High-level private hospital talks held amid Healthscope fallout
The economic viability of private hospitals in South Australia is being tested following the collapse of the country’s second-largest group.
Australian Medical Association SA President Peter Subramaniam and CEO Nicole Sykes met with Adelaide Community Healthcare Alliance CEO Paul Evans, Burnside Hospital CEO Alan Morrison and St Andrew’s CEO Eileen Sawyer this week to express concerns about the economic viability of the private hospital sector.
The high-level talks come after Australia’s second-largest private hospital group, Healthscope, announced its parent entities had entered receivership.
Subramaniam said he was “concerned about the South Australian private hospital sector’s financial instability and the wider implications for the whole of the health system”.
The President said the discussions were “collaborative and productive”.
“We’ve been reassured that South Australian hospitals that are owned and managed by Healthscope continue to operate as normal,” he said.
“But the structural fragility of the private health sector cannot be ignored.”
He said wages, energy and supplies costs were spiralling, pointing to the federal government’s 2024 Private Hospital Sector Financial Health Check Summary which showed private hospital expenditure was growing at almost twice the rate as revenue growth.
“The cost spiral in wages, energy and supplies is not being matched by insurer contributions,” he said.
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“APRA figures show that in the 2024 financial year private health insurers posted more than $2.2 billion in profits, but not enough money is being injected back into patient care.
“The impact is very significant on private hospitals operating in South Australia which has seen a number of smaller private hospitals close in the last few years.”
A wider collapse of the private hospital system would be a disaster, Subramaniam said, with flow on effects to public hospitals.
“The South Australian public hospital system relies on private hospitals to reduce surgical backlogs, but with the private sector sustainability now in question, this release valve for public patients will be affected,” he said.
“This week 23,775 South Australian patents are waiting for elective surgery, including 5565 who are listed as overdue. Elective surgeries are essential – not optional. Without a strong private hospital sector to share the load, our public hospitals cannot meet demand.”
Insurance plan to limit payout for beleaguered hospital
The news comes as it was revealed that a backup plan is in the works to avoid a potentially massive payout following Healthscope’s collapse.
Private equity-backed Healthscope’s parent company appointed receivers in May, which the NSW government believes has opened the door to terminate a contract covering Sydney’s Northern Beaches Hospital.
The government is still seeking an agreement to exit the hospital contract but is looking for an option to terminate it without paying compensation potentially worth hundreds of millions of dollars.
Treasurer Daniel Mookhey announced on Friday the government would move amendments to a bill before NSW parliament to provide a way out of the contract and have an independent person determine the final bill within a reasonable time.
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Mookhey has repeatedly said the government would seek to avoid any “windfall” gain from the contract exit.
“This is not a decision we take lightly,” he said.
“While an agreed exit from this failed (public-private partnership) contract remains my preference, I must ensure the government has the right to step in and protect the northern beaches community from this dragging on.”
Healthscope chief executive Tino La Spina told AAP the company was not seeking any windfall gain in proposing to return the public hospital’s operation to the government in April.
Healthscope operates 37 facilities across Australia. The federal government has ruled out footing the bill, but banks have stepped in to provide loans and assistance to receivers attempting to sell the business.
New wages offer to doctors’ union
The South Australian government has put a new pay offer on the table in negotiations with the SA Salaried Medical Officers Association (SASMOA).
The revised offer includes a minimum 10 per cent pay raise over three years, which the government said delivered a real wage increase above current inflation.
Junior doctors will also receive an additional $4050 base wage increase under the offer, which the government said was a first-year pay rise of up to 8.6 per cent.
The offer also includes incentives to attract doctors to regional areas, increasing minimum breaks between shifts and the ability to roster senior doctors on any day of the week.
SASMOA members will be having a one-hour Stop Work Meeting next Wednesday morning to discuss the offer and decide what action they will take going forward.
It comes after the Health Services Union gave in-principle support for the government’s offer for a new enterprise agreement for Allied Health Professionals.
Health Minister Chris Picton said the offer would “ensure our doctors’ pay is nationally competitive”.
“We hope the union and doctors will consider in detail the benefits of the offer that will help us continue our strong recruitment that has already seen a boost of more than 600 extra doctors into SA Health over three years,” he said.
