Healthscope entering into receivership should be a “wakeup call” to the Federal Government according to AMA (WA) President Dr Michael Page.
Healthscope has indicated Perth’s Mount Hospital, along with its other 36 private hospitals around the country, will continue to operate as normal while a receiver works to organise the sale of the business.
However, Dr Page said the news of one of the country’s largest private hospital providers entering into receivership should be a prompt for the government to ensure the future viability of the private health sector.
He said while Healthscope had been a unique situation, its financial woes had played out as private hospitals were increasingly finding it more challenging to make profits.
RELATED: Private maternity and obstetrics in the spotlight
“Hopefully this gives the Federal Government the wake up call it needs to provide the support – whatever that looks like – to the private sector, whether that’s through increased regulation of private health insurers or direct financial assistance,” Dr Page said.
“Clearly, something needs to be done to protect the protect the private sector. The whole private hospital sector is in jeopardy by underfunding.
“It would be a very dark day if a big private hospital operator collapsed and couldn’t continue functioning. The private system would never cope, especially in Western Australia where we have the highest penetration of health insurance in the country.
“People opt for private care here in a way that they don’t in other states, and our private hospitals therefore are even more important than they might be in some other states, so we can’t afford for them to fail.”
RELATED: Mount Hospital sells for $147m
While Healthscope hospitals are operating business as usual with support from a $100 million loan from Commonwealth Bank, Dr Page warned doctors, nurses and other Healthscope staff would be anxious about the future of their employment.
Last year the management of Brookfield, which owns Healthscope, accused private health insurers of bleeding its private hospitals dry.
Healthscope had reached an impasse in negotiations with Bupa and Australian Health Service Alliance insurers, which almost saw agreements between Healthscope hospitals and the insurers come to an end.
RELATED: Patients at the Mount face new ‘facility fee’
Healthscope issued a media release on Monday stating its parent entities had entered receivership, with its lenders appointing McGrathNicol Restructuring to work with its management to complete an orderly sale of the business.
It said the operational business, which runs the hospitals, is not in receivership and the Group’s hospitals remained open and operating “with no impact on staff, doctors or patient care”.
Healthscope chief executive Tino La Spina said: “The receivers and management share the same goal of maintaining our market leading standards of patient care and protecting the business, the hospitals and our amazing people.”
Health Minister Mark Butler told ABC Radio this week that he was considering taking regulatory action in regard to the private health industry.
“What we’ve found over recent years is that the percentage of the income that insurers earn that ends up in hospitals actually funding care has dropped, and at the same time profits and management expenses for those private health insurers has increased.” he said.
Mr Butler has previously urged public health insurers to address the issue.
“I said to all of the private health insurers that I expected them to find a way very quickly to pay more of the income they earn from millions of Australian households – to pay more of that income to private hospitals who actually deliver the care.
“The period of time I gave them to do that is starting to come to an end over coming weeks.
“If they haven’t done it to my satisfaction – and obviously I’ll be talking to private hospital operators, and the AMA and the nurse’s union and others who have a pretty clear interest in this – if this hasn’t corrected, then as I said I’ll look at taking regulatory action as the government.”
Want more news, clinicals, features and guest columns delivered straight to you? Subscribe for free to WA’s only independent magazine for medical practitioners.
Want to submit an article? Email editor@mforum.com.au