Healthscope advises of intent to terminate with AHSA Funds

Healthscope seeks to line pockets of private equity owners by advising of its intent to terminate agreements with 22 not-for-profit health insurers

22 November 2024, Melbourne, Australia: Healthscope, owned by North American Private Equity firm Brookfield, has advised of its intent to terminate its hospital agreements with 22 small-to medium-sized not-for-profit, member-owned private health insurers and associated brands represented by Australian Health Service Alliance (AHSA).

Healthscope confirmed its intention to terminate its agreements with AHSA funds, effective after 1 March 2025. The funds combined represent over 2.5 million Australians.

Andrew Sando, CEO of AHSA, which acts as an agent for the small-to medium-sized not-for-profit funds, said Australian health insurers should not be forced to fund the profits of one of the world’s largest alternative investment management companies, which, in 2023, had net income of US$5.1billion.

“Healthscope is driven by one thing – maximising returns for their investors, regardless of the impact upon the Australian private health care system. Gouging the Australian public to generate profits for their private equity owners is not in the national interest, and flies in the face of compassionate, equitable and sustainable healthcare. How and why the Australian Government permits foreign private equity owners such as Brookfield to extract more profits from the already financially challenged private health care system is unclear.” said Sando.

“If the member-owned and not-for-profit insurers are forced to pay more to Healthscope to improve the profit of its Canadian private equity owners, then it inevitably stands that premium prices will be impacted, further compounding the cost of living pressures facing ordinary Australians. Higher premiums create greater affordability challenges for ordinary Australians, fewer private health insurance memberships and participation, more reliance and pressure on public services and longer waiting lists,” said Sando.

The intention to terminate by Healthscope comes after it demanded patients of AHSA funds pay an additional hospital fee, in breach of the agreement both parties agreed on earlier this year fixing hospital fees for two years. AHSA commenced dispute resolution processes in accordance with the agreement to ensure that patients were protected against fees that were not allowed.

“Healthscope is ripping apart patient care plans and putting profits ahead of affordable private healthcare. Australia boasts a world-class healthcare system, one that is the envy of many other countries, but Healthscope’s actions are undermining its integrity and threatening the quality of care that Australians deserve.”

AHSA successfully negotiates contracts with hundreds of private hospital operators across Australia every year, ensuring that the customers of those health insurers are not faced with out-of-pocket gaps. This year, AHSA has successfully negotiated with other large private hospital groups and has agreements with over 500 private hospitals.

“Should the termination come into effect after 1 March 2025, policy holders of the not-for-profit and member-owned insurers potentially face out-of-pocket gaps if they decide to be treated or are admitted to a Healthscope hospital,” said Mr Sando. “Patients have the option to go to any of the other 500 private hospitals we have contracts with. Patients should discuss with their surgeon alternate hospitals to Healthscope hospitals to minimise their out of pocket expenses”.

AHSA is a not-for profit organisation that exists to ensure that its member insurers provide the best value, high-quality health services possible, whenever and wherever patients need it. Its member insurers cover more than 20% of all 15 million privately insured Australians, many of which work in critical industries: Teachers, doctors, nurses, police and emergency services, defence force and navy personnel.

“As a partner to all health stakeholders – funds, hospitals, practitioners and patients – our vision is for all sections of the system to work constructively towards more affordable, accessible care,” said Mr Sando.

Mr Sando said the not-for-profit, member owned health fund community always seeks to treat all contracted hospitals fairly and prioritises the needs of patients and doctors.

About AHSA

The Australian Health Service Alliance (AHSA) is a large, member-owned, not-for-profit service organisation. We serve small to medium not-for-profit and member owned health funds to achieve the shared goal of a quality, sustainable private health insurance industry for their members. The AHSA facilitates arrangements with healthcare providers on behalf of our funds. As a large service provider and negotiating group, our funds benefit from our collective size to achieve successful outcomes for members. Negotiation of competitive, patient-focused contracts brings value to fund members and contributes to the viability of Australia’s healthcare industry. AHSA exists for our funds and our funds exist for their members. Together, we strive for high quality private healthcare at an affordable price.