The doubling of the number of private day hospitals since 1991-92 to around 153 is associated with the introduction of advanced technology for minor surgical procedures. For several years, private patient admissions to public hospitals have been in decline. A number of market-related efficiency measures have been introduced by the industry, and additional private hospital construction planned, to maximise the market advantage of the drift of private patients from public to private hospitals. Targeted rebates to ameliorate the cost of premiums under the Private Health Insurance Incentives Scheme were introduced from 1 July 1997. Nonetheless, the decline in participation is now affecting private hospital admissions-insured episodes of care to March 1998 have declined by 3.3 per cent from the peak of December 1997.
Anecdotal advice is that the decline is continuing.
December 1997 data subject to adjustment. The contribution of the private hospital industry to the Australian economy is considerable. It could be argued that the importance of the private hospital industry extends beyond the economic benefits it offers in private individual financing of health to issues of innovation in marketing, quality of care and technical and management efficiency. Nonetheless, the option to switch back to Medicare and poor value for money perceptions have weakened the coverage of private health insurance and are impacting negatively on private hospital admissions and the capacity of public hospitals in meeting demand. The current piecemeal approaches of subsidising private health insurance participation rates through the Private Health Insurance Incentives Scheme and the Medicare levy surcharge have not been successful to date in re-gaining public confidence.