The peak body for Australia’s private hospital sector is positioning itself as essential to productivity reforms.
The Department of Health, Disability and Ageing has called the Australian Private Hospitals Association’s bluff, responding to claims that it had presented misleading data by pointing out the same flaws in the association’s data.
Last week, APHA came out with the somewhat bold claim that Health Minister Mark Butler was relying on “false data and flawed analysis” when drawing conclusions about the amount of money that private health insurers were paying to hospitals, also known as the benefits ratio.
APHA CEO Brett Heffernan contended that the department’s calculations were misleading in that it included the net risk equalisation special account and the state ambulance levies, neither of which are paid to private hospitals.
Essentially, this led to what APHA considered to be an inflated benefits ratio and thus gave a false impression that there had been an increase in the money flowing into the private hospital sector.
When The Medical Republic put those claims to DoHDA, it said it was following the Australian Prudential Regulation Authority’s whole insurance industry definition and standard accounting principles to calculate benefits ratios.
“APHA raises issue with department’s inclusion of payments for state ambulance levies and to the net risk equalisation pool (which has a negligible impact on the calculation) on the basis that they are not paid to private hospitals,” a DoHDA spokesperson said.
“However, their own approach also includes other amounts not paid to private hospitals, including accommodation payments paid to public hospitals, payments to doctors for medical services and for prescribed list devices.”
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According to the department, using its consistent definitions, the hospital benefits ratio was reasonably stable at 90% prior to the pandemic, fell to a low of 83% in the 2022 financial year, has since increased to 85.5% and is expected to have reached 87% in the 2024 financial year.
Since calling out the minister last week, APHA has also released commentary on the Productivity Commission’s interim report on healthcare and on the upcoming productivity roundtable.
In relation to the Productivity Commission report, it supported reforms that would break down cross-sector silos, empower Primary Health Networks to more flexibly commission services and leverage private hospital capacity.
APHA said private hospitals already provide services like hospital-in-the-home for public patients, but funding barriers prevented them from delivering these to private patients.
“We need a funding model that fosters public patients in private hospitals more consistently, supported by long-term commitments rather than ad hoc arrangements,” APHA said.
“This would reduce pressure on public hospitals, improve patient outcomes, and see spare capacity in private hospitals optimised.
“Aligning these reforms under the National Health Reform Agreement with private hospital capabilities will support more sustainable federal and state budgets, and ease government capital expenditure on public facilities and better promote innovation.”
On productivity, the private hospitals peak said that taxpayers “get a massive return on zero investment in private hospitals” and called for less “bureaucratic red-tape and insurer intransigence”.
