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 The many extracts on these pages are from copyright material. they are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

The Austin and Repatriation Privatisation

But no one in the world has risked putting a public teaching hospital, with its high-cost, low-return services, into the hands of a for-profit operator. The Austin privatisation is a bold and controversial ideological experiment.
Critical Condition The Age (Melbourne) May 31, 1999



  1. Background
  2. The Partners
  3. Contrary Points of View
  4. Doctors and the University
  5. Labour Opposition
  6. Staff Unrest
  7. The project falls apart
  8. The Kennett government loses the election
  9. Politics
  10. References


The Austin was founded in 1892 as a charitable mental institution. It became a public hospital in the 1960's and finally a leading teaching hospital with nine research institutes. Under the Kennett consolidation program it merged with the Heidelberg Repatriation Hospital so that it had two geographically separated campuses. It badly needed redevelopment and in1996 the governments plans to privatise it were leaked.

St Vincent's hospital, a teaching hospital run by the Sisters of Charity in the city had been under pressure from the Kennett government to move which they were reluctant to do. When the complex was put to tender Mayne, Ramsay and the Sisters of Charity were the preferred bidders.

Included in the project were the Larundel psychiatric hospital, the Royal Talbot Rehabilitation and the Mercy Hospital for Women. There was considerable concern that none of the bidders had the sort of balance sheet capacity needed to run the hospital. Ramsay and Mayne Nickless merged their bid as a 50-50 venture.

The project, estimated at more than $300million, involves building at the old Repatriation Hospital a kilometre away, a new 600 to 800-bed hospital, accommodating nine research institutes, relocating Larundel's psychiatric services and the Mercy Hospital for Women (and possibly the Royal Talbot Rehabilitation Centre), and probably building a new private hospital.
Critical Condition The Age (Melbourne) May 31, 1999

Three bidders have been shortlisted for the privatisation of the Austin and Repatriation Medical Centre despite a consultant's report warning that a private operator would unlikely make a profit without further staff cuts and Government assistance.
Austin Bidders Shortlisted, The Age (Melbourne) January 9, 1999


The Partners

After considerable discussion the Sisters of Charity joined the consortium. The Inner and Eastern network, one of the divisions formed by Kennett as part of his reorganised health system and run by Graham Samuel joined the consortium as a fourth partner.

The Inner and Eastern Health Care Network will also participate in the bid as a non-equity partner with Mayne Nickless and Ramsay Health Care.

The sisters of charity were in an uncomfortable position as neither Samuel nor the treasurer, Mr Alan Stockdale welcomed the Catholic Sisters, believing that this would not represent true privatisation.


Contrary Points of View

The North Eastern Health Care Network, another of Kennetts divisions was responsible for the Austin. It commissioned a KPMG report and advised against privatisation. It was disbanded and the KPMG report was attacked. The project was handed to a privatisation unit in the Health department.

Continuing concern about the viability of the project and concerns about the consequences were simply ignored. The health minister was adamant that the terms and conditions of his contracts -- contracts which were confidential and so could not be scrutinised -- would protect research, teaching and vulnerable patients.

Another concern was the possibility that the consortium could become a victim of corporate takeovers including multinational corporations and that the local community and government would lose all say over the running of the facilities.

The Kennett cutbacks in funding had impacted on all hospitals in Victoria and the Austin and Repatriation hospital was struggling to make ends meet. It had already cut costs to the bone and efforts to shed unprofitable but important services such as paediatrics were seen as preparation for privatisation.

The cash-strapped Austin Repatriation Medical Centre is selling assets to cover normal operating costs, the State Opposition said yesterday.
Austin Selling Assets To Pay Wages, Says Labor, The Age (Melbourne) January 21, 1999

Three bidders have been shortlisted for the privatisation of the Austin and Repatriation Medical Centre despite a consultant's report warning that a private operator would unlikely make a profit without further staff cuts and Government assistance.
The Age reported two weeks ago that a report by the accountancy firm KPMG, dated June 1997 and commissioned by the now-defunct North Eastern Health Care Network, questioned the suitability of a private company operating a public hospital.
Austin Bidders Shortlisted, The Age (Melbourne) January 9, 1999


Doctors and the University

The medical profession had never been consulted but they became reluctant participants in the privatisation process. Doctors in the hospitals who were on committees were bound by confidentiality agreements and dared not speak out as their fears and concerns about dumping unprofitable cases, teaching and research were substantiated by the unfolding process. They felt they would be fired if they spoke out. Melbourne University wanted the right of veto if they found that the education of their students was being compromised. This was something the market was unlikely to accept.

Unlike some of his colleagues, who are gagged by confidentiality agreements, he (Professor Colin Johnston) is unafraid to speak his mind. He views the hospital's privatisation with trepidation, believing a for-profit owner's main responsibility is to shareholders.

It would be difficult to see how they would underwrite the infrastructure for teaching, research and training,'' he said.
The University of Melbourne's medical faculty, which sends 70 to 80 students to the campus each year, is so concerned about the future of teaching under a private owner it has sought a veto power over the contract - - -
Troubling academics, researchers and doctors is that many of the core activities of a teaching hospital do not make money.
Strict confidentiality and probity agreements have prevented senior staff from publicly expressing their concerns. Many told The Age they feared they would lose their jobs if they made a noise.
Critical Condition The Age (Melbourne) May 31, 1999

The doctor's call for an ombudman to protect patients was rejected by the minister. The profession became increasingly concerned. The state branch of the Australian Medical Association (AMA) had been luke warm about the privatisations. They now came out publicly in strong opposition to the privatisation stating the reasons.

Most hospital staff were opposed to privatisation because they feared it would be virtually impossible to safeguard teaching, research and a full range of services under a for-profit operator.
Labor To Cancel Austin Hospital Privatisation, The Age (Melbourne) October 28, 1999


Labour Opposition

The labour opposition were strongly opposed to the privatisation of public hospitals but especially of the Austin and Repatriation hospitals. They promised to stop the process if elected. The government had refused to release two reports which its own departments had commissioned and which the hospitals own legal advisers had indicated they should release. These challenged the privatisation process. The opposition was forced to appeal addess to these documents through the courts.

The State Government has lost another round in its battle to keep secret financial details of the privatisation of the Austin and Repatriation Medical Centre.
These documents, which were prepared by the Government's own health care network, criticised the privatisation, and the Government doesn't want this made public in an election year,'' he (Thwaites) said.
Tribunal Orders Release Of Austin Documents, The Age (Melbourne) May 14, 1999

Parliament was told yesterday that the hospital's legal advice was not to challenge the tribunal's decision as it would be unsuccessful, but the State Government has pushed ahead with a Supreme Court appeal.
ALP Hits At Hospital Secrecy The Age (Melbourne) May 26, 1999


Staff Unrest

The government refused to guarantee the superannuation and leave entitlements of staff and this eventually brought hospital workers out on strike against the project.

Meanwhile, joint industrial action by all health and maintenance unions at the Austin begins this morning after the Government failed to guarantee the 4000 staff that their jobs and financial entitlements would be protected under a private operator.
Cost Blowout Hits Austin, The Age (Melbourne) May 31, 1999


The project falls apart

There were endless delays and a massive cost blow out as the complex process ground along. The Mercy Hospital for Women became disenchanted and finally withdrew from the project. They negotiated to go ahead and build their own hospital within the new campus. Many including some in the health department believed the project would be abandoned by the coalition itself after the 1999 election was over. No one expected labour to win.

An Insight investigation found that the likely cost of building what will be Melbourne's largest hospital complex has jumped from $150 million when it was announced in 1997 to between $300 million and $350 million.

The project is nine months behind schedule, with the project brief - the blueprint which describes the health services to be provided by the new operator - now due in late July. Bidders originally were told to expect the document last October.
Cost Blowout Hits Austin, The Age (Melbourne) May 31, 1999

The split follows the Mercy's frustration over delays of almost 12 months in completing the new medical complex's project brief. - - - - - - There will be two separate projects on the same site.''
Mercy Splits From Tender, The Age (Melbourne) September 8, 1999


The Kennett government loses the election

To analysts surprise the electorate rejected the Kennett government the labour party gained power with the assitance of three independents. Thwaites was now given the poison chalet of fulfilling his promises. He was Healthy Minister. The new government's decision to abandon the privatisation of the Austin and Repatriation complex was cheered by staff. The closing of the privatisation unit in the health department was welcomed.

More than 500 Austin and Repatriation Medical Centre staff yesterday clapped and cheered after the Health Minister, Mr John Thwaites, announced that the privatisation of the hospital was cancelled.
BRIEFS :: Austin staff cheer at minister's visit, The Age (Melbourne) October 29, 1999

Most of the Austin staff on the hospital's steering committee and working parties opposed the privatisation they were working towards. Still, they tried to minimise the potential damage they feared a private operator could bring - above all, inadequate funding of activities that didn't make money, such as research, training and the treatment of some patients.
As a medical centre, we all felt very, very anxious about that ... We as medical staff did not have any say (in the decision to privatise). That was dished up to us.''
Going Private Was Hard To Swallow, The Age (Melbourne), November 20, 1999

The amount of money set aside by labour was woefully insufficient but it soon realised this and it was soon significantly increased. The Mercy Hospital was eager to move ahead into the new complex after 5 years of what it called being "mucked around". St Vincent Hospital wanted to stay in the city and not move.

Last week Bracks and Thwaites returned to the Austin as feted guests. The special stage and sound system rigged up on the Austin's forecourt had to be abandoned as rain threatened, but the weather turned out to be the only gloomy element on the day.

As Premier, Steve Bracks announced a $320million public redevelopment of the Austin and Repatriation Medical Centre - - -
People feel like they've been put through the wringer. - - - - and everyone was really uncomfortable about the potential for other people to be controlling the destiny of the hospital.''
Going Public, The Age (Melbourne) September 8, 2000


On the 7th November 2001 the contract to start building the new $325 million hospital complex immediately was awarded by the state government.

On the same day the embittered and acrimonious federal health minister, Dr Wooldridge who was about to retire discontinued funding for the Austin's positron emission tomography scanner. He had been discredited in the scan scam. It is clear that politics and health, like money and medicine simply do not mix.

Federal Labor would review the Coalition's decision to strip the Austin & Repatriation Medical Centre of funding for its cancer scanning program, opposition health spokeswoman Jenny Macklin said yesterday.

Ms Macklin said the process behind a last minute'' decision by retiring Health Minister Michael Wooldridge not to continue funding for the Austin's positron emission tomography scanner needed scrutiny.
Labor Pledges Austin Review, The Age (Melbourne) November 7, 2001


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Home . . . . Australia
Entry ... Privatisation Background .... Overview of States
NSW ... Victoria ... South Australia -- W. Australia ... Queensland ... Tasmania
La Trobe ... Austin& Repat. ... Berwick ... Knox
This page created February 2002 by Michael Wynne