New data reveals private hospitals collectively lost $756 million last financial year, while private health insurers collectively made $2.7 billion in profit. The significant loss for private hospitals is the second in a row, following a $36 million loss in 2023-24.
Catholic Health Australia Acting CEO Dr Katharine Bassett said the data, released by the Australian Bureau of Statistics and Australian Prudential Regulation Authority, indicated a failure of the system.
“When insurers are posting record results while hospitals can’t cover their costs, the money has stopped moving through the system the way it should,” she said.
“Insurer profits have hit record highs, management costs have ballooned, and the hospitals that care for patients are going backwards.
“This is a sign of a system failure. People’s cover is only worth something if the hospital can afford to treat them.”
Dr Bassett said the issue could be solved by requiring insurers to pay out 90 per cent of their premium revenue on patient care.
“A 90 per cent ratio is what Australians were getting before COVID. It would put $1.2 billion back into patient care every year, and increase the value proposition of private health insurance, which is critical for taking the pressure off our public hospitals.
“This, alongside a code of conduct to keep insurer–hospital negotiations fair, would help steer premium dollars back to where the care actually happens, while the sector works on longer-term reforms to the funding model.”
Dr Bassett said the policy was modest, achievable, and in patients’ interests.
The framework could be designed with sensible thresholds so that smaller and restricted insurers can continue to serve their members sustainably.
Catholic Health Australia (CHA) is Australia’s largest non-government, not-for-profit group of health, community, and aged care providers.
