Healthscope said it had no choice but to end its contracts with two insurers after they refused to pay a proposed hospital facilities fee.

The terminations will take effect on 20 February 2025 for Bupa and from 4 March 2025 for the AHSA funds.

Bupa said the extra charge provided no added benefit to customers, while Healthscope said it was important to bridge the gap between what insurers pay and the rising costs of hospital care.

Healthscope chief executive Greg Horan said the hospital provider had to terminate its contract with the insurers after both threatened legal action to prevent the introduction of the new charge.

“Healthscope cares for over 650,000 patients each year and we are absolutely committed to providing the best possible care. But we can only do this if we receive adequate funding,” Horan said.

“We proposed the Hospital Facilities Charge following the failure of Bupa and the AHSA to recognize and fairly fund the rising costs of care. In the absence of fair funding, this charge was Healthscope’s best option.

“The response from the insurance companies was legal, and we are not prepared to engage in protracted and expensive legal challenges.”

Bupa APAC CEO Nick Stone said the insurer was working “tirelessly” to negotiate the fee.

“We are shocked and deeply disappointed by Healthscope’s actions. They appear to be disregarding the interests of our common patients and customers by attempting to affect their access to health care,” said Stone.

“We are concerned that Healthscope’s actions will cause unnecessary stress for patients and customers who want to access private healthcare at a time when we should be working together to build trust in the private health system and take the pressure off hospitals and their frontline teams. “

AHSA, in a statement headlined “Healthscope seeks to line pockets of private equity owners by announcing intention to terminate contracts with 22 not-for-profit health insurers” said it had more than 2.5 million customers who would be affected by the separation .

Andrew Sando, CEO of AHSA, said Healthscope was driven by maximizing investor returns, rather than the Australian private healthcare system.

“Gouging the Australian public to generate profits for its private equity owners is not in the national interest, and goes against compassionate, fair and sustainable healthcare,” Mr Sando said.

“How and why the Australian government is allowing foreign private equity owners like Brookfield to extract more profits from the already financially challenged private health care system is unclear.”

Healthscope is owned by Canadian private equity group Brookfield and operates 38 private hospitals across Australia.

Dr Rachel David, chief executive of Private Healthcare Australia, the peak body for health funds, described Healthscope’s plan to charge a hospital fee of $50 for same-day services and $100 for overnight services as an “unethical new low”.

“This is another unethical tactic by a $1 trillion North American venture capital firm that seems intent on holding health fund members hostage, while trying to bully health funds into paying them more so they can increase their profits,” Dr David said.

“If Healthscope was serious about delivering patient care to Australians in a cost of living crisis, it would negotiate an affordable and sustainable outcome, rather than throwing its toys out of the crib.

“There is no room for health funds to pay across the board, above inflation increases to private hospitals. People struggling with the cost of living will simply drop out or downgrade their health cover, leaving Healthscope worse off as its customer base dries up.”