Don't ignore private hospitals to fix out health mess

IS Australia's health system humming along so nicely that a daily cash splash is all that's needed in this election? A billion funding injection here, a $10 million prop up there.

Almost every facet of healthcare is in crisis. Public waiting lists, private hospital closures, mental health access block and a bulk-billing collapse.
Private hospitals are the canary in the coalmine given they shoulder so much of the burden.

They account for 70% of planned surgery, 62% of acute mental health care, 80% of hospital rehabilitation and much of the medical treatment Australians rely on every day, like 54% of chemotherapy.

Over the last three years the Australian Prudential Regulation Authority (APRA) has exposed the health insurance industry ripping-off private hospitals by more than $3 billion. That is, failing to pay hospitals in full for treatments they provide.

The insurers say they cannot afford it. But APRA reports that the insurers banked record profits of over $5 billion over that period. In fact, averaging $2 billion each year for the last two years.

Adding insult to injury for the 15 million Aussies with private health cover, in 2023-24 the insurers awarded themselves an 18% increase in 'management fees', reaping another $3.5 billion a year from your premiums.
According to insurers your premiums aren't for your healthcare, but for their profits.

The consequences have seen some 20 private hospitals close entirely, while more than 70 services in other hospitals have been permanently cancelled, notably maternity and mental health units.

That means less choice and access for insured patients and longer public hospital waiting lists.

Despite knowing this for two-and-a-half years, Federal Health Minister Mark Butler has left it until the federal election to pledge that insurers must restore the traditional funding ratio to private hospitals or be regulated to do so.
Better late than never. But this inaction has, and will, cost patients, the public and private hospital workforce, and health delivery dearly.

So far, the Coalition has dodged this reform issue entirely. Instead, spruiking the insurer's mantra that it costs them too much to pay for treatments in full. Isn't that the purpose of health insurance?

Make the insurance companies pay what they should. It costs taxpayers and patients nothing and insurers can afford it. Fixed.

Insurers must not be allowed to run amok abusing their market power, while private hospitals are forced to close more services. All while putting massive pressure on public hospitals.

Regardless of who forms government after May 3, healthcare in Australia needs a government committed to a balanced public-private hospital system and that means holding the health insurance industry to account.

Australia's world-leading private hospital system is too important to abandon to the profiteering of health insurance companies.

Brett Heffernan is chief executive of the Australia Private Hospitals Association. Published in the Daily Telegraph and Adelaide Advertiser on 16 April 2025.

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