Private hospital episodes of care rise 'not enough'

New data shows private hospital episodes of care are starting to increase, but not enough to slow the viability crisis impacting the sector, says Australian Private Hospitals Association (APHA) President Christine Gee AM.

The latest Australian Prudential Regulation Authority (APRA) quarterly private health insurance membership and benefits summary showed there were 1,059,451 episodes of care in private hospitals for April-June 2024, up on pre-COVID-19 levels.

Ms Gee said it was encouraging to see the growth in Australians accessing private hospital care but comparing 2019 prices and 2024 prices failed to stack up with the inflationary impacts of the past few years.

"The amount of episodes is just above the number we would have seen in 2019, pre-COVID-19, so it's good to see a bump in episodes of care," she said.

"However, those increases still amount to a loss for the private hospital sector as the dollar value of benefits has lagged significantly behind the rate of inflation over time."

Ms Gee said in practical terms a 13.3 percent growth in episodes between June 2019 and June 2024 only amounted to a 5.03 percent growth in income, which is eight percentage points lower than required to maintain the same level of revenue for the equivalent number of episodes.

"Growth in benefits per episode is eight percentage points lower than it should be to maintain the profitability of June 2019," she said.

"On a per episode count, hospitals were paid today's equivalent of $3,210.39 in June 2019 and $2,975.94 in June 2024 – a 7.30 percent real decline in benefits paid per episode.

"Using the nominal dollar amount during that time period, in June 2019 hospitals were paid $2,655.28 per episode and in June 2024 it was $2,975.94 per episode – that's a 12.1 percent growth in benefits per episode. However, this belies the 20.9 percent growth in CPI in the same period.

"When we compare this to the private health insurance sector we can see how out of balance the private system is. APRA data released just last week showed that the profit after tax of the private health industry grew from $382 million in the third quarter of 2023 to $800 million in the first quarter of 2024."

Ms Gee said an increase of more than 60,000 people taking up hospital cover in the June 2024 quarter illustrated the value of private hospitals to Australians.

"This shows the value Australians put on the high quality care they receive in private hospitals and the ability to access care at a time they choose and with a doctor they choose," she said.

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