Private hospitals operator Healthscope scraps contracts with Bupa, AHSA funds over fee dispute

Six million Aussies could soon be facing massive out of pocket costs at 38 private hospitals, after operator Healthscope tore up agreements with health funds Bupa and members of the Australian Health Services Alliance over a fee dispute.

In October, Healthscope proposed a $100 fee for Bupa and AHSA members using Healthscope care facilities across dozens of private hospitals.

It was argued the proposed fee would help rectify what the operator called “chronic underfunding” from insurers and the rising cost of providing care.

“We were proposing the hospital facility fee following Bupa’s and the AHSA’s failure to recognise and fairly fund the rising cost of care. In the absence of fair funding, this fee was Healthscope’s best option,” Healthscope chief executive officer Greg Horan said.

However, Healthscope said the insurance providers allegedly threatened legal action against the fee.

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

Bupa’s 4.1 million health insurance members will no longer be covered in Healthscope hospitals from February 20, 2025, while members of AHSA funds will have their contracts terminated from March 4, 2025.

AHSA funds collectively covers more than 2.5 million people under Australian Unity, GMHBA, Health Partners, Westfund and HIF.

Bupa APAC chief executive officer Nick Stone on Friday said the insurance provider was “shocked and deeply disappointed” by Healthscope’s decision to terminate its contract.

“Since March, Bupa has worked tirelessly to engage constructively with Healthscope and negotiate amendments that they requested to our current contract,” Mr Stone said.

“They (Healthscope) appear to be disregarding the interests of our shared patients and customers by seeking to impact their access to healthcare.

“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 Stone reassured members they would be fully covered until February 20 next year, and that services commenced or booked before that date, including oncology and maternity treatments, would not be affected.

Healthscope said the decision to terminate the contracts with the insurance providers was based on the ongoing financial difficulties the provider was facing.

“Healthscope cares for over 650,000 patients every year and we are absolutely committed to providing the best possible care,” Mr Horan said.

“But we can only do this if we are adequately funded.”

Mr Stone said Bupa had tried to work with Healthscope to ensure customers were still covered.

“Bupa calls upon Healthscope to confirm that they will not be charging customers this fee and commit to working with Bupa to reach a fair, patient-centred agreement,” Mr Stone said.

“We want our customers to know that our priority in these negotiations has been to keep healthcare costs affordable without compromising quality of care, especially when cost-of-living pressures continue to impact Australians.

“We will always work hard to advocate for them by negotiating fair and sustainable contracts with our hospital partners, including recent agreements with other private hospitals, that strike the right balance between minimising premium increases and hospital costs.”

Mr Stone said it was “a critical time” for the private healthcare sector.

“Insurers and hospitals need to put aside their individual interests and work productively together, along with government, to ensure our joint customers and patients continue to have choice and access and our private health sector remains affordable and sustainable,” he said.

“Despite their recent actions, we remain committed to working together to reach a mutually sustainable solution that places customers and patients first.”