Healthscope hospitals, the second largest private hospital group in Australia owned by North American private equity group Brookfield, has announced it will charge up to $100 to patients for simply walking into its facilities.
In a deeply unethical move, Healthscope will charge patients from some health funds a new "hospital facility fee" of $50 for same-day services and $100 for overnight services. Healthscope is urging people to switch health funds if they are affected by the fee.
Rachel David, CEO of Private Healthcare Australia, the peak body for health funds, said the fee was a "new low" from Brookfield, which is trying to extort money from health funds so it can make bigger profits for its overseas investors. She said the health funds being targeted by Healthscope already have legal contracts in place for fair funding of services and that this move could be illegal.
"This is a deeply unethical move from a $1 trillion North American private equity firm holding patients hostage and trying to bully health funds into paying them more so they can increase profits," she said.
"Brookfield was only ever in the Australian hospitals market for the short term. It is trying to squeeze out as much profit as possible before it abandons Healthscope hospitals, potentially making private healthcare unaffordable in the process.
"Targeting patients is a new low. I have never seen a hospital group do this before. This will cause great distress and uncertainty for thousands of people trying to plan healthcare across Australian right now.
"Doctors who use Healthscope hospitals should consider their position, and the financial distress this will cause vulnerable people. In most locations, alternative hospital providers with more stable finances are available."
The funds targeted by Healthscope represent almost half the health insurance market in Australia – more than 6 million people.
Patients potentially affected should talk to their doctor and health fund about other options. This may include booking surgery with a more ethical Australian private hospital group that will not charge an unwarranted fee during the worst cost of living crisis most of us have ever lived through.
The move comes after health funds have provided multiple voluntary payments to private hospitals to help them survive tough financial conditions. Health funds will not, however, keep paying hospital groups more and more above inflation because it will drive up the cost of health insurance too quickly, putting it out of reach for many Australians. Under this scenario, everyone loses.
Dr David said: "Health funds are holding the line with companies like Healthscope and its private equity owner Brookfield to protect Australians from rising insurance premiums. Too many players are trying to get their hands in the till right now, including the NSW government, which has just hiked a tax on health insurance for 4 million people in that state. We cannot allow governments and private equity firms to raid the pockets of health fund members like this.
"It may be time for the Federal Government and regulators to intervene to prevent this 'run on health funds' spiralling further out of control."
Healthscope has exaggerated claims of hospital closures in an attempt to pressure the Federal Government into a financial bailout. Whilst some private hospitals have closed over the past 5 years, more have opened. Federal Government data shows we now have more private hospitals in Australia than we did 5 years ago.
In addition, the latest Australian Prudential Regulation Authority data shows health funds returned 88 cents in the premium dollar to people with health insurance - the greatest return of any type of insurance.
Explainer - what are hospital contracts?
Health funds and hospitals contract with each other to ensure health fund customers can access high quality health care without charging out of pocket costs from the hospital.
The Australian Government provides a minimum floor price that health funds must pay to every hospital (a default benefit). Contracts provide higher than the minimum price in exchange for the hospital not charging patients for hospital and operating theatre expenses. These contracts often include quality indicators, reporting requirements and other accountability measures so health funds can be confident their customers are getting the best possible care without being out of pocket.
Medical services (provided by doctors) are more likely to have out of pocket costs charged directly to the patient. Also, many health insurance products have an excess payable by the patient.
Nearly all private hospital services in Australia are provided under contracts between health funds and hospitals, with no additional out-of-pocket costs.
While hospital and health fund disputes are common, it is very rare for a contract to be terminated.
Contracts do have termination clauses, but these require a notice period (generally 90 days). Healthscope are declaring that they will not be terminating the contracts, but are refusing to comply with the contracts' conditions.
It is unprecedented for a hospital group to say they want to keep collecting the extra payments under a contract, but then also breach that contract by charging patients directly.
