Australia Is Losing Its Private Maternity Wards

Australia’s troubled private health sector has been shutting down maternity wards, leaving women at greater risk for traumatic and dangerous births.

Financial instability and staffing issues have caused at least 11 birthing units at private hospitals to close since 2018. Three more maternity ward shutdowns are set to occur this year in Hobart, Darwin, and Gosford.

The closures have put pressure on the remaining hospitals that are each attempting to absorb hundreds of additional patients every year. Some public maternity units have become “so stretched that they’re kicking people out a couple of hours after delivery,” Gino Pecoraro, MBBS, president of the National Association of Specialist Obstetricians and Gynaecologists, told Medscape Medical News.

Some regions, such as Far North Queensland and the Central Coast of New South Wales, are being left with no private hospital maternity wards, giving women no other choice than to travel long distances or visit public hospitals to give birth. “There are cases of women going into labor and having to stop the car by the side of the road,” said Pecoraro.

Gosford Private Hospital, North Gosford, which has the only private birthing unit on the Central Coast of New South Wales, will stop offering birth services on 31 March. Its operator, Healthe Care, cited a 40% decrease in patient numbers over a decade as the reason.

The closure affects 27 staff and will divert 465 patients per year to the region’s public hospital. But a critical shortage of specialists at Gosford Hospital, the nearby public hospital, has raised concerns that women will have to be rushed to cities more than an hour away to give birth.

Obstetricians often leave towns where private hospitals have closed their maternity wards because they can no longer split their practice between public and private hospitals. Working in both sectors helps obstetricians make ends meet.

The unsustainable workload across public and private hospitals also is causing midwives to leave the profession, Annie Butler, the federal secretary of the Australian Nursing and Midwifery Federation, told Medscape Medical News. “We’re seeing critical midwifery shortages across the country,” she said.

“The most important problem, from my point of view, is women not having choice,” said Nisha Khot, MBBS, a vice president of the Royal Australian and New Zealand College of Obstetricians and Gynaecologists and an obstetrician based in Melbourne, to Medscape Medical News.

One third of mothers in Australia have experienced birth trauma, and some, understandably, prefer to see an obstetrician they know and trust rather than be assigned to whichever obstetrician is working at the public hospital, said Khot.

Declining Birth Rates

Maternity wards are among the most expensive and difficult services for private hospitals to operate. “Nobody really makes a profit margin on maternity care,” Brett Heffernan, CEO of the Australian Private Hospitals Association, told Medscape Medical News. When private hospitals need to make cuts, the birth unit is usually the first to go.

Private hospitals have been under financial strain for some time. The Private Hospital Sector Financial Health Check, which was conducted by Australia’s federal government last year, found that private hospitals had some of the lowest profit margins in the healthcare sector. These profit margins fell further after the COVID-19 pandemic began.

Insurers’ policies have contributed to the strain on private hospitals. The claims ratio (ie, the proportion of funds collected as insurance premiums that are used to pay for health services) has dropped as low as 83.8% recently. Historically, the rate has been 90%.

“Over the past 3 years, the private health insurers have been shortchanging private hospitals by more than $3 billion,” said Heffernan. “At the same time, the health insurers have managed to bank over $5 billion in record profits.”

The Australian Medical Association has called for an increase in the insurance premium payout ratio to around 90%.

Australia had a record-low birth rate in 2023. Despite steady population growth, the absolute number of births dipped from 315,147 in 2018 to 286,998 in 2023, which did not help matters for private maternity wards.

Demand for private obstetrics has also decreased significantly over time because it has become so expensive. To access private obstetric care, women must purchase the most expensive tier, gold-level insurance, for at least 12 months before giving birth. Even then, the out-of-pocket costs for a private birth can be as much as $10,000.

As a result, about 25% of births now occur in private hospitals compared with almost 40% in the 1990s.

Governmental Responses

As a stopgap measure, Australia’s state and federal governments have given millions of dollars to public hospitals so they can expand their maternity services.

In December 2024, the federal Department of Health established the Private Health Chief Executive Officer Forum so that insurers and private hospitals could make joint recommendations to the government about how to make private hospitals financially viable.

In March, federal health minister Mark Butler gave insurance companies a 3-month deadline to strike a deal with private hospitals or face regulatory action.

“We’ve been raising these issues for two and a half years,” said Heffernan. “This is the first time that the federal government has made a commitment to reform the funding mechanism. We very much welcome that.”

But the announcement comes “on the eve of a federal election campaign,” said Heffernan. “If I’ve got my cynic’s hat on, there’s a degree of trying to make this issue go away before an election,” he said.

Pecoraro, Butler, Khot, and Heffernan declared having no relevant financial relationships.

Felicity Nelson is a freelance science journalist based in Sydney.