COVID-19: Major partnership with private hospitals

On 31 March 2020, a major partnership with the private hospital sector was announced as part of national efforts to address the COVID-19 pandemic. In a joint statement the Minister for Health and representatives of the private health sector and medical and nursing associations, stated that the aim is ‘to ensure the full resources of our world class health system, are ready and focussed on treating patients as required, through the coronavirus pandemic’. The new arrangements were described as ‘unprecedented’ by the Health Minister. The Australian Government will guarantee the viability of the private hospital sector in return for the sector making private hospital beds and its workforce available to work with the public hospital sector in addressing COVID-19.

The private hospital sector represents a significant proportion of the Australian health system; 58 per cent of all hospitalisations involving surgery occurred in private hospitals in 2016–17. The Minister for Health noted the sector currently comprises 657 facilities (including acute care, psychiatric and day hospitals), has 105,000 full and part-time staff including 57,000 nurses, and can provide around 34,000 beds. Private hospitals have agreed to support the COVID-19 response through services including:

  • Hospital services for public patients – both positive and negative for COVID-19.
  • Category 1 (urgent) elective surgery.
  • Utilisation of wards and theatres to expand Intensive Care Unit (ICU) capacity.
  • Accommodation for quarantine and isolation cases where necessary, and safety procedures and training are in place, including:
    • Cruise and flight COVID-19 passengers.
    • Quarantine of vulnerable members of the community.
    • Isolation of infected vulnerable COVID-19 patients

Separate agreements will be developed between private hospitals and state and territory governments who are responsible for managing and regulating hospitals in their jurisdictions. Victoria recently announced it had reached an agreement with the sector. Other jurisdictions were expected to quickly follow suit.

The Health Minister estimates that the measure will cost the Commonwealth $1.3 billion, although he stressed this figure was not capped and more money would be provided if required. The total cost of the public health system response to COVID-19 will be shared between the Commonwealth and the states and territories under a national partnership agreement. The Commonwealth has agreed to meet 50 per cent of the costs incurred by the states in diagnosing and treating COVID-19 patients in public hospitals (including the purchase of public elective surgery in private hospitals at cost) and related public health activities. It is also providing an advance payment of $100 million to the states based on population levels and will continue to fund Medicare payments for general practice and PBS medicines.

Notably, the partnership was announced the day before a suspension of category 2 and category 3 elective surgeries across both public and private hospitals was due to commence. The suspension originally announced by Prime Minister Scott Morrison on 25 March, was aimed at preserving essential resources including personal protective equipment (PPE). It was due to start from midnight that day, but after discussions with the sector, the deadline was delayed until 1 April, although not without some controversy. It also followed on from calls (such as from the Royal Australasian College of Surgeons) for governments to inject resources into the private hospital sector to prevent staff stand downs and hospital closures.

Further details of the partnership have emerged in media commentary. According to the President of the Australian Private Hospitals Association, Michael Roff ‘[private] hospital capacity would be offered under a cost recovery basis’. According to Melissa Sweet writing in Croakey, the deal with private hospitals requires them to effectively ‘act as not-for-profit organisations for the duration of the arrangement, and also to open their books for audits’.

While some questioned whether the partnership is effectively nationalising the private hospital sector, the Health Minister has rejected this description. The Australian Consumer and Competition Commission has granted interim authorisations for public and private hospitals to cooperate, so as to avoid concerns over breaches of competition rules. Other issues that have been raised include potential problems accessing hospital services and ventilators in rural and remote areas, as noted by Melissa Sweet . As well, questions have been raised over the future scope of elective surgery once the current emergency passes. Stephen Duckett and Adam Elshaug writing for The Conversation have questioned whether the level of elective surgeries previously being performed ought to be sustained, given, they argue, that some elective surgeries have marginal benefit. Some private hospital operators have reportedly struggled with the loss of revenue from cancelled elective surgeries.

On 21 April, the Prime Minister announced that category 2 and some category 3 elective procedures could recommence from 27 April 2020 across both public and private hospitals. Given that stocks of personal protective equipment (PPE) were now ‘largely sufficient’, we’d achieved ‘success in flattening the curve’, had low rates of COVID related hospitalisations and unnecessary delays on elective surgeries could negatively affect health outcomes, the National Cabinet agreed to the recommencement. It is expected to result in one in four closed elective surgery operating lists reopening. In a separate statement the Health Minister listed the principles that would guide decisions in reinstating elective surgeries:

  • Procedures representing low risk, high value care as determined by specialist societies
  • Selection of patients who are at low risk of post-operative deterioration
  • Children whose procedures have exceeded clinical wait times
  • Assisted reproduction (IVF)
  • Endoscopic procedures
  • Screening programs
  • Critical dental procedures.

But concerns have emerged over how elective surgery beds will be allocated across the public and private hospital sectors, given that private hospitals have agreed to prioritise public hospital patients.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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