Negotiations between Bupa and Ramsay Health have broken down with the private health insurer's members facing higher out-of-pocket costs for hospital treatment.
In a statement, Ramsay said it has issued a notice to Bupa to terminate the Hospital Purchaser Provider Agreement between the two parties.
It said that without resolution, their contract will be terminated with effect from 2 August.
"Patients booked to be admitted to a Ramsay facility prior to this date will not be impacted by this decision. Ramsay will continue to accept benefits paid by Bupa for approved treatment provided to Bupa insured patients in accordance with transition requirements under the Hospital Purchaser Provider Agreement and as required by law.
"After the end of the transitional arrangements, Bupa insured patients will be required to pay an upfront payment on admission, being the difference between the statutory default benefit Bupa is required to pay and Ramsay’s hospital treatment costs," said Ramsay.
Bupa said it is "extremely disappointed at the approach taken by Ramsay".
"During our negotiations in the last few months, Ramsay has sought unreasonably high rates of increase, which are more than double the rates that have been agreed to with all other hospital groups in recent times," said the company
Bupa Health Insurance managing director Chris Carroll said, “Ramsay’s refusal to negotiate in any meaningful manner arguably reflects a desire to increase the value of their business, which is currently the subject of a private equity backed takeover offer.
“Today’s decision by Ramsay is an affront to Australian’s who are facing growing cost of living pressures. Bupa is acting to support its members during this challenging time. We have already delayed our annual price increase by six months, to ease the pressure on families. This will bring our total support to members to more than $460m since the start of the pandemic."