One of Australia’s largest hospital owners, Healthscope, will end contracts with some of the nation’s major private health funds in an increasingly bitter funding dispute that could leave patients out of pocket for hospital care.
Healthscope, owned by Canadian private equity group Brookfield Asset Management, said it would terminate contracts with Bupa and the Australian Health Services Alliance (AHSA), which includes Australian Unity, GMHBA, Health Partners, Westfund and HIF.
The terminations will come into effect on 20 February for Bupa and 4 March 2025 for the AHSA funds.
Healthscope, which cares for 650,000 patients at 39 private hospitals, said Bupa and the AHSA threatened legal action to defeat a modest fee increase it proposed to partly bridge the gap between underfunding from the insurers and rising costs.
“In order for us to remain viable, we are left with no choice but to terminate the contracts,” Healthscope CEO Greg Horan said in a statement.
Private Healthcare Australia, the peak body for health funds, said ripping up legally binding contracts with funds representing 50% of Australia’s $26 billion private health insurance market within months of signing them was an “unethical new low”.
“This is another unethical tactic from a $1 trillion North American private equity firm that appears intent on holding health fund members hostage, while also trying to bully health funds into paying them more so they can increase their profits,” Private Healthcare Australia CEO Dr David said in a statement.
David said patients could be charged thousands of dollars to receive care at a Healthscope-owned hospital.
Bupa said it had worked tirelessly to engage constructively with Healthscope and negotiate the amendments it requested to the current contract.
“We are shocked and deeply disappointed by Healthscope’s action,” BUPA APAC CEO Mick Stone said in a statement.
AHSA CEO Andrew Sando said Healthscope was driven by maximising returns for its investors regardless of the impact on the Australian private health care system.
“Gouging the Australian public to generate profits for their private equity owners is not in the national interest, and flies in the face of compassionate, equitable and sustainable healthcare,” Sando said in a statement.
Brookfield purchased Healthscope for $5.9 billion in 2019.