Media releases

June 8, 2005

Rising costs drive hospital contract negotiations

Medibank Private Managing Director, George Savvides, said all acute medical, surgical and obstetrics overnight hospitals in metropolitan Melbourne, Sydney, Adelaide, Brisbane and the Gold Coast had been asked in February to respond to a Medibank Private tender for hospital services.

"We asked 99 hospitals to provide us with a schedule of pricing, contract terms and to recognise quality and safety benchmarks supported by the Australian Council for Safety and Quality in Healthcare and the Australian Council on Healthcare Standards," Mr Savvides said.

"Our task now is to reach an equitable agreement with each individual hospital, on terms that are good for us all - but most importantly, for our three million Medibank Private members who will benefit from the 'no gap' Members' Choice hospitals."

"We found that through existing contracts some hospitals have been charging our members prices varying up to 25% for identical procedures undertaken in similar hospitals. Our tender process is to draw a line in the sand and say no more, this is unfair for our members".

He said industry suggestions that up to 40 private hospitals could lose contracts with Medibank Private were incorrect, and that hospital access would be cut by 10 per cent is mere speculation.

"I can say quite clearly, every hospital in this tender process has the opportunity to take up a contract with Medibank Private," Mr Savvides said.

"The critical distinction is that a small number of hospitals likely not to satisfy the criteria of joining the Members' Choice network will be offered an alternative contractual arrangement that better reflects the value of their services when compared to their peer hospitals. "

Mr Savvides said Medibank Private members were saying they would no longer tolerate annual premium increases in the order of what we have seen in recent years.

"Our drive is getting a fair go and a better deal for our members. We do that by tackling the biggest cost in our business, the total charges we pay for private hospital services, which last year increased by something in the order of 10 per cent." he said.

"The question we have to ask is why our members should wear increases of this magnitude, particularly when we know there are some hospitals demanding prices significantly greater than very similar hospitals who offer similar standards of quality and services?"

Medibank Private will continue to maintain contracts with more private hospitals and day surgeries than any other major health fund.


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