Background

Catholic Health Australia (CHA) strongly supports the Department of Health and Aged Care’s (the Department’s) objective to create a transparent, nationally consistent approach to pricing private hospital services through a Private National Efficient Price (PNEP). The Draft Pricing Framework for Private Hospital Services (the framework) represents an important and long-overdue step toward modernising private hospital funding, improving contracting transparency, and enhancing system-wide efficiency. However, the framework will not succeed unless it directly addresses the sector’s severe and prolonged underfunding, builds a credible data and costing foundation, and introduces robust governance, transition and regulatory safeguards. The proposed timeline is highly ambitious given the number of critical elements that remain unresolved; without resolving these foundational issues first, the PNEP risks being implemented on an unstable base, undermining both its credibility and its ability to deliver meaningful reform.

CHA also stresses that several major challenges facing the private health system, including specialist out-of-pocket costs, product complexity, insurer market power, the relationship between public and private hospitals, and shortcomings in risk equalisation, sit entirely outside the pricing framework and cannot be fixed by the PNEP. These issues require parallel policy attention if meaningful sector-wide reform is to be achieved.