressure to close.

"The insurers' catchcry is they cannot keep pace with the rising costs of healthcare. But the APRA data belies that claim, with insurers banking never-before-seen profits of more than $5 billion over the same three years. They also increased their 'management fees' in 2023-24 by a whopping 18% to reap a further $3.5 billion a year from people's premiums.

"It's not hard to make record profits when you're not paying your bills in full. This puts all services in private hospitals at risk. The crisis in maternity is just one of many to materialise, with 12 maternity wards being closed in recent years, including Hobart and Darwin Private Hospitals.

"Regardless of the changes being proposed by insurers, until the core issue of insurance companies failing to pay hospitals in full for treatments is addressed, more services and, indeed, entire hospitals, will close.

"In fact, more than 70 services in private hospitals have closed in the last few years. That insurers are making unprecedented profits while hospitals are closing services, tells you everything you need to know about the system being broken.

"The Federal Government has had two years to address these issues, but even after its Private Hospital Viability Health Check in November confirmed the entrenched funding crisis, the government has pointblank refused to act.

"This latest spate of service closures makes the need for the Federal Government to realise only it can fix the broken funding model when the insurers hold hospitals over a barrel, is paramount.

"During the recent contract dispute between BUPA and hospital group Healthscope, BUPA was exposed offering doctors up to $500 per patient to take their business to non-Healthscope hospitals. That gives you a glimpse into the lengths insurance companies will go to assert their market dominance over hospitals. They did this while denying a $100 per patient payment to hospitals.

"So when the Federal Health Minister says hospitals and insurers need to work it out, he's playing into the insurance companies' hands. It's not a discussion of equals. The playing field is anything but level."

-ENDS-

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