Private hospital insurance - is it worth it?


3 minutes

12 November 2018

Last updated: 21

Hospital insurance, like car insurance, is something you buy hoping you’ll never have to use it.

But unlike your car insurance, the value of private hospital insurance is often questioned because of our free and perfectly adequate alternative: the public hospital system.

So, why do people get private hospital cover?

Many Australians initially get it to avoid government penalties, like the Medicare Levy Surcharge. But the real value of private hospital insurance is in the freedom and control it gives you over your healthcare.

Private hospital insurance (not to be confused with extras insurance) covers you for inpatient medical treatment and surgery in private hospitals. You can also use it to cover treatment in a public hospital, but the benefits are limited, which is something we’ll explain below.

In this article, we explore the strengths and weaknesses of public and private hospitals in Australia, and the pros and cons of using your private hospital insurance in both.

We will cover:

1. How long you’ll wait

The time you wait depends on a bunch of factors, a major one being whether you need emergency or non-emergency care.

In an emergency, you’ll most likely be sent to your closest emergency ward and be seen within 24 hours. Most of the time you won’t have a choice between public or private—emergency cases generally end up at public hospitals because that’s where most emergency wards are located.

We’ll focus on how long you’ll wait for non-emergency surgery (also known as elective surgery) instead. This is surgery that can be attended to after 24 hours, and includes things like knee reconstructions and tonsil removal.

Going public

In the public system, you cannot choose your time of treatment.

If you need elective surgery, you will be placed on a public hospital waiting list. When a surgery date becomes available, you’ll go in for treatment. If someone needs care more urgently than you, you may be bumped down the list.

On top of your waiting time, you have your wait-to-wait—the time between your GP appointment and your first specialist visit.

In WA, the median wait-to-wait is around nine months, with variation likely occurring by procedure and hospital (but this data is currently unavailable).

Going private

In the private system, you have much more control over your time of treatment.

There is no waiting list in the private system, so you will generally be seen faster. Plus, you’ll be able to book surgery on a date that suits you.

While there is no waiting list in the private system, you might still wait a few weeks based on the availability of your chosen specialist.

There is slight variation depending on the procedure you need and the popularity of your chosen specialist, but overall, wait times are generally steady in the private system.

Choosing your time of treatment is a major advantage of going private. It means you can easily work around any existing commitments, like your job or upcoming holidays.

The only situations where you might not have a choice is if your specialist is unavailable, or if you’re in urgent need of surgery.

Going public as a private patient

As a private patient in a public hospital you will have the same level of control over your time of treatment as a public patient.

You will have a similar wait-to-wait as a public patient, and will still be placed on the public hospital waiting list.

In WA, all other things being equal, patients on the waiting list must be seen on a ‘first on, first off’ basis regardless of funding source1.

2. How much will it cost?

There are two main phases when it comes to costs: outpatient costs and inpatient costs.

Outpatient costs are fees for services you receive before you’re admitted to hospital—that’s anything from GP to specialist visits.

For now, we’ll explore what happens when you’re admitted to hospital—your inpatient costs.

Going public

Once you’re admitted to hospital, in the public hospital system, your treatment is generally free or subsidised. Your costs are covered between Medicare, the government and you.

Most things, from your doctors’ and specialists’ fees to your medication and hospital accommodation, will be covered.

The only things you might have to pay for are TV, internet, parking or newspapers.

Going private

If you go private, your costs will be covered between your health fund, Medicare, the government, and you.

It’s not uncommon to have out-of-pocket costs for private hospital treatment. These happen when the cost of a service isn’t totally covered between your health fund and Medicare.

Common out-of-pocket costs when you go private include any excess or co-payment you have on your hospital insurance policy, and sundries like internet. You’ll also need to pay for any gaps, for instance, if your doctors or specialists aren’t fully covered by your health fund.

Tip: To minimise out-of-pocket costs, choose a hospital and specialists that have fully covered agreements with your health fund.

Going public as a private patient

Going public as a private patient means your costs will be covered between your health fund, Medicare, the government and you.

Private patients in public hospitals often don’t have gaps to pay. If there are any gaps you’ll pay for these out of your own pocket, much like you would if you went to a private hospital.

Some public hospitals also offer meal and parking vouchers—an exclusive perk for private patients. 

3. Choice of specialist

While choice of specialist isn’t high up on the priority list for everybody, there are advantages in being able to choose.

Going private

If you go private, you can choose your doctor and your specialist.

It means if someone you know had a good experience with a particular doctor or specialist, you can choose them for your treatment too.

Choice of specialist also means you can choose the best surgeon for the job (for example, the best orthopaedic surgeon in WA) so long as they’re available.

You also have the option of choosing your hospital. If you choose your hospital, they will normally have a list of doctors that work at that hospital for you to pick from.

Going public

If you go public, you won’t have a choice of specialist.

If you need elective surgery you will generally be referred to the hospital closest to your home, and that hospital will allocate your doctors and specialists. Your doctors can often include trainees, who begin their careers in public hospitals to gain experience.

Going private in a public hospital

As a private patient in a public hospital, you may be able to choose your doctor and specialist. It all depends on your doctor’s availability and whether they work at your hospital.

If you’re admitted through the emergency department, you’re generally assigned a doctor and will get little, if any, opportunity to change.

4. Privacy and comfort

If you’re going to be in hospital for a few days, privacy and comfort can make a real difference to your stay. 

Going private

Privacy and comfort are a big part of the private hospital experience. 

If you go private, you will be able to recover in the peace and quiet of a private room (so long as it’s covered on your hospital insurance and there’s one available). If you’re with HBF, you will also be covered for a hospital border, which means your partner can stay with you overnight at the hospital. 

Going private also means more flexibility over what and when you eat. Private hospitals like St John of God employ dietitians to create tasty and nutritionally balanced meals. Plus, if you’re feeling peckish, most private hospitals are happy to provide snacks and meals outside regular mealtimes.

Other perks may also be available, like your own TV and ensuite bathroom.

Going public

Public hospitals are focused on providing care to those that need it most, so privacy and comfort can sometimes take a back seat.

Private rooms are reserved for people that really need them. For example, you’ll get a private room if you’re infectious.

Other than clinical need, getting a private room in a public hospital is luck of the draw. If there’s one free, you might get in, but it really depends on how serious your condition is compared to other patients. In a public hospital, you will likely share a room with 1 - 3 other patients, sometimes more.

Because space in public hospitals is limited, most of the time, your partner will not be able to stay with you overnight.

Going private in a public hospital

While using your hospital insurance in a public hospital does entitle you to a private room (so long as it’s covered on your policy), you will still only get one if no one needs it more than you. Like going public, it’s unlikely there’ll be space for your partner to stay overnight. 

You will also have the same meal options and times as a public patient.

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1 WA Department of Health - Elective Surgery Access and Waiting List Management Policy (2020)