Bupa Faces Allegations of Anti-Competitive Practices
Health insurance giant Bupa has come under scrutiny for its alleged anti-competitive behavior in dealings with private hospitals. Critics argue that these practices are limiting the choices available to Bupa customers, ultimately affecting their access to healthcare services.
Leaked documents have exposed how Bupa’s contracts impose strict conditions on smaller hospitals, which often lack bargaining power against a company that holds a significant portion of the Australian market. The main point of contention is Bupa’s Medical Gap Scheme, which critics claim prevents subcontracted doctors from charging patients any out-of-pocket costs at contracted hospitals.
David Du Plessis, a former Bupa executive who now consults for private hospitals, supports these allegations. He explains that the complexity of billing means hospitals that refuse to sign contracts may face a difficult decision: either accept lower payments from Bupa per procedure or pass on significant out-of-pocket costs to their patients.
“It’s a wedge. It’s a way of forcing the hospital, who have to hold the contract,” he said. While avoiding out-of-pocket costs might seem beneficial for patients, Mr. Du Plessis warns that they could end up losing out as well.
Doctors are unable to use Bupa’s Medical Gap Scheme at non-contracted hospitals, meaning patients who go to one of those 99 facilities can face a double hit: out-of-pocket costs from both the hospital and the doctor. “They’re removing choice from their members,” Mr. Du Plessis told ABC News.
Bupa has responded by stating that the claims about its gap scheme are baseless and that the scheme was designed to help customers pay less, and in many cases nothing, for medical out-of-pocket costs.
Understanding the Bupa Gap Scheme
Bupa’s Medical Gap Scheme has been in operation since 2021. It applies when patients are treated as “No Gap” or “Known Gap” patients in a private hospital, meaning they should only pay their excess — or up to $500 on top of that if they are a Known Gap patient.
Typically, under contracts with hospitals, an insurer details what it will pay the hospital for theatre and room fees if customers are treated as a no-medical-gap or fixed-fee patient. It is then up to doctors whether they will apply No Gap schemes on their share of the procedure. The two can decide independently of each other whether to apply a No Gap bill.
However, Bupa’s Medical Gap Scheme operates differently, using the terms of the hospital contracts to stipulate that physicians cannot charge a gap fee either. It also means Bupa No Gap doctors cannot make use of the scheme at uncontracted hospitals.
This ultimately forces Bupa customers to use a Bupa-contracted hospital if they want no out-of-pocket expenses on their procedure, as well as the hospital stay. “For those patients unaware of the Bupa deals, if they end up in an uncontracted hospital for a major procedure … they could be looking at thousands in out-of-pockets,” Mr. Du Plessis said.
Uncontracted Hospitals in Bupa’s Sights
The ABC can reveal that, since August last year, Bupa has also been trying to impose similar conditions on doctors at uncontracted hospitals. In a letter to the Australian Society of Ophthalmologists, Bupa stated its specialists could start using the No Gap scheme for doctors’ fees at some of the 99 hospitals across the country it did not have a contract with.
But, it stipulated they could only do so, “provided they [the uncontracted hospital] give and continue to comply with a written undertaking not to charge Bupa customers any out-of-pocket costs beyond the applicable excess…”.
Australian Private Hospitals Association chief executive Brett Heffernan described this as “beyond the pale.” “They’re squeezing the hospital on one end in terms of the contract negotiation and they’re squeezing the doctors on the other end to put pressure onto the hospitals to capitulate,” he said.
The association has called on the Australian Competition and Consumer Commission (ACCC) to act, alleging it is anti-competitive behaviour. “This is a situation where Bupa are trying to have the hospital over a barrel and dictate pricing. It’s completely inappropriate,” Mr. Heffernan said.
Terms Could Be Anti-Competitive
Bashi Hazard, who lectures in competition law at the University of Sydney’s Law School, said the gap scheme could be anti-competitive if it was found to be both coercive and limiting competition in small areas. “What we’re looking at in this situation could be a vertical restraint,” Dr. Hazard said. “That is something that, particularly in regional areas, the regulator would have to take a close look at.”
Bupa has stated that the scheme aims to help customers avoid unexpected bills “and get the care they need with confidence.” They also mentioned that they had previously contacted some non-contracted hospitals to outline “voluntary contracting options” that could support lower out-of-pocket costs for members.
Power of Bupa’s Market Share
Bupa is one of Australia’s largest health insurers, with nearly 4 million customers nationally and a quarter of the market, making it essential for most hospitals to contract with the insurer. It is the market leader in South Australia with more than 40 per cent market share.
Bupa reported a full-year after-tax profit of $594 million in 2024–25, higher than any other private health insurer. “In states where Bupa has a huge market share, it becomes doubly problematic,” Mr. Du Plessis said.
Small Hospitals Feeling the Brunt
Mr. Du Plessis noted that the problem for many small hospitals is compounded by Bupa’s slow response to offering contracts, especially to new hospitals. “I’m seeing a number of providers citing difficulties with getting contracts, with Bupa in particular, particularly new hospitals that are opening, and being able to then establish reasonable rates with them,” he said.
He added that delays in negotiations were part of the strategy. The contracts obtained by the ABC showed the long arms of these contracts. Hospitals must get permission from the insurer if they intend to open a new unit or wing, show evidence of why it is needed, the names of the doctors involved, how they will attract patients, and even guess how many Bupa patients might use it if they want to get their higher contracted rates.
While legally allowed, the Australian Private Hospitals Association said it was onerous and broke the compact with customers to only insure for services, not direct them. Mr. Heffernan said secrecy provisions in contracts prevented anyone from objecting publicly. “We see clauses in there about what hospitals can and can’t do, and one of the things they can’t do is talk to anybody about what the egregious terms of these contracts are,” he said.
Bupa stated that its contracting practices comply with competition law and “operated under regulatory oversight.” Peak body Private Healthcare Australia, which represents health insurers, said No Gap arrangements were designed to avoid surprise medical bills.
“People with private health cover consistently tell us they want certainty about what treatment will cost. No Gap arrangements are designed to provide that certainty,” chief executive Rachel David said.
*In this story “No Gap” refers to both No Gap and Known Gap charging. Do you know more, or are you affected?
