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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 Berwick Privatisation


The Berwick privatisation is another saga of endless delays and public disappointments as the plan to privatise the hospital lurched from one plan to another and was eventually abandoned. By the time the process finally got there the privatisation bubble had burst. Corporations realised that the government was not going to dish out the funds needed to make a big profit and that the community was distrustful. The federal coalitions massive bail out of private insurance was working and they could make better money elsewhere. There was no longer a need to use the myth of profitable privatisations to boost share prices.

The need for the hospital was recognised in the early 1990's by the labour party but they were in debt and were soon out of power. The coalition had the hospital on its privatisation list and it went out to tender. Ramsay was announced as the preferred tenderer in April 1999. The new labour government promised to continue with the privatisation.

It is suggested that Ramsay realised that they had under quoted. They entered negotiations with the new government which dragged out into 2000. Ramsay finally abandoned the project.

The government entered into a deal with the next in line, the not for profit Catholic Mercy Health and Aged Care Network to build and run the hospital with a target to start building in November 2001 and an opening date of late 2002. In April/May 2001 the Sisters of Mercy found that they were overextended and also dropped out of the project.

The state now purchased the land for the hospital and decided to build and run the private hospital themselves. The system was still over-stretched and the government raised the money by entering into a public-private partnership (PPP) to raise the capital. They put the building out to tender with a contract to lease the hospital back and run it publicly. The strategy of using PPPs instead of loans to fund public projects without showing these as debts has been used extensively by the labour goverment in Victoria. It has been heavily criticised. While it reduces risk it simply hides the debt which must be paid over time.

Expressions of interest were asked for in December 2001 with a preferred tenderer announced by mid 2002 and completion sometime in 2004. This is more than 10 years since the need for the hospital was first identified. This says little for private sector efficiency.

References and Extracts

Ramsay Hitches His Star To The Public System, Business Review Weekly, 24 March 1997
Ramsay is bidding for - - - - - he would like to offer private services for public patients on new hospital sites including Knox and Berwick.
The Victorian Government has the usual players looking at co-location projects in Melbourne's Berwick growth corridor, at Knox in the eastern corridor and the Austin and Repatriation Medical Centre redevelopment at Heidelberg in Melbourne's north-west.

Hospitals Can't Stand Alone: Ramsay, The Age 15 March 1999
Ramsay's chief financial officer, Mr Bruce Soden, says Ramsay will continue to shift hospital projects off balance sheet on a case-by-case basis.

``If the quality of the revenue of these projects is high enough, then it's bankable on an off-balance-sheet basis. We are certainly planning to do Mildura, (in Victoria), and Princess Alexandra (in Brisbane) and Berwick - if we win it - off balance sheet,'' Mr Soden says.

Hospital Takeover Stalled As Talks Drag On, The Age (Melbourne) September 17, 1999
Protracted negotiations between the State Government and the preferred bidder for the privatisation of the Berwick Hospital have failed to produce a contract.

The Government announced in April that Ramsay Health Care had won the tender to build and operate the 150-bed public hospital.

Ramsay yesterday confirmed negotiations on the contract were six to eight weeks behind schedule but hoped the issues would be resolved well before this side of Christmas''.
Ramsay's chief executive, Mr Pat Grier, denied his company had dropped out of the project, but conceded there's always that possibility''.
He (Ramsay representative) said he was not aware if the Government was holding talks with Mercy Health and Aged Care, which is believed to have come second in the tender.
A source, who did not want to be named, said Ramsay had underestimated the cost of building the hospital.

The group had asked for a 12-month delay because it was over-committed with projects that were currently not making money.

Hospital plan; gets go-ahead, Berwick Leader March 1, 2000
HEALTH Minister John Thwaites has publicly confirmed the long-awaited Berwick Hospital will be built.
"While there may be some contractual issues around the building and operating of this facility, the Bracks Labor government is committed to the project," Mr Thwaites said.

It's time: Napthine, Berwick Leader April 5, 2000, Wednesday
STATE Opposition Leader Denis Napthine called on the Bracks Government to build the Berwick Hospital during the Growing Victoria Together summit last week.
Mr Napthine labelled the proposed Berwick Hospital one of 10 major projects the Labor government should list as a priority.
"The need for the Berwick Hospital was identified by the previous Labor Government and despite seven years in office, the Liberals' plans for the hospital amounted to nothing more than hot air". (labour response)

New hospital for city's south-east, Herald Sun July 14, 2000
MELBOURNE'S thriving south-eastern suburbs will finally receive the hospital promised to them by the Kennett Government.

After two years of negotiation, the Mercy Health and Aged Care Network will invest more than $50 million in a new public hospital at Berwick.
The hospital, announced by Health Minister John Thwaites and Member for Dandenong John Pandazopoulos yesterday, will be built by the Mercy with the government helping to fund operating costs.
"I am very pleased that a non-profit provider will now operate the new hospital, especially given the Mercy's long history in public health care," Mr Thwaites said.

$50m For New Hospital, The Age (Melbourne) July 14, 2000
The redevelopment at Berwick will see the existing Bush Nursing Hospital incorporated as a private facility into the new Berwick Community Hospital, which will have 162 public beds.

Mercy Health and Aged Care, run by the Sisters of Mercy, won the tender to build and operate the facility after a deal between Ramsay Health Care and the State Government fell through. Ramsay sought $4.2million in compensation from the government. It is believed the matter has been settled with a $600,000 payout to the Sydney-based company.
Construction at Berwick will start in November, with completion expected by late 2002.

State takes on hospital project. The Age10 Apr 2001
Victorian Health Minister John Thwaites has announced the State Government has purchased the site of the future Berwick hospital in order to speed up negotiations with possible private health care providers to build the hospital.

$2.6 million land deal secures, Victorian Government Press release 10 April 2001
Berwick hospital. Victorian Health Minister John Thwaites has said the Victorian Government has purchased land on which to construct a new 180 bed hospital in Berwick.

Hospital project dropped, Herald Sun May 26, 2001
PLANS for the long-awaited Berwick hospital have again been stalled.

The Mercy Health and Aged Care network yesterday announced it would drop its $50 million plan to build and operate a 219-bed public and private hospital at Berwick for commercial reasons.
Mercy Health and Aged Care spokesman Eric Noel said the group opted out of the deal to consolidate operations in other areas.
Health Minister John Thwaites yesterday said the hospital would now be entirely publicly run, with the Government seeking private bids for construction and financing.

He said a public hospital would be a lot quicker to deliver. "The private operation of the proposal has led to long delays because of the need for extensive contractual negotiations," he said.

Hospital; closer, Berwick Leader August 22, 2001, Wednesday
THE State Government expects to call tenders for the Berwick Community Hospital within the next two months.

Health Minister John Thwaites said last week the Government wanted to get construction under way as quickly as possible.

Hospitals Bed Down Better Margins, Shares Magazine 1 September 2001
Ramsay has also discontinued a number of development projects including the Berwick Community Hospital privatisation, the Princess Alexandra collocation and the Austin Repatriation privatisation project.

Hospital to open in 2004, Berwick Leader October 3, 2001, Wednesday
BERWICK Community Hospital's earliest opening will be in the first quarter of 2004 a timeline slammed by Berwick State Liberal MP Robert Dean as showing "the State Government is further behind than when it started".

The Government announced earlier this year that after an amicable split with preferred contractor Mercy Hospital the development would be built privately and leased back to the State.

Health Minister John Thwaites last week announced it would be operated by Southern Health, which already operates Dandenong Hospital and Cranbourne Integrated Care Centre.

"The decision to have the hospital operated by Southern Health puts an end to the former Kennett government's disastrous experiment in hospital privatisation," Mr Thwaites said.

Hospital bidders called, Berwick Leader December 12, 2001, Wednesday
EXPRESSIONS of interest have been invited for the building of Berwick Community Hospital.

Applications close at the end of the year, with a shortlist expected by late January. A preferred tenderer should be announced by mid-2002.
And unlike previous plans for the hospital, its day-to-day operation would not be privatised.

States push for public-private partnerships The Australian November 11, 2003
Melbourne's new County Court building was completed under a PPP, - - - - -. Other big projects are the Spencer Street station rebuild, the Berwick public hospital and the Docklands film and TV studio.

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This page created February 2002 by Michael Wynne
Minor update July 2005