Health minister Greg Hunt says private hospitals must retain staff during coronavirus pandemic, since the state is underwriting their viability

Tens of thousands of doctors, nurses and midwives from Australia’s private hospitals will be made available for redeployment within the public health system, as part of a package designed to prop up the sector and tackle the coronavirus pandemic.

The federal government will wear half of the cost of integrating the private hospital system with the public one in preparation for Covid-19, the health minister, Greg Hunt, has said in a letter to the private health sector guaranteeing its viability.

Hunt told reporters on Tuesday he expected the deal – a “once-in-a-century redesign” of the country’s hospital services – to cost the federal government an extra $1.3bn, although the amount was uncapped and would be increased if needed.

Private hospitals would support the Covid-19 response through activities such as providing care for public patients, carrying out category 1 elective surgery, and providing wards and theatres to expand ICU capacity.

Private hospitals might also provide accommodation for quarantine and isolation cases where safety procedures are put in place, including passengers from cruise ships, according to a statement issued by Hunt.

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State and territory governments are expected to complete partnership agreements over the course of this week. In his letter, Hunt said those agreements would outline an integration plan, and that the federal government would contribute 50% of the funding required for this. On Saturday, the private sector warned that hundreds of staff would need to be stood down and hospitals closed following elective surgery cancellations to prioritise Covid-19 preparedness.

The plans follow a meeting on Monday between the private health sector and the federal, state and territory governments to discuss how private hospitals and staff will be supported following elective surgery cancellations and until the sector is needed to assist with the coronavirus response, as well as how the sector will be used as the pandemic worsens to prevent the public sector from becoming overwhelmed.

“The Australian public needs to have confidence that deferred activities, such as non-urgent elective surgery, will be able to be resumed and accelerated at the appropriate time,” Hunt’s letter to private health providers, published on the ASX on Tuesday by Ramsay Health, said.

“As the Australian government is underwriting your viability, you must retain the workforce for operation in your own facility or for redeployment across the health system or as directed by the government or states and territories including medical, nursing, clinical and ancillary staff. The Australian government will work quickly to ensure your staff have appropriate training and equipment to ensure patient care is safe and the health and safety of your staff is maintained.”

Hunt wrote that the agreement was only to ensure the viability of the sector, and its purpose was not to generate profit or to assist with loan or debt repayment. The viability guarantee would be conditional on the hospitals agreeing to open their books to show government funding was only being used for operational costs.

He said the sector must agree to support the aged care sector and national disability insurance scheme recipients in return and must make its equipment, such as personal protective gear, available to the broader workforce.

Failure of the private sector to follow directions from the state and territory governments to integrate with the public sector would lead to the agreement being voided, Hunt said.

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Economists and health analysts warned on Monday that the private sector should not be given special treatment ahead of other businesses and sectors facing unemployment and profit losses. Speaking about the deal at a press conference on Tuesday afternoon, Hunt said the partnership would add 30,000 beds to the hospital system.

“It will bring over 105,000 full- and part-time hospital staff, including 57,000 of our amazing nurses and midwives,” he said. “It guarantees them their future and their support, both during the crisis and beyond, but most importantly it brings their resources to the fight against coronavirus, Covid-19, in Australia.”

Grattan Institute health economist Stephen Duckett said he did not see why hospitals should be receiving government support to pay for overheads while they were empty, but that the government seemed to have put tight measures in place to ensure bailout money was used as wisely as possible.

“The federal government is at least trying to be tight and they make it clear this money is only for specific purposes.”

The chair of the Australian Healthcare Reform Alliance, Jennifer Doggett, said the terms of the agreement were sensible as they ensured the resources in the private hospital sector would be used wisely.

“It also recognises the reliance of the so-called ‘private’ hospital sector on public funding,” Doggett said. “The public invests billions each year into this sector - doctors and nurses are trained through publicly funded universities and in public hospitals, Medicare funds 75% of the schedule fee for services provided to private patients and the private health insurance rebate which subsidises the cost of private hospital insurance. These subsidies can only be justified if they deliver public benefits.

“However, post-pandemic, this agreement should prompt a rethink of the role of the private hospital sector in Australia, in particular the role of ‘for profit’ providers such as Ramsay and Healthscope. The transformation of the private hospital sector in Australia from mostly locally-based, not-for-profit industry to one dominated by large for-profit corporate entities, many of whom are based overseas, has occurred without any substantial policy oversight or public debate. It has been driven by commercial and corporate interests rather than by the health needs of the community.”