Time to do what you said you'd do

IS there a facet of Australian healthcare that is not in crisis? Patients are paying a heavy and mounting toll and healthcare professionals are counting the human and financial costs.

It has been 22 months since the Federal Government formed its first ginger group (CEO Roundtable, which morphed into the CEO Forum) to find solutions to the viability crises forcing private hospitals to close entirely while others have shutdown 80 services across the country. Nothing has been done.

It has been 15 months since the Federal Government pledged a six-month timeline for "immediate solutions" to the mental health, maternity and regional hospital crises. That deadline lapsed nine months ago and still there have been no decisions, let alone any action, taken.

It has been 12 months since Federal Health Minister Mark Butler publicly rebuked health insurers' record profits, record management fees and poor payouts, demanding they dramatically increase the benefits ratio to private hospitals within three months he would force them to do so.

A year on and, despite publicly conceding insurers are still coming up short, the government has taken no action at all.

It's time the Albanese Government did what it said it would do. Rhetoric must give way to putting out the flames that are reducing Australia's once renowned public-private hospital system to embers.

It starts with bringing the health insurance industry into line. Record multibillion-dollar profits, the highest management fees ever, and a secret, abuse-riddled contracting regime see insurance companies the sole winners from the chaos caused by government indecisiveness and inertia.

There are some things governments are directly responsible for. A coherent healthcare system is one of them. It may be the most important community asset a society needs to function cohesively. Australia's once enviable health system is lurching from one crisis to another.

Private hospital closures and services permanently shut down; public hospital waiting lists, ramping and Emergency Department dysfunction; mental health, maternity and regional health recognised as in long-term crisis; GPs overburdened with mental health patients; and a chronic shortage of psychiatrists in acute mental healthcare; all have the system in decline.

According to the Australia Prudential Regulation Authority, private hospital volumes have rebounded from COVID-19 and is now higher than what it was pre-pandemic, but the payout ratio from insurers is lower than what it was pre-pandemic.

The latest quarterly figures show the benefit payout ratio at a mere 86.3% in December 2025, up from 84.3% in December 2024. Even including arbitrary ambulance levies and the risk equalisation pool, which don't go to private hospitals, but add about 1.5 points to the percentage, health insurers are still way short of the government's 90% threshold.

Exacerbating the systemic viability strain heaped upon private hospitals, private hospital utilisation is now above pre-Covid levels, but the benefits ratio paid by insurers is nowhere near the pre-Covid 90% benchmark.

The facts make a mockery of claims that the benefits ratio paid to private hospitals is lagging due to under-utilisation. Despite more insured patients than ever using private hospitals, insurer payments have failed to keep pace.
The resultant shortfall in insurer payments to hospitals since 2022 is over $1 billion a year.

The solutions aren't difficult, but they do require leadership. With 12.6 million Australians holding private hospital insurance and 5.14 million admissions a year in private hospitals (41% of all admissions), the need for insurers to meet their obligations to the hospital network, is critical.

The Federal Government needs make the insurers pay their way as it vowed a year ago. Restoring the benefits ratio to the pre-Covid level of 90% is long overdue.

A Mandatory Code of Conduct for contracting between insurers and hospitals, with an arbitration model and price transparency overseen by the ACCC, is essential in-tandem with the 90% guarantee to ensure consistency and fair terms across the sector.

It's not just about insurers. The government was urged three years ago to ease the moratorium that prevents overseas-trained psychiatrists already accredited and living in Australia from working in acute private hospitals.

It would cost government nothing, but free-up psychiatrists to practice where severe-needs mental health patients are falling through the cracks, in turn, easing the burden on GPs and reducing public hospital Emergency Department traffic.

It is imperative that the Federal Government not wait for a tragedy in healthcare to be a trigger for belated action. The issues and solutions are clear. The Minister has already publicly articulated them. It's time to put that recognition into action.

Brett Heffernan is CEO for the Australian Private Hospitals Association. Published in the March-April Edition of Australian Doctor magazine (available by subscription only).

Next Feature Articles:
3/4/2026 Insurers wield the scalpel

Previous Feature Articles:
13/2/2026 Profit put before patients