New private hospitals data shows out-of-pocket specialist fees keep rising, while the number of hospitals that submitted their required monthly data dropped dramatically in one year.
Private hospital fees and gap payments keep rising, with the average gap payments for private medical specialists increasing 61% in five years, new private hospital data from the Department of Health, Disability and Ageing (DoHDA) shows.
The two new reports also show that the number of hospitals reporting their data on time fell last year, with industry leaders warning that the drop in compliance reflects the growing financial pressures on private hospitals and workforce shortages.
The new data also shows that half of all private hospital care is now for people aged 65 years and over.
The latest Hospital Casemix Protocol (HCP) data from private health insurers shows that the average medical gap payment for medical specialists rose 61% in five years, from $240 per hospital separation in 2020-21 to $386 in 2024-25.
Meanwhile, the average gap where a gap was paid – when the patient received a bill – rose from $628 to $840 – an increase of 34%.
The HCP data also shows that the average overall gap payment across all privately insured separations (episodes of care) rose from an average of $505 in 2023-24 to $550 one year later.
Five years earlier, the average gap was $409, an increase of 35% over five years. Where a gap was paid, the average rose by 30%, from $678 to $880 in that same period.
The Private Hospital Data Bureau (PHDB)report, which summarises data collected from private hospitals through the PHDB, also shows the increases in costs over four years.
In 2024-25 the average hospital charge per stay was $3557, up from $3324 in 2020-21, while the average day hospital charge increased from $1064 to $1147 in five years.
Catholic Health Australia director of health policy, Dr Katharine Bassett, said specialist out-of-pocket costs were one of the fastest-growing bills patients faced when it came to private hospital care.
“That’s where affordability is really being lost,” Dr Bassett said.
“And because seeing a specialist is an essential part of private care, when those costs climb, people start asking whether it’s worth going private at all.
“That’s a real problem for the hospitals that wear the consequences when they don’t.
“The people who use private hospitals most are the ones who need the rebate most.
“Australians over 65 are now nearly half of all private hospital activity, and that keeps growing.
“For a lot of them, the rebate is what keeps cover affordable. So, we’ll be watching these changes to the rebate closely.”
The PHDB annual report also includes data on compliance, which measures how many hospitals submitted their required monthly PHDB data files.
The new data also shows that compliance rates – the measurement of a hospital’s data reporting – fell dramatically between 2023-24 and 2024-25.
The percentage of “full compliant” hospitals – that is, hospitals that submitted data for every month they operated – fell from 74.6% in 2023-24 to 52.9% in 2024-25.
The percentage of private day hospitals that were “full compliant” dropped from 67.7% in 2023-24 to 45% in 2024-25.
Meanwhile, the “average percent compliant hospitals” – the average monthly compliance rate per hospital – was 91.4% in 2023-24, dropping to 86.2 % in 2024-25.
The Australian Private Hospitals Association (APHA) said the likely reasons for the 2024-25 compliance drop were:
- Financial distress: the Government Health Check in 2024 found EBITDA margins halved from 8.7% to 4.4%. Hospitals under pressure may deprioritise admin reporting.
- Hospital closures: fewer hospitals expected to report, while closures or transitions disrupt reporting continuity.
- Staffing pressures: workforce shortages (especially mental health, nursing) stretch administrative and data staff.
- Day hospitals hit hardest: day hospital full compliance fell 67.7% to 45%, while overnight hospital compliance fell from 82.9% to 62.4%. Smaller facilities have fewer data resources.
- Data timing: some hospitals may have submitted late files not captured in the updated report.
A Department of Health, Disability and Ageing spokesperson said that:
“Private hospitals’ compliance with PHDB reporting requirements remains a priority for the Department.
“The Department continues to engage with hospitals and provide support to help them meet their reporting obligations and maintain the quality of reported data.
“Despite a decline in reporting compliance, PHDB data completeness remains high, and the number of separations collected by the department continues to provide a representative dataset.
“In 2024-25, PHDB separations were estimated to be 98% complete when compared with AIHW hospital statistics, a slight decrease from 99% in 2023-24.
“The PHDB Annual Report remains a valuable source of aggregate information and benchmarking, supporting analysis of sector-wide trends and performance.”
APHA CEO Brett Heffernan said that the two reports “confirm what Australia’s private hospitals have been saying for some time”.
“Private hospitals continue to deliver care to more than five million Australians each year, while becoming increasingly efficient, yet the financial pressures on the sector continue to grow,” he said.
“The reports show hospital costs continue to rise as providers deal with increasing workforce, operating and medical supply costs.
“At the same time, patients continue to face significant out-of-pocket costs, from specialists but increasingly from insurance policies that do not cover them appropriately.
“There remains a substantial gap of over $1 billion annually between the cost of delivering care to insured patients and the benefits paid by private health insurers.
“This directly impacts choice, access and high-quality healthcare in an environment where insurer funding has failed to keep pace. The federal government has presided over this situation for four long years without any action to date.
“These findings reinforce the need for genuine reform of the private health system. Australians pay their health insurance premiums expecting timely access to quality hospital care, and more of those premiums should be flowing back into patient care.
In its pre-budget submission in April, the APHA called for a legislated 90% minimum payout ratio.
“APHA continues to call for the benefits ratio to be restored to 90% so that premium increases translate into improved funding for hospitals and better value for consumers,” Mr Heffernan said.
The reports also strengthen the case for a mandatory code of conduct governing contracting between insurers and hospitals, overseen by the ACCC, he said.
Mr Heffernan said that would bring greater transparency, accountability and fairness to a system that has become increasingly unbalanced.
“Australia’s private hospitals continue to do the heavy lifting for the health system, delivering efficient, high-quality care and reducing pressure on public hospitals.
“The challenge is ensuring the funding model is reformed so patients can continue to access that care into the future.”
Read the full PHDB annual report 2024-25 here and the HCP annual report 2024-25 here.
