Insurers Expand into Healthcare, Sparking Competition Concerns

Australian private health insurers are deepening their ownership and partnerships with healthcare providers—a strategy known as vertical integration—that has drawn scrutiny from medical groups and competitors. Since the COVID-19 pandemic, this trend has accelerated, with insurers expanding beyond traditional dental and optical services into general practice (GP) medical centers, telehealth, and hospital contracts. The following report synthesizes details from multiple sources regarding insurer investments, contractual practices, and the resulting concerns.

Insurer Investments in Healthcare Services

Several major health insurers have increased their direct involvement in primary and allied health services:

Medibank Private: Through its subsidiary Amplar Health, Medibank holds a 90% stake in 105 MyHealth GP clinics. It also received approval to acquire an additional 61 clinics from Better Medical. Amplar Health provides home hospital services and GP telehealth consultations and holds minority shares in several private hospitals.

• Bupa: Operates 27 medical centers in Australia, with plans to increase that number to 130 by 2027. Bupa also runs 60 mental health clinics, offers dental and optical services, and provides digital health services through its Blua platform. It partners with Amplifon for hearing services.
• NIB: Holds a majority share in hub.health, which offers members a 10% discount on GP telehealth consultations. NIB also provides dental services and has an audiology agreement with Specsavers.
• HCF: Offers free GP visits through its partner GP2U for some members and operates HCF dental centers.

Contractual Practices and Competition Concerns

Bupa has been accused by industry bodies and a former executive of anti-competitive behavior in its contracts with private hospitals. Details from leaked documents and public statements include:

Medical Gap Scheme

Bupa's scheme, operating in its current form since 2021, limits patient out-of-pocket costs (for "No Gap" or "Known Gap" patients) to the policy excess or up to $500. The scheme's terms require that doctors at contracted hospitals cannot charge patients any additional fees. Doctors cannot use the scheme at non-contracted hospitals.

Effect on Hospitals

David Du Plessis, a former Bupa executive, stated that the scheme forces smaller hospitals with limited bargaining power to sign contracts. Industry bodies, including Day Hospitals Australia and the Australian Private Hospitals Association (APHA), said the contracts make hospitals responsible for enforcing doctor fees—a requirement no other insurer imposes. Contracts reportedly require hospitals to seek permission for new units and list involved doctors, and include secrecy clauses preventing public discussion of terms.

Non-Contracted Hospitals

Bupa has reportedly contacted non-contracted hospitals to request they waive out-of-pocket charges for its patients. Bupa stated this was a voluntary effort to improve affordability.

Market Context

Bupa holds approximately 4 million customers, representing about a quarter of the Australian market. In South Australia, its market share exceeds 40%. Bupa's reported after-tax profit for 2024–25 was $594 million. Its benefits-ratio payment (the percentage of premiums paid out as benefits) is 82.4%, compared to 85.6% for Medibank Private and 87.8% for HCF.

Calls for Oversight

Medical and hospital groups have raised concerns about the potential impact of these business practices on patient choice and market competition.

Managed Care Concerns: The Australian Medical Association (AMA) and Catholic Health Australia have stated that insurer investments in GP clinics and hospitals could push healthcare toward a model similar to managed care in the United States. They have called for increased oversight, alleging that existing laws may be circumvented through pilot programs and other methods.

Anti-Competitive Allegations: The Australian Private Hospitals Association (APHA) has called for the Australian Competition and Consumer Commission (ACCC) to investigate Bupa's contract terms. Bashi Hazard, a competition law lecturer at the University of Sydney, stated that the Medical Gap Scheme could constitute an anti-competitive vertical restraint, particularly in regional areas where patient choice is more limited.

Bupa's Response: Bupa denied the anti-competitive claims, stating the Medical Gap Scheme is designed to help customers pay less for their care. The company said its contacts with non-contracted hospitals were about discussing voluntary options to improve affordability for customers.