Dr Rachel David spoke with FiveAA radio in South Australia about the state of the private health system.

Yesterday morning, we were talking about private hospitals and the fact quite a number have closed around the country and here in SA. Down in the south east, Mount Gambier, Keith, in the city – urology clinics, gastro clinics, day surgery places and hospitals in general. Western Hospital, I’m not sure where that’s at the moment, but under immense pressure, not- financial not that long ago.

Doctor Rachel David, CEO, Private Healthcare Australia, on the line. Rachel, good morning.

Look, there’s a lot there, Matthew. And if I can just have a couple of minutes to address those two points. The point- the first point about the profitability of health funds and the second about hospitals closing.

So on profits, just a couple of things. It is not legal to operate a health fund at a loss over a period of time. So by definition, a health fund needs to be profitable. And the extent of that profit is reviewed in detail every year by the Minister in the premium round process. When the health funds started to accumulate cash during the pandemic lockdowns, they paid it all back to consumers. $4.4 billion went back to their members because they knew that they had to continue to provide value. So the APHA made this claim, or Michael Roff made this claim that you could pay anything the hospitals were asking for, and they have done it tough as a result of inflation and not put up premiums. That’s just not true. And we’ve asked the APHA to provide its modelling to- that indicates how they arrived at that conclusion, and they haven’t done so. So what we need to do is focus on what we can pay hospitals without putting up premiums and increasing the burden on our members. We are going through that process with the Federal Government, and it will mean that we’ll need to make some savings somewhere along the line, and we’re just determining what they are.

On the second point about hospital closures, there was a list in the papers of 72 hospitals that had apparently closed around Australia. Now, of those 72 hospitals, 60 of them were small doctor-owned and other day surgeries that open and close all the time. They were surplus to requirements and that’s why they closed. So- and even that they included some of the cosmetic cowboy clinics that were referred to in the media. Of the 12 standalone overnight hospitals that closed, seven of them were taken over by other entities, either other hospital companies or states, and are still open. So we’re actually talking about five significant hospitals across the whole country that have closed. Now, that doesn’t mean to say that hospitals aren’t doing it tough. They’ve been hit by inflation of recruitment, power and food, just like every other business around Australia, and we’re working with them on how we can address that. But the answer is- like, if a cafe has been hit by, you know, the issues with inflation and workforce, the solution is not to put up the price of a coffee to $15.