Australia private hospitals face losses as insurer profits rise

Australia’s private hospital sector reported an operating loss of $23.8 million (AUD34 million) for the 2023-2024 period, even as private health insurers recorded combined pre-tax profits of $1.89 billion (AUD2.7 billion). A report by Deloitte indicates that insurers captured 65% of combined sector profits during this timeframe, up from 50% in 2017-2018. This divergence is attributed to falling hospital benefit payout ratios, which dropped from approximately 88% pre-pandemic to 84.3% in 2024-2025.

Major insurers, including Bupa, Medibank, HCF, and NIB, control roughly 80% of the market, providing them significant leverage in negotiations. This has left smaller hospitals and single-operator facilities with weaker bargaining power. Additionally, 33% of reporting private hospitals posted negative returns in 2023-2024, a significant increase from 12% in 2017-2018.

Compounding these financial pressures is proposed legislative change regarding private health insurance rebates. A Senate measure aims to remove age-based loading for Australians over 65 starting in April 2027. While national modeling suggests the impact may be manageable, regional providers like St Vincent’s Private Lismore warn of severe consequences. The hospital expects to lose between 1,200 and 1,800 privately insured patients annually, resulting in a revenue loss of up to $3.9 million.