Private hospitals are at risk, but the biggest risk is inaction

The private hospital sector in Australia is in serious trouble. Costs are rising, patients are ageing, and the funding model is hopelessly outdated. Everyone knows it, but no one wants to say it straight: without reform, private hospitals will close, choice will shrink, and the pressure on public hospitals will continue to escalate. 

That’s why the idea of a National Private Price matters. It’s a sensible, pragmatic reform that sets a fair floor for what insurers must pay private hospitals. It’s not radical. It’s not revolutionary. It’s common sense. 

Some critics scoff at the idea, pointing to the National Efficient Price in the public system and saying it’s not really national, not really efficient, and not really a price. That may be true, but it misses the point.  

The lesson from the public system is simple: independent, transparent pricing works. It has kept public hospitals funded in a way that matches real costs. It has contained runaway inflation. It has supported efficiency without destroying equity. A fit-for-purpose National Private Price would do the same for private hospitals. 

Another complaint is that hospitals’ financial data can’t be trusted. But that is exactly why we need the National Private Price. Right now, negotiations between insurers happens behind closed doors. Patients and policymakers have no idea what’s going on. The National Private Price would force consistency and provide accountability for the almost $8 billion government spends on the private sector through the rebate each year. It would also push the system toward greater efficiency.  

In addition, the Independent Health and Aged Care Pricing Authority already manages complex hospital cost data in the public system, navigating variations in procurement, workforce mix, and regional differences. Extending this capability to private hospitals will require resourcing, but it is entirely achievable. 

Then there’s the fear that the National Private Price would destroy competition. That’s simply not true. The National Private Price would be a floor, not a ceiling. Insurers and hospitals would still negotiate. Hospitals with strong brands, better outcomes, or specialist services could secure higher rates, moving us toward value-based funding. But at least everyone would know there was a baseline — a fair price below which hospitals can’t be squeezed. Far from killing competition, the National Private Price would give it a level playing field. 

The National Private Price won’t solve everything. But it’s the most credible, data-driven step we can take to stabilise the system. It means hospitals can invest. Insurers can plan. Patients can have confidence that private care, which gives them access and choice, will still be there when they need it.  

This is a once-in-a-decade opportunity for real reform. Yes, it’s complicated. Yes, there are risks, and yes, there are further details to sort out. But the reality is, we may not get another chance like this for years. So why wouldn’t we roll up our sleeves, work together, and shape the outcome? Why succumb to the backroom lobbying of for-profit interests at the expense of better outcomes and fairer pricing for patients? In health policy we often get stuck in analysis and objections from entrenched interests, resulting in meaningful change slipping through our fingers. The real danger now isn’t in trying and failing. It’s in failing to try. After all, Einstein famously said that doing the same thing over and over and expecting a different result is insanity. What could be more nonsensical than that?