Healthscope’s decision to discontinue maternity services at its private hospitals in Hobart and Darwin reflects broader challenges in Australia’s private healthcare sector, including financial pressures and the evolving role of private health insurance in sustaining hospital services.
The company announced that maternity services at Darwin Private Hospital will end on April 17, with final admissions on April 10. In Hobart, the maternity unit will close on Aug. 20, with the last patients admitted on Aug. 13.
According to ABC’s report, Healthscope cited declining birth rates and staffing shortages as key factors in the closures. The number of births at Darwin Private Hospital has declined from 700 in 2013 to fewer than 300 in 2024, while recruitment difficulties have made it unsustainable to maintain maternity services in Hobart.
While the immediate impact is on expectant parents and healthcare staff, the closures also signal wider industry trends. The ability of private hospitals to continue offering maternity services is closely tied to private health insurance coverage, cost pressures, and patient demand.
Private maternity care in Australia is largely dependent on private health insurance, with insurers covering a significant portion of obstetric costs. However, affordability concerns and policyholder choices are influencing hospital decisions about which services remain financially viable.
In recent years, many Australians have shifted to lower-cost health insurance policies that exclude or limit maternity coverage, reducing the number of insured patients seeking private obstetric services. At the same time, private health insurers have faced rising costs, as hospital and medical inflation have outpaced premium growth.
According to the Australian Prudential Regulation Authority (APRA), hospital and medical inflation reached 6.7% in 2024 – almost double the national inflation rate. This trend has widened the gap between insurer reimbursements and the actual cost of providing services, placing financial pressure on private maternity wards.
The closure of private maternity units could have ripple effects on both the insurance and public health sectors. With fewer private options available, expectant mothers may turn to public hospitals, increasing demand on facilities such as Royal Darwin Hospital, which will be the only birthing hospital in the region.
For insurers, the trend raises questions about the sustainability of maternity coverage within private health policies. If private hospitals continue to shut maternity units, some policyholders may reconsider whether private maternity cover remains worthwhile, potentially affecting the insurance market.
Gino Pecoraro, president of the National Association of Specialist Obstetricians and Gynaecologists, said the closures reflect instability in private obstetric care.
“The closure of these maternity services underscores the fragile state of private obstetric care and foreshadows a dangerous shift towards insurer-controlled managed care,” he said, as reported by ABC.
Additionally, ongoing speculation about a potential Healthscope acquisition by private health insurer Bupa – which recently reached an agreement to ensure Bupa members will not face additional fees when receiving treatment in Healthscope facilities – has sparked debate over the role insurers might play in hospital operations.
According to ABC, some industry analysts have raised concerns that if insurers gain greater control over healthcare delivery, hospital services could become more aligned with insurer priorities rather than patient demand.
Federal Health Minister Mark Butler acknowledged the impact of the closures, stating that the government was working with state authorities and private health insurers to ensure continuity of maternity services.
With private hospitals and insurers facing increasing financial pressures, APRA has urged insurers to strengthen risk management frameworks and develop long-term strategies to ensure sustainability. The regulator has also flagged concerns about the financial and operational risks affecting the private healthcare sector.
