Public-Private Contracting Proposal

THE Australian Private Hospitals Association (APHA) has written to all state governments to propose a structured model for public-private collaboration that would help governments reduce elective surgery waiting lists, ease pressure on public hospitals, and give patients faster access to the care they need.

We believe this model offers significant benefits for patients and the health system.

The value of public-private cooperation is well established. The partnership between governments and the private health sector during the COVID-19 pandemic demonstrated that national health outcomes and private hospital viability are complementary, not competing, interests.

Public patients are already treated in private hospitals under ad hoc contracting arrangements across the country; these arrangements reduce waiting times, ease pressure on public hospitals, and help manage unexpected surges in demand.

What has been lacking is consistency and surety. Public-private contracting in Australia has too often been on again, off again, without the certainty about patient volumes and contract length that providers need to plan, invest, staff, administer and deliver the treatment and care required.

Without that certainty the full benefits of contracting, timelier access for public patients and more efficient use of resources, are unlikely to be realised. A structured, standardised approach changes that.

It is designed to be nationally coherent but tailored to state needs and priorities, and rests on a small number of principles that experience shows are essential to making public-private contracting work:

• Commit to three to four-year contracts with private hospitals to provide services public patients in need, with two options to extend for two years each. This is the case in other jurisdictions. This enables private hospitals to plan and allocate resources accordingly.
• Governments pay participating private hospitals directly, without requiring public hospitals or local health services to act as financial intermediaries, ensuring efficient and certain payment.
• Bundled, DRG-based pricing that reflects the true cost of delivery and is set in genuine consultation with the sector, rather than imposed unilaterally.
• Streamlined reporting and no mandated systems that duplicate, or sit awkwardly alongside, existing private hospital infrastructure.
• Clear program administration, performance monitoring, and transparent reporting.

We recognise that health system structures and service delivery contexts vary across jurisdictions. The framework we provide is deliberately flexible: it sets national appropriate standards while leaving states and territories free to adapt contract terms and arrangements to local needs.

While it is directed at elective surgery, the same collaborative principles extend naturally to sub-acute care, where private rehabilitation capacity can relieve pressure on acute beds, a companion model we are keen to progress.

APHA and its members are willing and able to partner with governments to ensure patients are treated sooner and the health system is more resilient.

The APHA's full proposal is available at: A Framework for Public-Private Collaboration and Cooperation.