Health Pre-budget submission for 2024-25 Commonwealth Budget

Catholic Health Australia (CHA) is Australia’s largest non-government grouping of health, community, and aged care services accounting for about 15 per cent of hospital-based healthcare in Australia. Our members operate hospitals in each Australian State and in the ACT, providing about 30 per cent of private hospital care and 5 per cent of public hospital care in addition to extensive community and residential aged care. Further, CHA Members run over 100 social outreach programs across Australia. CHA not-for-profit providers are a dedicated voice for the disadvantaged which advocates for an equitable, compassionate, best practice and secure health and care system that is person-centred in its delivery of care.

CHA appreciates the opportunity to provide input into the Commonwealth Budget’s priorities for 2024-25, and looks forward to continuing to work constructively with the new government in the execution of our joint commitment to improving health and aged care outcomes nationally.

Please note that CHA has also communicated our aged care priorities in a separate detailed submission. Many of the measures outlined there are applicable across the care sectors.

The threat to patient choice and access – private hospital viability

CHA Members – and other stakeholders across the private health sector – are acutely concerned about future private hospital viability and its implications for patients, the public hospital sector, and the continued value proposition of private health insurance. The private hospital sector’s fiscal sustainability is being squeezed as a result of decreasing funding from highly profitable private health insurers on the one side and ever escalating costs on the other. CHA Member hospital groups are under significant strain with none having returned a profit in the 2021-22 financial year. On top of this, there is a considerable program of reform being imposed upon hospitals that, whether intentional or not, adds further financial and administrative burden onto the already struggling sector. Many of these reforms are not focused on improving patient access or care. Examples include:

• Tens of millions of unfunded costs for each hospital entity impacted by compliance with the Security Legislation Amendment (Critical Infrastructure Protection) Act 2022
• Ongoing changes to the funding of General Use item prostheses which is on track to see many CHA member hospitals’ spend on these soon-to-be unfunded items eclipsing their total operating margin.

The private health sector exists to deliver value to patients and to take pressure off the public hospital sector. Increasingly, the rules and regulations governing private health services have not sufficiently protected consumers from service closures and casemix reductions, which are on track to accelerate. Rather, the current system has enabled private health insurers to bank huge profits while failing to ensure an adequate flow of funding to struggling private hospitals.

The extraordinary value of private hospitals to the Australian taxpayer

The value proposition of private hospitals in financial terms alone is incredibly compelling. More than two out of every five hospital admissions in Australia are to a private hospital. Two out of three elective surgeries in Australia from 2019–2021 were performed in private hospitals. In 2019–20, 71 per cent of the $17.1 billion spent on private hospitals (some $11.5 billion) was funded by non-government sources. For $5.6 billion, Australian governments saw two fifths of hospital admittances and two thirds of elective surgeries delivered, before accounting for any of the other enormous benefits provided by private hospitals. This is a bargain by any measure. For comparison, governments collectively spent some $60 billion on public hospital services.[1]

Beyond the incredible value private hospitals offer to patients and the public hospital system in reduced costs and elective surgery wait times, there is a direct benefit to the Commonwealth Government’s budget position. 2023 research found that, on average, the Commonwealth Government saves about $554 for each individual it subsidises to access private health insurance.[2]

There is significantly more value on the table. One estimate put the savings to the Australian health system available from expanded private hospital in the home (HiTH) care at $1.3 billion. There is strong evidence of the improved health outcomes that can be achieved through HiTH and the benefits to patients where they have this opportunity. This massive productivity leap can be achieved through an expansion of existing default benefit arrangements to HITH.

CHA is currently working on a strategy for addressing challenges in the private maternity care space. While not canvassed extensively in our pre-budget submission, we will reach out to the Government to discuss private maternity in the coming months.

Clearly, patient choice, elective surgery wait times and the Government’s budget position are all placed at risk as long as private hospitals face genuine uncertainty around their financial sustainability. CHA’s pre-budget submission (attached) outlines tangible, affordable measures the Commonwealth Government can adopt to protect and reinforce the role of the private hospital sector in providing safe, high-quality care options to patients and supporting the public hospital sector.

I am very happy to meet with you, or arrange for you to meet with Catholic hospital operators from around the country, to provide any further information you need in support of these recommendations.

Sincerely

Jason Kara
Chief Executive Officer
Catholic Health Australia