Australia's largest not-for-profit health and aged care provider plans to end its contract with the private health insurer nib, after negotiations for a renewal broke down.
St Vincent's operates 10 private hospitals across New South Wales, Victoria, and Queensland and said it had not taken the decision lightly.
"This is the first time in our 167-year history that St Vincent's has given notice to a private health fund that we intend to end our agreement," CEO Chris Blake said.
The ABC understands the dispute is over how much nib is willing to pay the hospital to treat its policyholders.
The insurer said it was disappointed to see the disagreement play out publicly.
"nib has a long partnership with St Vincent's, is sympathetic to St Vincent's financial position, and that of other private hospitals, and has made a very fair and reasonable offer to St Vincent's," CEO Mark Fitzgibbon said.
"We will continue discussions with them, noting our partnership has several months remaining."
What does this mean for nib customers?
Nothing's changing just yet.
Both parties have 65 business days to come to an agreement. If that doesn't happen, their contract will end in October.
If that happens, nib patients who seek treatment at one of St Vincent's private hospitals may instead need to pay more for some of the services they receive.
However, they would still qualify for what's known as second-tier default benefits, which act as a bit of a safety net.
Under that scheme, patients with private cover can still seek treatment at a hospital where there is no negotiated contract with their health insurer.
Typically, they just pay more out-of-pocket costs than they would if a contract were in place.
If a patient was unwilling to pay the gap, they could then elect to be treated at a different hospital or go into the public health system instead, though wait times are typically much longer.
It's important to note this does not affect the two major public health networks St Vincent's operates in Darlinghurst in Sydney, and Fitzroy in Melbourne.
While this sort of thing is not entirely uncommon during contract negotiations, it is more unusual for it to involve players as large as these two.
St Vincent's said it had already negotiated major new agreements with Medibank, HCF, and the Alliance group of health funds in the last 12 months.
The Australian Medical Association urged both sides to come to an agreement saying patients would ultimately be the ones to lose out.
"These disputes undermine the confidence that Australians have in private health insurance arrangements, particularly as we continue to see significant premium increases at a time people are facing significant cost-of-living pressures," president Steve Robson said.
He also renewed calls for reform of the private health sector to ensure its long-term sustainability.
A sector-wide 'crisis'
The dispute is symbolic of a much larger problem.
Across Australia, private health providers have expressed concern about the rising costs of health care, with some hospitals forced to reduce services and others closing entirely.
Earlier this year, Private Healthcare Australia, which represents the nation's health insurers, warned health funds were "walking a tightrope" between keeping premiums as low as possible for consumers and providing adequate funding to hospitals.
"There is a crisis in private healthcare in Australia," Mr Blake said.
"Over the last five years, more than 70 private hospital services have closed. We've now got a major federal government review into the survival of the sector."
Paul Jansz, a cardiothoracic surgeon with St Vincent's public and private hospitals, described the situation was "dire".
He said private hospitals helped to reduce demand on the public system, and it was vital they functioned well.
"I think it's becoming harder and harder for these private hospitals to make ends meet and a lot of them are closing and there's some sobering statistics about private hospitals and day surgeries that just can't afford to keep the doors open," he said.
In March, the federal health minister approved a 3.03 per cent rise in health insurance premiums.
It came after Mark Butler used ministerial powers on public interest grounds to block a bid by insurers to raise premiums by up to 6 per cent.
Loading...