Patients at the Kangaroo Point campus of St Vincent’s Private Hospital, along with thousands across Australia may soon face increased out-of-pocket expenses for their healthcare.
This comes after a breakdown in negotiations between St Vincent’s Health Australia, the nation’s largest not-for-profit healthcare provider, and private health insurer NIB.
On Thursday, 4 July 2024, St Vincent’s served notice to NIB, indicating their intention to terminate their existing contract within 65 business days unless a revised funding agreement can be reached. The potential fallout of this stalemate would see NIB-insured patients shouldering a larger portion of their medical bills when seeking treatment at any of St Vincent’s ten private hospitals across NSW, Victoria, and Queensland.
St Vincent’s CEO, Chris Blake, stressed the gravity of the decision, stating it was a first in the institution’s 167-year history. Despite their best efforts, Blake asserted that NIB had not presented a fair offer that adequately addressed the escalating costs associated with providing private hospital care.
Inflationary pressures on wages, food, energy, personal protective equipment, IT services, and even basic maintenance have significantly increased the financial burden on hospitals. Blake cited St Vincent’s electricity costs as a prime example, expected to nearly double from $6.5 million in 2023 to $12 million this year.
While St Vincent’s successfully negotiated new agreements with other major health funds like Medibank, HCF, and the Alliance group in recent months, talks with NIB have stalled. NIB’s CEO, Mark Fitzgibbon, expressed disappointment with St Vincent’s public stance, maintaining that their offer was fair and reasonable. He assured continued discussions, highlighting the remaining months of their partnership.
The stalemate has drawn concern from the Australian Medical Association (AMA), with President Prof Steve Robson urging both parties to resume negotiations to protect patients’ interests. Robson warned that the dispute could erode public trust in private health insurance, especially amidst rising premiums and cost-of-living pressures.
Dr Katharine Bassett, representing Catholic Health Australia, echoed these concerns, accusing insurers of prioritising profits over patient welfare and hospital sustainability. She pointed to NIB’s substantial premium increase and relatively low return to policyholders as evidence of this trend.
The Australian Competition and Consumer Commission’s (ACCC) recent report on private health insurance revealed a significant surge in industry profits. This, coupled with the closure of 71 private hospital services due to financial strain in the past year, underscores the escalating crisis in private healthcare, as Blake emphasised.
Both St Vincent’s and the CHA are advocating for reforms to address these systemic issues. They propose changes to the annual premium round process and a new funding model to better reflect the actual costs incurred by hospitals. The AMA is also calling for the establishment of an independent regulatory body to ensure the sector’s proper governance and patient value.
As the October 3rd deadline looms, the fate of thousands of patients’ healthcare costs hangs in the balance. Whether a resolution can be reached that satisfies both St Vincent’s and NIB, while safeguarding patient interests, remains to be seen.
Published Date 11-July-2024