President’s Update - Private hospitals and payroll tax

Sector Under Strain

The AMA - at both state and national levels - remains concerned about the economic viability of the private hospital sector. Healthscope’s recent collapse into receivership is not an isolated incident, but rather a symptom of a broader, systemic issue.
Last week, AMA SA CEO Nicole Sykes and I met with three of South Australia’s leading private hospital leaders: Paul Evans (CEO, Adelaide Community Healthcare Alliance), Alan Morrison (CEO, Burnside Hospital), and Eileen Sawyer (CEO, St Andrew’s Hospital). We discussed the future of Healthscope, the continuity of patient care during this uncertain period, and our wider concerns for the state’s health system.

The structural fragility of the private sector is clear from the closure of private hospitals in Adelaide over the past few years. The Australian Government’s Private Hospital Sector Financial Health Check Summary (October 2024) revealed that private hospital expenditure is growing at nearly twice the rate of revenue. A key contributor is the insufficient contribution from private health insurers, who are failing to keep pace with rising hospital costs—wages, energy, and supplies among them. According to the AMA’s Private Health Insurance Report Card 2024, only 84% of private hospital insurance premiums were returned to patients in the form of rebates and benefits last financial year. The AMA continues to advocate for a minimum return of 90% to patient care.

The implications for the broader health system are significant. Private hospitals deliver over 70% of elective surgeries and account for 40% of all hospital admissions in Australia. If they are unable to maintain these services, the burden will shift to the already overstretched public sector.

As President of AMA SA, my priority is to advocate for the whole of the health system and support all doctors in the public and private sectors. Our strong, collaborative relationships with private hospital leaders will be key to pushing for sustainable funding models, greater insurer accountability, and a robust healthcare workforce.

Removing Payroll Tax

AMA SA welcomes the commitment from Opposition Leader Vincent Tarzia that a future Liberal Government would scrap payroll tax on GPs. We’ve been campaigning for the removal of this tax on all private specialists for three years, and we will continue to press the Malinauskas Government to understand the concerns of our members.

The case against the tax is compelling. Evidence from our members shows it increases patient costs and threatens the viability of GP clinics - potentially worsening the GP workforce shortage. Moreover, there is no indication that the revenue generated would offset the broader inefficiencies and cost burdens created by shifting care from primary to tertiary settings.

To strengthen our case, we will pursue a multi-pronged evidence-gathering strategy that combines quantitative data with qualitative insights. We will seek key metrics from the government, including:

•    Practice-level data: Number of affected practices, revenue impacts, compliance costs
•    Patient access metrics: Bulk billing rates, consultation fees, service utilisation
•    Health system utilisation: ED presentations, preventable hospitalisations, cost-shifting indicators
•    Workforce impacts: Practice closures, GP numbers, geographic distribution

Healthcare is a unique sector. It requires policy approaches that recognise the independent contractor model as a valid, reasonable and efficient model to care delivery - not a loophole for tax avoidance.

 

Constructive talks with SASMOA

This week, AMA SA CEO Nicole Sykes and I had a productive meeting with SASMOA President Dr Laura Willington and Chief Industrial Officer Bernadette Mulholland. As the peak bodies representing South Australia’s medical workforce, AMA SA and SASMOA share a strong commitment to supporting doctors across all settings - public and private, clinical and training - especially during times of change.

We identified key areas of alignment, including workforce sustainability, doctor wellbeing, and the need for coordinated, system-wide workforce planning. We agreed on the value of closer collaboration to strengthen advocacy and share a commitment to improve working conditions for doctors and uphold the principles of clinical leadership and high-quality patient care.

This meeting marks the beginning of what we hope will be a regular and constructive dialogue between our organisations.