Healthscope call to end hospital contracts for Bupa, ASHA insurers to affect 6.5 million members

A decision by Australia’s second-biggest private hospital operator to put contracts with Bupa and the Australian Health Services Alliance through the shredder has sent shockwaves across the sector and is likely to affect access to care for more than six million patients.

Healthscope dropped the bombshell on Friday, saying Bupa and the AHSA’s “refusal” to maintain funding for its hospitals at sustainable levels had forced its hand.

But Private Healthcare Australia has blasted the moved and labelled it an attempt to gouge patients and line the pockets of Healthscope’s foreign owners.

The AHSA covers east coast members of WA’s dominant health insurer HBF and 21 other not-for-profit insurers including HCF, Union Health, Westfund and smaller State-based funds.

Ructions between the private health insurers and Healthscope — owned by US private equity giant Brookfield — has been rumbling along for months.

Healthscope said after failed talks last month it had proposed a “modest” out-of-pocket fee of up to $50 for same-day services and $100 for overnight services, which would go some way towards bridging the gap between the “chronic underfunding” from the insurers and the rising cost of providing care.

But it said it now had “no choice” but to terminate its contract with the funds after they threatened legal action. Its deal with Bupa will end on February 20 next year and on March 4 for ASHA funds.

Chief executive Greg Horan said providing high quality care for 650,000 patients a year required “fair funding” from private insurers and the introduction of a “hospital facility fee” would have helped to maintain care standards at its 38 facilities.

“The response from the insurers was lawfare, and we are not prepared to engage in protracted and expensive legal challenges,” Mr Horan said.

“In order for us to remain viable, we are left with no choice but to terminate the contracts.

“There is a viability crisis impacting private hospitals across the country. Hospitals are losing money, and cannot attract new investment.

“Private health insurers are banking record profits — Bupa, in particular, has delivered enormous profits to its UK parent, while refusing to pay fairly for the care of its Australian members at Healthscope hospitals.”

The decision will affect Bupa’s more than four million members and ASHA, which represent 2.5 million members.

Private health insurers across Australia have been engaged in a war of words over funding for private hospital operators, which say the rising cost of care could force many to close without extra funding.

Insurers have countered they would have to lift insurance premiums to cover the extra contributions, potentially putting coverage out of reach of Australians already labouring under rising cost-of-living pressures.

Bupa chief executive Nick Stone said there would be no immediate changes to the coverage customers receive if they attend Healthscope hospitals up the February 20 end date and beyond for certain treatments including maternity and oncology, and any treatments that have already started.

Mr Stone said the insurer had been working “tireless” to thrash out a deal and was “shocked and deeply disappointed” by the move.

“They appear to be disregarding the interests of our shared patients and customers by seeking to impact their access to healthcare,” he said.

“We are concerned that Healthscope’s actions will cause undue stress to patients and customers looking to access private healthcare at a time when we should be working together to build trust in the private health system and take pressure off hospitals and their frontline teams.”

Mr Stoned called on Healthscope to confirm it will not charge customers the fee and commit to working with Bupa to reach a fair deal.

AHSA chief executive Andrew Sando Healthscope’s focus was solely on maximising returns for its investors and took aim at the Federal Government for allowing foreign owners to stake a claim on Australia’s private health care system.

Mr Sando warned the end of the contract could force more families to abandon their private health cover and flood an already under-strain public system.

“Should the termination come into effect ... policy holders of the not-for-profit and member-owned insurers potentially face out-of-pocket gaps if they decide to be treated or are admitted to a Healthscope hospital,” he said.

“Patients have the option to go to any of the other 500 private hospitals we have contracts with. Patients should discuss with their surgeon alternate hospitals to Healthscope hospitals to minimise their out of pocket expenses.”

PHA chief executive Rachel David attacked Healthscope’s “unethical tactic’ and said it was an attempt to hold health members hostage “while also trying to bully health funds into paying them more so they can increase their profits”.

“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,” Dr David said.

“There is no scope for health funds to pay across the board, above-inflation increases to private hospitals. 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.

“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.

“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.”

Mr Horan left the door open to further talks with Bupa and said Healthscope could still negotiate a fair funding agreement “that properly and sustainably addresses the rising costs facing private hospitals”.

“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,” he said.

After last month’s talks ended without a deal, Bupa said the move to introduce a hospital facility fee offered no benefit to its members.

“This is an unprecedented and unfair move by Healthscope,” said chief executive Nick Stone.

“Everyday Australians should not be caught in the middle and penalised as a result of contract negotiations, particularly at a time when many are battling a higher cost of living.

“We have reminded Healthscope of their contractual obligations under our current three-year agreement which is designed to give patients certainty when they are at their most vulnerable seeking medical treatment.”