Private Health CEO Forum to tackle financial viability issues

The Australian Government is establishing a Private Health CEO Forum, following a private hospital sector financial health check.

Minister for Health Mark Butler said, “Private hospitals provide much-needed medical care to communities across the country and are fundamentally important to the broad operation of the entire healthcare system.

“There will be no silver bullet from Canberra or funding solution from taxpayers to deal with what are essentially private pressures in this system.

“The government will work in partnership the private health sector to develop innovative solutions which meet the needs of the sector and the Australian people,” Butler said.

While parts of the sector have remained strong, there has been a reduction in profitability over time as costs have risen faster than revenue, the government acknowledged in a statement.

“This shows that there is substantial work for private health insurers and private hospitals to do to ensure the sector’s long-term viability,” the statement said.

“Hospitals and insurers must work together in the interests of patients and in the national interest to support the entire health system.”

The forum will bring together independent experts as well as leaders from private hospitals, private health insurers and medical groups to develop short-term options for government consideration and to commence work on long-term reforms to strengthen the sector’s financial viability.

Catholic Health Australia (CHA) welcomed the federal government’s report on the Private Hospital Sector Financial Viability Health Check.

“This report confirms what we have been saying for a long time — that the private health sector is under severe and unprecedented funding pressure, especially in mental health and maternity care,” said CHA Director of Health Policy Dr Katharine Bassett.

CHA’s consultations with the government throughout the process were led by Cabrini Health CEO Sue Williams and Calvary Healthcare CEO Martin Bowles AO PSM.

“We thank the government for undertaking this important review and committing to swiftly identifying both short-term and long-term solutions,” Bassett said.

“We look forward to working with all sector stakeholders, including insurers, medical groups, patients and independent experts, to ensure private hospitals continue to provide choice and high-quality care, and alleviate pressure on the public system.”

CHA has proposed several short-term solutions to maintaining viability. These include: governments purchasing services from the private hospital sector to reduce public waiting lists; governments helping to fund wage growth in private hospitals; reducing the capital reserve requirements for private health insurers to increase the flow of funding into the system; reforms to the 2025 premium round to ensure hospital costs are reflected in premium increases; and government incentives to bring down out-of-pocket costs for maternity care.

“Now we know the extent and seriousness of the problem facing private health care, the whole sector needs to move quickly and cooperatively to implement solutions in the national interest. The establishment of the Private Health CEO Forum is a welcomed step to achieving this,” Bassett said.

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