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Newcastle Herald
Newcastle Herald
Health
Damon Cronshaw

Will a not-for-profit takeover of private hospitals cut fees for patients?

Two Hunter private hospitals are set to be owned by a not-for-profit organisation, as the push intensifies for patient fees to be reduced.

Rival bids for Newcastle and Hunter Valley private hospitals are being considered under the Healthscope sale.

Calvary Healthcare and PurposeCo, both not-for-profits, are the bidders.

The receiver of the Healthscope collapse, McGrathNicol, is expected to announce a decision soon.

The Newcastle Herald asked University of Newcastle health economist Francesco Paolucci if not-for-profit operators would help reduce patient fees.

Professor Paolucci doubted this would occur because the federal government is yet to introduce major reforms for the struggling sector.

He added that prices are set by the surgeons, specialists and anaesthetists. If their fee is higher than what Medicare and private health insurance covers, patients pay an out-of-pocket gap fee.

Professor Paolucci said there was "no price cap" on medical services in Australia's private health system.

"Ultimately even not-for-profits will have to maximise something. Believe it or not, that will be profits," he said.

"The difference is they are distributed in a different way."

He said the market was "very concentrated".

"Entry to the medical profession is largely restricted. You don't have enough doctors and specialists," he said.

"That brings prices up. There is no escape unless you open up the market or regulate it."

Professor Paolucci believes "a mix of political, long-term structural changes" will happen in the hospital sector.

The rising costs for patients to see specialists and have surgery has prompted widespread community concern.

Federal Health Minister Mark Butler has vowed to act on the matter.

"We've seen a big spike in specialist fees in the period since COVID," Mr Butler said in April.

"They're effectively so high that big parts of the population simply cannot afford to get procedures done."

He said the government "has to act".

"That's what I've said to the AMA [Australian Medical Association] and all the colleges of specialists as well," he said.

"We can't sit back as a government and see people simply not accessing the care they need because of cost.

"All options are on the table as far as I'm concerned. "

The minister has commissioned a federal inquiry into "access to and affordability of medical specialists in Australia".

Some submissions have called for governments to expand public outpatient specialised clinics, of which waiting lists at John Hunter Hospital are massive.

Others called for Medicare and insurance rebates to rise.

The Australia Institute submission called for "a National Specialist Fee and Affordability Framework".

"It could ensure Medicare funding contributes to affordable specialist care," the submission said.

"The framework should set clear benchmarks for reasonable fees, support voluntary fair-fee, no-gap and known-gap arrangements, and protect vulnerable patients from excessive and unpredictable out-of-pocket costs."

The Albanese government proposed introducing a benchmark pricing model for private hospital procedures.

The plan aimed to end the ongoing battle between private hospitals and insurers over contracts, but opposition from hospital groups and insurers led Labor to shelve the plan.

It would have been the biggest change to the private health system in decades, using a process similar to the way prices are set in the public hospital system.

Professor Paolucci said this was a "missed opportunity" for badly needed structural change in the sector.

He said the fact that not-for-profit organisations were entering the private hospital market indicated change was afoot.

"The fundamental question is what are the governments planning to do when it comes to the public-private mix in hospital care," he said.

"It's pretty clear it's not sustainable and they need to do something."

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