Private healthcare standoff: 6.6 Million Australians face higher costs or limited access

Private healthcare standoff: 6.6 Million Australians face higher costs or limited access

More than six million Australians may face significant disruptions to their private healthcare access after Healthscope, the country’s second-largest private hospital operator, announced it would terminate contracts with two major health insurance groups – Bupa and the Australian Health Services Alliance (AHSA). The decision comes amid an escalating dispute over sustainable hospital funding and rising healthcare costs.

The article also provides a lists of hospitals being impacted and insurance fund members under AHSA.

Why Did Healthscope End These Contracts?

Healthscope CEO Greg Horan explained that the termination was driven by the insurers’ refusal to adjust funding to meet the rising costs of hospital care. The private hospital sector has been under immense financial strain, with rising operational costs outpacing reimbursement rates from insurers.
“We are committed to providing the best care for our patients,” Horan said. “But without fair funding, hospitals cannot remain viable or attract investment.”

Earlier, Healthscope proposed a hospital facility fee to bridge the gap between rising costs and insurance payouts. However, both Bupa and AHSA opposed the fee, threatening legal action. In response, Healthscope opted to terminate its agreements, effective February 20, 2025, for Bupa, and March 4, 2025, for AHSA funds.

Who will be affected?

The decision impacts customers of both Bupa, which has 4.1 million members, and AHSA, which represents over 2.5 million policyholders across 26 smaller health funds. These include:

• Bupa members: All 4.1 million policyholders.
• AHSA-affiliated funds (representing 2.5 million members):
• Major insurers: Australian Unity, GMHBA, HBF, Westfund.
• Industry-specific funds: Teachers Health, Nurses & Midwives Health, Police Health, Defence Health.
• Other regional or specialised funds: Latrobe Health, St. Luke’s Health, Phoenix Health, and others.

Healthscope’s role in Australian healthcare

Healthscope operates major hospitals nationwide, including Norwest Private Hospital in Sydney, Knox Private Hospital in Melbourne, and Nepean Private Hospital in New South Wales. Collectively, Healthscope facilities care for over 650,000 patients annually, making the fallout from this decision wide-reaching.

The standoff is exacerbated by what Horan described as a “viability crisis” in Australia’s private hospital sector, where rising costs and underfunding have led to the closure of over 70 private hospitals in the past five years.

“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,” Mr Horan said.

Insurers and critics respond

Bupa and AHSA have pushed back against Healthscope’s claims, accusing the hospital operator of prioritizing investor profits over patient care. AHSA CEO Andrew Sando described Healthscope’s actions as “gouging” and stated that patients would still have access to other hospitals within AHSA’s network of 500 private facilities.

The broader healthcare landscape also reveals challenges for insurers, who argue that meeting above-inflation funding demands would force them to raise premiums, risking policy downgrades or cancellations by members.

Health insurers fighting ‘aggressive’ action from Healthscope

Video by Sky News Australia

Rising healthcare costs across Australia

The Australian Bureau of Statistics reported a 6.7% rise in medical and hospital service costs in the last year alone, further compounding financial pressure on both hospitals and insurers. A recent government review highlighted that profit margins for private hospitals have halved over the past five years, underscoring the economic challenges faced by the sector.

What’s next for policyholders?

Policyholders with affected funds face three primary options:

• Pay out-of-pocket fees: Continue using Healthscope hospitals but cover additional costs directly.
• Switch insurers: Transition to a fund that retains agreements with Healthscope.
• Seek alternative hospitals: Opt for treatments at other private hospitals within their insurer’s network.

Implications for Over 60s

For Australians over 60, who often rely on private healthcare for elective surgeries, ongoing treatments, and shorter wait times, this development could significantly disrupt care plans. The financial burden of higher out-of-pocket costs or the logistical challenges of changing providers may disproportionately impact this demographic.

Looking forward

As February and March deadlines loom, patients are encouraged to consult their healthcare providers and insurers to understand how this decision will affect them. For many Australians, this situation underscores the urgent need for systemic reform in funding and managing private healthcare.

Whether these negotiations result in a resolution or permanent contract terminations, the ripple effects will shape the future of private healthcare access for millions across the country.

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