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Letter re Nursing Home Licences 22 Feb. 1998

In February 1998 I received a copy of the August 1997 letter from Alpha to FIRB supporting Sun's entry to Australia and claiming large benefits from this. One of these was its contribution to aged care. I immediately wrote to the nursing home licensing department of the department of health pointing out Sun's plans and criticisng this letter. I was also critical of the way the department and the minister had carefully distanced themselves from the process of assessing Sun's suitability during the 1997 FIRB investigation.

The letter referred to in the last paragraph is a letter I received from the department when I wrote to them in 1994 about the possibility that Tenet/NME might move into nursing homes. This letter boasted of the way in which the department scrutinised license applicants - in particular their probity. In 1996 the newly elected Federal Government had revised the aged care regulations. I did not know when I wrote this letter that the probity requirements had been removed.

22 February 1997

Mr xxxxxxx
Certification and Approval Services Section
Aged and Community Care Division
Commonwealth Department of Health and Family Services
P O Box 9848

Dear Mr xxxxxxx,

Sun Healthcare and Moran Health group
- licences for nursing homes.

I refer you to my previous correspondence dated 11 January and 9 February 1998. In these letters I objected to licences for facilities managed by Alpha Healthcare (including Health Care Corporation Pty Ltd) and some Moran facilities. This was because of the de facto control exerted by Sun Healthcare which is under investigation in the USA. I enclose additional correspondence from Alpha Healthcare to FIRB which has now come into my possession.

Alpha/Moran/Sun healthcare will be providing nursing home care:- The content of the letter quite clearly indicates that, contrary to the claim in your letter to FIRB, Sun does intend to directly involve itself in the provision of nursing home facilities in Australia. It does plan to use its US business nursing home expertise and experience in Australia. It is this "expertise" which resulted in the practices which led to the fraud investigation of Sun Healthcare and to the matters which forced Sun to settle a shareholder's action for US $24 million. In this it seems no different to Tenet/NME, Columbia/HCA, SmithKline Beecham and many other dysfunctional corporations. Of particular concern is the available information about standards of aged care in for-profit facilities in the USA. The adverse consequences of US corporate business practices are widely documented. Particularly disturbing are the serious concerns about Sun's own business practices. It is reasonable to conclude that Sun potentially poses a major threat to our health and aged care system and so to the welfare of our elderly citizens. This is at a time in their lives when they are vulnerable and defenceless.

Disturbing practices in your department:- I find it very disturbing that both your department and your minister distanced themselves from the decision to admit Sun to Australia on the basis that the facilities were licensed by the states and that you had no jurisdiction. You advised FIRB in this regard. The fact that your department did not even bother to ask whether Sun/Alpha planned to operate nursing home facilities is doubly disturbing as it suggests that you did not want to know officially of Sun's plans. The minister's plan to revolutionise health care by providing the sort of step down subacute nursing home care advocated in Alpha's letter indicates his interest in such matters. He could not have been ignorant. It is deceptive "Yes Minister" conduct like this which has caused so much disillusionment and distrust of politicians and governments in Australia.

Two other matters in this letter are worthy of comment

The letters describes the urgent need to plan for the aged care explosion:- This very valid argument highlights the need for open and concerned debate so that rational plans can be developed for healthcare and for the aged

-- plans which do not squeeze care and squander 30-50% of available funds in profits for shareholders.

-- plans which do not expose our health system and our frail elderly to the ruthless and fraudulent practices so prevalent in the US health care "marketplace". In the USA health care has become a profit driven industry rather than a generous and benevolent service.

This section of the letter highlights the vulnerability of our system and the possibility that Sun will fulfil Ron William's pessimistic predictions by dominating the "market" and then dictating care. Lindorff claims that in the USA some corporations so dominated aged nursing homes that they simply flouted regulations relating to standards of care. Regulators could not close the homes and turn the frail aged out into the street.

I have repeatedly written of the urgent need to open public discussion. I have pointed to the folly of attempting to solve our health care problems by behind closed doors arbitration between "stakeholders" each intent on a slice of the cake. Government and citizens should be openly advised by informed practical people whose concern is the welfare of the public rather than corporate shareholders or economic ideology.

The misuse of language to distort the situation:- The letter from Alpha is filled with what I called "NMEspeak" when I first encountered it in Tenet/NME's correspondence in 1992. This was because of its similarity to George Orwell's "newspeak". John Ralston Saul's recent analysis shows that what I called NMEspeak is integral to modern corporatist discourse. The most striking feature is well illustrated in this letter. This is the forceful and assertive positive claims about exactly those matters which are in question, and where the corporate position is weakest. The very matters of contention are assumed to be self evident truths. By this technique the requirement to confront the concerns is avoided. Past experience has shown that gullible and inexperienced Australian bureaucrats swallow this nonsense without discomfort. (see NSWHealth's dealings with Tenet/NME's in June 1992 and October 1992)

Please note the claims:-

1. Sun's healthcare skills match Australia's needs. --- The evidence from the USA, from independent assessments, from the FBI investigation, from corporate statements, and from the court action for which Sun has paid US $24 million raise serious concerns that Sun's skills, like those of Tenet/NME are a serious threat to Australia. (see reports and assessment by WAHealth Department Feb/Mar 1993).

2. Sun's investment will assist Alpha's growth. --- The assumption that Alpha/Sun's growth is desirable once again goes to the heart of the major concern that companies like Mayne Nickless and Alpha which have followed US corporate policies will come to dominate the private health sector and dictate the way in which medicine is practiced - the US way! This concern is not confronted.

3. Sun's investment will enable a new hospital to be built at Westmead. This assertion once again assumes the desirability of co-located hospitals and also that Sun is essential for this. An alternate bidder would not pose the serious risk of introducing dysfunctional and possibly criminal US business practices into this hospital complex. The response simply ignores the fact that the NSW government does not want Sun. It objected to Sun's entry into Australia.

4. Sun is an experienced and respected international healthcare operator:- This statement lays claim to a false credibility. Sun is a company accused of fraud and of dishonesty in its dealings. The paragraph makes exaggerated claims without responding to the concerns which have been raised by the independent review of standards, by the concerns of the nursing profession, by the FBI, by board members own statements, by the settlement of court actions making very serious allegations, by the disturbing exposures of fraud, unethical practices and the misuse of patients in comparable US corporations. These are corporations whose corporate effort has been similarly concentrated on expansion and profit.

5. The aged healthcare industry badly needs the experience, expertise and investment funds of leading private sub-acute and aged healthcare provider:- In the USA independent studies have shown that not for profit hospitals provide both more and better services to the patients and to the community. For-profit services performed poorly. There are serious concerns about standards of care in the US corporate system and particularly in aged care where Senator Cohen found fraud to be rampant. Investigations by nurses, consumer groups and patient advocacy groups have all raised serious concerns about standards in aged care nursing homes in the USA.

Aged care must be paid for. There is no reason for believing that by paying shareholders 30-50% of available funds we will reduce the cost of care and maintain standards. Sun once again makes claims but does not confront the evidence or the contrary arguments. Making exaggerated claims is not a valid substitute for addressing the concerns.

In Australia, like the USA private care has in the past been provided largely by not for profit groups whose prime interest is in the welfare of citizens and the community. To suggest that corporations are so much more efficient that they can provide the same care with 30-50% less money is a lot to swallow.

6. Sun's skills portfolio perfectly fits Australia:- The concerns about Sun's skills portfolio are described in the previous paragraphs and once again are ignored. Sun fails to indicate the nature of its "skills portfolio" and we must therefore base our assessment of this on the documents in our possession. Only a blind ideologue could support this claim.

7. Sun's investment will provide us with a list of benefits derived from the US and international health care markets:- Vast amounts of information from the investigation of numerous corporations in the USA and of companies like GSI in the UK have raised major concerns about the nature of corporate health care business practices and their touted expertise. Dysfunctional practices are the rule rather than the exception. The corporate for profit integrated services which the letter advocates have been associated with unethical and fraudulent conduct. Once again the section simply makes elaborate claims and ignores the issues which they should be addressing.

8. No other healthcare provider has focused on the subacute health care sector:- This is correct but this is simply because our health system has not been structured for this. Those of us who have advocated progressive care for many years have met an unresponsive brick wall. Government must take much of the blame. Building separate subacute for profit hospitals is a commercial decision designed to generate profits. It is not in the interests of patient care. Such facilities should be on-site in order to ensure continuity of care. Australian doctors will be most reluctant to relinquish care to another facility until their personal responsibilities to that trusting patient have been adequately discharged. This policy takes no account of the bond of trust and responsibility between patient and doctor which is so important for a dedicated service.

9. Sun's investment will not alter the structure of Australia's aged and subacute health care industry:- This is contradictory nonsense. The letter has already indicated Sun's intention to introduce its US expertise. This foreign, profit first culture would most certainly result in major changes.

10. Sun's investment will increase employment:- This is exactly the rationalisation used by the previous minister for health in NSW when he attempted to justify the decision to grant Tenet/NME hospital licences in 1993. This decision entrusted the welfare of Australian citizens to a company which had mercilessly exploited vulnerable patients, many of them young children. The morality of sacrificing vast numbers of Australians in order to increase employment and corporate profits is revealing.

In this letter all of the serious concerns about Sun's entry into Australia are met by ignoring them. Instead firm statements are made. These are based on the assumption that these concerns either do not exist or that Sun's position is beyond contention. I sincerely trust that you will not be so gullible as to be persuaded by this sort of nonsense. The only conclusion which any sensible person could reach is that Sun is not addressing the concerns because it is unable to do so. Were it to attempt this then the weakness of its position would be further exposed.

The tragedy of our time is that the language of reason and science has been replaced by the rhetoric of the advertising agency. The art and wisdom of leadership have become victim to the art of the international corporate con man. Principles of democracy and concern for the citizen have been subjugated to the interest of corporate "stakeholders". The discourse of an integrated, caring and supportive society has been replaced with the interest driven language of competition. In this way the whole of a rich human civilisation is reduced to a self interested and vulgar market - all in less than a decade. That the market was an integral component of our balanced society is not disputed. It has served us well. When society and its members become servants of the market then the integrated value systems which make the market work for citizens are removed. They are considered to be obsolete.

I enclose a copy of the faxed letter sent to me by Mr yyyyy in 1994. I sincerely trust that your department has not changed the stated policy.

Yours sincerely,

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