Private hospitals stay open for insured Aussies despite Healthscope-Brookfield standoff – PHA
Private hospitals stay open for insured Aussies despite Healthscope-Brookfield standoff – PHA | Insurance Business Australia
Life & Health
Private hospitals stay open for insured Aussies despite Healthscope-Brookfield standoff – PHA
Statement released as Australians expect dispute to drive up premiums
Life & Health
By
Roxanne Libatique
Australians with private health insurance will not lose access to private hospitals, despite concerns raised by Healthscope and its owner, Brookfield Asset Management, according to Private Healthcare Australia (PHA), the private health insurance industry’s peak representative body.
PHA CEO Rachel David responded to claims made by Healthscope and Brookfield, suggesting that the two parties are pressuring health insurers and the federal government for financial support, a move that could push up premiums for millions of Australians.
She offered assurances that the PHA would not make decisions that will unnecessarily raise health insurance premiums, particularly with the current cost-of-living pressures.
Healthscope concerns
Healthscope, which manages a number of private hospitals in Australia, has hinted that it might terminate contracts with some health insurers, potentially increasing costs for patients.
David, however, stressed that health insurers will prevent hospitals from passing these costs onto consumers.
“Healthscope is the one threatening to charge consumers more, not health funds. It’s a disgrace they are threatening pregnant women and people with cancer with extra fees,” she said.
Health insurers, she added, remain committed to preventing significant hikes in both premiums and out-of-pocket expenses. They are also continuing to invest in expanding services, such as telehealth, home-based rehabilitation, mental health care, and “no gap” hospital treatments.
Brookfield’s financial strategy under scrutiny
Brookfield purchased Healthscope in 2019 but has since faced financial challenges.
According to David, Brookfield’s decision to take on large amounts of debt and risk has backfired due to the rising costs of inflation and higher interest rates.
“[Brookfield] is the only hospital owner in Australia whose mission is to make short-term financial gains for foreigners, including its CEO Bruce Flatt who is worth an estimated $5.8 billion,” she said, pointing out that Brookfield has already made over $2.5 billion from selling off Healthscope’s assets, most of which have been sent offshore.
Additionally, a recent Healthscope report disclosed that the company underpaid its Australian workforce by more than $21 million.
David noted this issue as part of a broader problem of private equity firms maximising profits while externalising risks.
“This underpayment scandal proves they do not care about Australian workers, and now they want other Australian businesses and families to pick up the bill for their flawed strategy,” she said.
Healthscope receives financial assistance from insurers
The PHA claimed that Healthscope has already received substantial financial support from insurers, including tens of millions of dollars in additional payments made outside of contracts.
The federal government is also conducting a financial review of the private hospital sector, examining whether hospitals in certain areas are at risk of closure.
David stated that insurers are prepared to step in if any hospitals in critical areas face shutdown, but the government’s review process needs to run its course first.
“Health insurers are not sitting on a pot of gold that can be raided by a private equity firm,” she said.
The report provided insights into the performance of general insurance, life insurance, and private health insurance sectors.
For the March 2024 quarter, private health insurance revenue remained steady at $7.8 billion, consistent with the December 2023 figures.
Insurance service expenses saw a slight decrease, falling to $7.1 billion from $7.3 billion the previous quarter. This led to an improvement in the sector’s insurance service result, which rose to $634 million, compared to $489 million in December 2023.
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