A private hospital provider is at war with Australia's largest private health insurer, accusing it of ruthless tactics that will see patients pay more.

Australia's largest private health insurer has been accused of ruthless tactics that will hurt chronically ill and dying hospital patients.

Contract negotiations between private hospital provider Calvary Health Care and insurer Medibank Private have broken down in spectacular fashion.

Medibank last week announced it will end its contract with 11 private hospitals that Calvary operates across Australia on August 31, in part because Calvary won't agree to a new list of "quality and affordability criteria".

The insurer says it should not have to foot the bill when members treated at Calvary hospitals suffer what it calls highly-preventable adverse events, such as falls and bed sores.

It argues such costs should be covered by Calvary in cases where the right treatment could have prevented the need for further care.

But under the current contract, all Medibank Private members are footing the bill for preventable events, putting broad upwards pressure on premiums, the insurer says.

Calvary has hit back, accusing Medibank of trying to dress up an attempt to save money by claiming the changes are about the quality of patient care.

"Many of the so-called quality and safety measures contained in Medibank's new contract demands appear to be more financially driven than quality focused," Calvary's chief executive Mark Doran said in a statement on Friday.

"... we are concerned that this is its only motivation ... while attempting to cloak these changes with another name."

Mr Doran later told AAP the changes would affect some of the most vulnerable patients typically cared for in Calvary hospitals, including those in the end stages of life.

And he said many of the things Medibank had described as preventable were in fact common complications.

"Take someone at end of life, having pain management, and they are readmitted for that pain management. If it falls within 28 days (of the previous admission), the hospital would not be paid," he said.

In a July 2 statement announcing the end of the contract, Medibank blamed Calvary's unwillingness to sign up to its quality criteria.

But it also said Calvary had sought an "unsustainable" increase in the rates Medibank paid for services provided to members treated in its hospitals.

"It is disappointing that Calvary Health Care felt unable to agree to our affordability and quality requirements, which are part of our commitment to improving our members' healthcare experience and maintaining the long-term affordability of healthcare," Medibank general manager Dr Andrew Wilson said.

Medibank says it will continue to pay a "large proportion" of costs incurred by Medibank members who continue to seek care at Calvary facilities after August 31.

But it warns members may incur higher out-of-pocket expenses because after that date, Calvary will be able to charge their own rates for the services they provide.

Calvary said patients would face a hip-pocket hit that could amount to hundreds of dollars a day, and Medibank members could consider moving to an insurer that would provide them with full cover.

Both parties are due to attend a mediation hearing with the health insurance ombudsman on July 21, but Calvary isn't expecting any real progress.

"If the other party does not want to negotiate ... They are usually very frustrating and that's been our experience in the past," Mr Doran said.