Our Position – Private patients in public hospitals

The treatment of private patients in public hospitals has become a growing and contentious feature of Australia’s hospital funding landscape. Under the current National Health Reform Agreement (NHRA), patients admitted to public hospitals can elect to be treated as private, allowing the hospital to bill their private health insurer (PHI) and the Medicare Benefits Schedule (MBS) while still receiving reduced levels of public funding through Activity Based Funding (ABF).

This arrangement was originally intended to be financially neutral, ensuring that total hospital revenue was consistent regardless of a patient’s funding status. However, in practice, it has created financial incentives for state and territory governments and public hospitals to encourage patients with private health insurance to use it when admitted, generating additional revenue to supplement capped Commonwealth and State funding.