CHA backs government’s private health funding reform

Catholic Health Australia (CHA) said the Government’s proposal to introduce a Private National Efficient Price (PNEP) for private hospital funding is a long-overdue reform that has the potential to deliver fair, transparent and sustainable funding for essential care.

CHA Interim CEO Kathy Hilyard said decisive action on the PNEP would address long-standing problems in the private hospital system which, for too long, has operated under fragmented, opaque, and inefficient funding arrangements.

“A nationally consistent price for private hospital care is a much-needed reform that will put our member hospitals on a more sustainable footing,” Ms Hilyard said. “The current system, where every insurer and every hospital must bargain over the cost of care, is hugely inefficient, resource-draining and substantially favours insurers at the expense of hospitals.

CHA’s Director of Health Policy Dr Katharine Bassett said the funding mechanism, devised by the peak body on behalf of its members, would deliver fairness and equity to the sector.

“A Private National Efficient Price would determine fair, sustainable funding for essential services such as surgery, maternity, mental health and regional care, helping secure their future and delivering real benefits to patients,” Dr Bassett said.

“For many years now, powerful insurers have been starving hospitals and patients of funding while boosting their sizeable profits. This has led to the closure of more than 80 services in the past six years. A national price has been shown to work in the public system and applying it to private care is the logical next step.”

CHA emphasised that while it strongly backs the Government’s reform direction, there are still important questions to resolve, including data quality, governance, capital funding, safety and quality adjustments, and the future handling of devices.

CHA also warned that the private hospital sector is in a precarious position and cannot wait for longer-term reforms alone.

“The case for reform is urgent, but hospitals also need immediate stabilisation measures,” Dr Bassett said. “Many are operating on 90-day viability cycles and facing a 2027 fiscal cliff driven by wage pressures, inflation and escalating clinical costs.”

“Short-term investment that reflects real cost growth is essential to keep services open while the PNEP is developed and implemented.”

CHA said it looks forward to working closely with government, hospitals and private health insurers to ensure the PNEP is implemented safely, transparently and with the right protections for patients, regional communities, training capacity, and essential acute-care services.

“Private hospitals play a critical role in reducing pressure on the public system,” Dr Bassett said.

“If done well, the PNEP will help ensure Australians can continue to access high-quality private health care when and where they need it.”

Read our submission and position paper on the PNEP.