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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.

Privatisation and Co-location
New South Wales

The extracts quoted on this page are from copyright material, copyright held by the quoted entities or their owners. The extracts are reproduced here to foster discussion in the public interest. I believe this is legitimate. They should not be reproduced for profit or for any other purposes.


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The first privatisation of a public hospital in Australia was in Port Macquarie in New South Wales (NSW). It was introduced over massive opposition from the local community and against the will of the parliament. Intended as a show case for the privatisers it proved a monumental disaster for them. It was a dismal economic miscalculation for NSW citizens proving costly and unpopular. It had one of the worst performances in the state with long waiting lists and concerns about the services it provided. Six years after it was opened concerns about its operation and management generated a massive community backlash with calls for the hospital to be bought back by the state. While this was impossible a parliamentary inquiry has been commenced and government are once again negotiating with Mayne to improve the situation.

The press reports tell the complexities of the story and reflect the emotions aroused far better than I can. I supply a selection of extracts and comment only for background and to bring the issues together.


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Privatisation in Port Macquarie

New South Wales led the way in the privatisation of public hospitals and also in co-locations. The privatisation of the public hospital in Port Macquarie was the first in Australia and has been both the flagship for corporate privatisations and the best example of the failure and deficiencies in this system. The market, represented by Mayne Nickless health supremo Catchlove claimed that it could run hospitals better and cheaper (ABC 7.30 report 1997). Government was in the mood to listen. This privatisation aroused intense debate and intense opposition both in the parliament and in the community. The government proceeded in the face of the majority of parliamentarians and of objections by the majority of Port Macquarie citizens. Macquarie was to be the first of a large number of public hospital projects which it planned to sell off - the way of the future.

The government contracted with a consortium based on Mayne Nickless to build and run the new Port Macquarie Base Hospital (PMBH) for a period of 20 years. During this period it was to be paid considerably more than other public hospitals for the care of each public patient. It would contain both public and private beds so that the company would enjoy the flow over of public to paying patients which occurs in this situation as well as transferring costly private care which the patient could not afford into the public system. As Mayne Nickless also owned the only other major private hospital in the town it would enjoy a monopoly.

After 20 years the hospital, paid for by the government would be given to Mayne Nickless. It was claimed that this would save the state large sums of money and that the private sector would provide superior services.

Community health services in the Port Macquarie area are to be privatised, as part of a radical trial by the State Government.
The Hastings Public District Hospital is due to close when the bigger private hospital opens. Mr Hannaford said the preferred tenderers to build the hospital and take over the community health services were Mayne Nickless and Jennings Pty Ltd.


The State Government, under pressure to curtail its ambitious capital works program because of a shortfall in revenue, is considering enticing private companies to build and operate up to six new public hospitals in NSW.
SIX HOSPITALS MAY BE UP FOR GRABS, Sydney Morning Herald 8 February 1992

The State Government has given the go-ahead for privatisation of the new public hospital at Port Macquarie - with the highest subsidy in the region -despite strong opposition from welfare groups, Independent MPs and some local residents.
SUBSIDY TO PRIVATE HOSPITAL ATTACKED, Sydney Morning Herald 19 February 1992

However, this will be no ordinary district public hospital. It will be an $80 million public hospital built and operated by a private consortium, Fletcher Jennings-Health Care of Australia. In other words, a public hospital that will have to make a profit to survive.
GETTING A PROFIT OUT OF HOSPITALS, Sydney Morning Herald 31 March 1992

In Port Macquarie in New South Wales, Mayne Nickless was handed what many regard as a trading monopoly by the then Greiner Government.
Tehan Set To Shake Up Hospital Funding, The Age 5 March 1993

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The parliamentary attack was led by the labour shadow minister of health, Dr Andrew Refshauge a past chairman of the Doctor's Reform Society, a group highly critical of the intrusion of commercial forces into health care. The independents on whose support government depended were also critical and all voted against the privatisation. Critics were hampered by confidentiality clauses. The terms of the contract were never publicly scrutinised. A parliamentary committee set up to review the issue was denied adequate access.

A public vote in Port Macquarie, a safe government seat revealed that a majority of citizens were strongly opposed to the project, as were the nursing profession.

A proposal for a patient focussed not for profit church group to build and run the hospital then return the hospital to government when it was paid for was not part of the ideological agenda.

The state government signed the deal in the face of this strong opposition ignoring the established protocol for dealing with matters where government policy had been voted down by parliament.

As far as Dr Refshauge is concerned, - - - - - "And the companies running the hospital will have enormous power to be able to extract even better financial arrangements further down the track.

It would be difficult for a government, any government, to resist the push from a company for a bigger price when the product is health care and the location is a marginal seat."
GETTING A PROFIT OUT OF HOSPITALS, Sydney Morning Herald 31 March 1992

The Government is pushing ahead with the deal despite Parliament passing a motion from Labor and Independent MPs that it was misconceived and not in the interests of NSW citizens.
HOSPITAL SHOWDOWN, Sun Herald 5 April 1992

"I am asking for the Parliament to be given the right to discuss and examine the contract before it is signed," Mr Hatton (independent MP) said. "What is the use of examining the contract after it is signed, as has been suggested by the Government?"

The State Government is pushing ahead with proposals to privatise Hawkesbury Hospital (another hospital on the list) in defiance of a motion carried by a majority of MPs rejecting the privatisation of the NSW public health system.
HOSPITAL TO GO PRIVATE UNDER NEW GOVT PLAN, Sydney Morning Herald 9 April 1992

"I think the Government has finally recognised that there is real concern in the electorate about the notion of handing over public hospitals to the private, profit-driven sector," he (Dr Peter Macdonald Independent MP) said.
HOSPITAL POLICY CHECKUP, Sydney Morning Herald 10 April 1992

Despite its finding that the private option would save State taxpayers $41 million over the life of the 20-year contract, committee members were divided irrevocably into pro and anti-privatisation camps with independent MP, Mr John Hatton, determined to stop the deal going ahead.
Mr Hatton said last night he was "convinced" it was not in the public interest to proceed with private sector involvement in the provision of community health services and that "no contract can be tight enough to guarantee health policy standards".

Mr Hannaford (Health Minister) is understood to have told the company that if a bill aimed at blocking the $50 million project was passed by the Lower House, but rejected by the Upper House, then the Government would sign the contract anyway.
Normally, when a bill is rejected or amended by the Upper House, it must go back to the Lower House for further debate and a fresh vote, before being sent once more to the Upper House.
If the bill is rejected again, the Government must call a joint sitting of both Houses to discuss the deadlock, but no vote is taken.

Should the deadlock continue, the Government is then faced with two options: to call a referendum on the bill, or to ask the Governor for an election to resolve the deadlock.

WHEN a government plays Santa Claus and gives a community a new hospital, it usually expects a pat on the back from voters - not a kick in the teeth. Yet that appeared to be the response in Port Macquarie yesterday when voters in a council referendum gave their verdict on the offer of a new hospital for the city in two years.
But the Government has chosen to stick to its guns to make a point in a safe seat. And that point is an ideological one, to demonstrate that the private sector can do it right for you in health care.
That was a source of jubilation for Health Minister Ron Phillips. Like Fahey, Phillips flatly told Port Macquarie residents he would ignore their referendum, their wishes, and push ahead with the hospital.
FAHEY DEFIANT IN HOSPITAL ROW, Sun Herald 20 September 1992

PORT Macquarie residents gave the thumbs down to the privatisation of their public hospital yesterday by a 60-40 margin on early counting.
"I am proud of the people of Port Macquarie who were blackmailed with the threat of no public hospital until the year 2000," he (John Hatton) said.

The US health system relies heavily on private, profit-making hospitals. Despite legislation to control the activities of these hospitals, the US health authorities have found it impossible to prevent the duplication of expensive (and profitable) services, such as cardiac surgery. Private hospitals are difficult to control, particularly when they have a strong profit motive to buck the central authority.
PORT MACQUARIE CONTROVERSY, Sydney Morning Herald 30 October1992

Dr Catchlove complimented the New South Wales Government for this bold initiative which clearly identifies the State as leading Australia in the development of innovative methods of providing new and improved health services in extremely difficult economic times.

"The separation of Government's role as purchaser and regulator of services from the provider role is a worldwide trend" he said, and ensures the community receives value for money with proper guarantees of quality.
MAYNE NICKLESS LIMITED: RE: SIGNING OF HOSPITAL CONTRACT (Part A), Australian Stock Exchange Company Announcements 14 December1992

The State Government's contract to privatise Port Macquarie Hospital, signed yesterday, now faces the threat of legislation to cancel it.

The Premier, Mr Fahey, and the Minister for Health, Mr Phillips, may also face censure motions when Parliament resumes next year, following concerns that the contract was not properly scrutinised.
"Not only was the full contract not looked at, but two vital sections were missing - that about costs and that about community health," he (Refshauge) said.
GOVT'S HOSPITAL DEAL UNDER THREAT, Sydney Morning Herald 14 December 1992

The political reality, argues the Government, is that it has no choice. Like all other State governments, its $4.6 billion annual health budget is simply not enough to meet the spiralling demand for hospitals and services, particularly in high growth areas.
The Opposition health spokesman, Dr Andrew Refshauge, and the Independent MP Mr John Hatton are convinced that the Government plans to go much further on health privatisation than it is prepared to publicly admit.
The solution to the impasse - which the Independents say they are prepared to consider - may lie in a proposal put forward by the Uniting Church. The church is discussing with the Health Department the possibility of running the new $70 million hospital as a non-profit venture and turning it over to the community once it has paid for the cost of the building in about 20 years.
SQUEEZING CARE FROM A HEALTH DOLLAR, Sydney Morning Herald 4 May 1993

A residents' action group is launching a legal challenge in the Land and Environment Court next month to stop the planned Port Macquarie Private Hospital.
HOSPITAL COURT CASE, Sun Herald 30 May1993

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The legacy of the coalition government

When the labour party came to power in NSW in 1995 the hospital privatisation policy was terminated but the new government was left with the legacy. Soon after in 1996 it was dealing with a hostile federal government. Refshauge was the new health minister. It was now possible to secure an independent evaluation of the privatisation by the auditor general.

Within 2 years relations between government and the company had broken down. (ABC 7.30 report 1997). There was a dispute over the contract with the company demanding $3 million more for treating an additional 1800 admissions. With the threat of legal action the government eventually gave way and paid up but the details are secret. Other public hospitals were also struggling to cope with the burden of increasing admissions. They did not get the same special treatment and were disenchanted.

The Fahey Government increasingly adopted a policy of contracting out core clinical and medical services, such as radiology and pathology, but this practice is also expected to be stopped.
Tentative privatisation, such as the contracting out of entire hospitals at Port Macquarie and Hawkesbury and partially contracting out Prince of Wales, is expected to stop.

The shoring-up of the public hospital system is likely to prove electorally popular, although all other States are moving in the opposite direction.
Refshauge Unveils His Health Vision, Sydney Morning Herald 17 August 1995

The NSW Auditor-General, Mr Tony Harris, has launched a scorching attack on the senior ranks of the State's public service for entering into grossly disadvantageous deals with the private sector.
Mr Harris said that until the public service had built up the requisite skill base, public servants entering into contracts with the private sector "should do so with extreme care, because they keep on getting it wrong".

The NSW Auditor-General's Report for 1996 cites the controversial Port Macquarie Base Hospital, undertaken by the previous government, as one example where the public sector is left shouldering most of the risk in what was supposedly the private sector providing public infrastructure.
"This inexplicable grant is additional to the significant fees paid by the private sector-provided hospital services. The Government is, in effect, paying for the hospital twice and giving it away."
NSW Bureaucrats Blowing Deals: Harris, Australian Financial Review 30 May 1996

Dr Refshauge (Minister for Health): - - - We are not going to privatise hospitals. We believe that the public sector is important and should not be flogged off."
General Purpose Standing Committee No 2 -- Health and Aboriginal Affairs, NSW Hansard 3 June 1997 page 250

The Port Macquarie News reported on 3 March 1997 that the budget for the Port Macquarie Hospital had finally been signed off after a twelve-month stalemate between the NSW Health minister, Dr Andrew Refshauge, and the HCOA.
Reports indicate other public hospitals in the area are angry that a private operator can be bailed out, while public hospitals are expected to operate under strict budgetary and activity restrictions. When compared to similar sized hospitals elsewhere in NSW, Port Macquarie Hospital is currently costing $6million more in recurrent funding. "The recurrent costs of the privatised Port Macquarie Base Hospital are between 20% and 30% higher than for an equivalent hospital," Dr Refshauge told NSW Parliament recently."
PRIVATISATION OF PUBLIC HEALTH - IN THE PUBLIC INTEREST?, Queensland Nursing Union web site - accessed 1998

Instead of saving some $15 million, as estimated by the NSW Health Department prior to privatisation, the deal would cost the state around $93 million.

Fran Collyer conducted a detailed analysis of Port Macquarie as part of broader research into privatisation funded by the Australian Research Council. Her (Fran Colyer) own analysis is that in addition to the extra costs identified by the Auditor-General, the privatisation of Port Macquarie also cost the public purse more through the costs of drawing up and administering a complex contract, a community information program about the benefits of privatisation, the separate delivery of community and preventive health programs no longer provided by the base hospital, and the costs shifted from the state sector into the federal fee-for-service budget.

The outcome of the Port Macquarie privatisation has, according to Collyer, been to transfer significant public funds from the public sector into the private sector.
Case Studies of Public Hospital Privatisation by Meredith Carter, Health issues Centre Journal September 1998

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Problems soon appear

It seems that despite its greater funding the hospital was not fulfilling its commitment to the public sector. It was one of the worst performing public hospitals according to a range of NSW health department indicators. Waiting lists soon blew out and this hospital had one of the longest waiting periods in the state. As the government knows well one of the strongest inducements to get patients to pay privately or take out private insurance is a long waiting list. Mayne Nickless had a monopoly of private services in Port Macquarie. Private care paid much better. There were no financial inducements to reduce the waiting list.

The company never disclosed the proportion of the money paid for care that was being taken in profit. It was under extreme market pressure to perform financially. Its health care profits were falling way behind its extravagant promises to the market. Its share price slid steadily down and down between 1994 and the crisis in late 1999/2000. The temptation to boost its bottom line by diverting resources from public services must have been extreme. The contract precluded public scrutiny and no one would know. There was an ongoing wrangle with the government in an attempt to get more public money for this hospital which was already better funded than other public hospitals..

- - - Moody's Investment Service putting the company on a credit watch review for possible downgrade.
Moody's puts Mayne on notice, The Australian 16 March 1999

Concerns about the standard of care in the hospital were expressed but at this time there was not much evidence for it. Available objective data and its accreditation record were acceptable - although the US experience and subsequent allegations by a doctor in Port Macquarie suggest that this may be a poor indicator.

I have not had access to reports in the Port Macquarie News prior to October 2000, but am aware that there was ongoing opposition and unhappiness in the community during this period. When Smedley's reforms impacted in 2000 and 2001 there was a public revolt and the community called on the government to buy back the hospital and run it as a public hospital and not a money making business.

That profit pressures would compromise care had been one of the strongest criticisms of privatisation. The hospital was operating in a hostile community. Had care been demonstrably substandard privatisation would have been discredited. After all the promises and denials this was a serious threat. Catchlove had brought in Dr John O'Donnell, who had extensive public hospital experience to bring the new hospital on line. He subsequently became National Director of Clinical Service and Quality for Mayne Nickless. It is likely that he was largely responsible for maintaining standards of care in Mayne hospitals and for Catchlove's refusal to bow to market pressures.

That all was not well in the hospital is suggested by a series of revolving door hospital CEO's - six in as many years. This is often a pointer to a company which places unreasonable pressure on senior staff to do things with which they are not comfortable. This was a feature in those US aged care corporations which made their profits by squeezing staff and care. That there were pressures placed on care in order to reduce costs is also suggested by complaints from the nurses in 1995 and their willingness to call for an outside review. This suggests that internal hospital conflicts about care were not being resolved in the patients interests.

The NSW Nurses' Association has called on the State Government to investigate a North Coast private hospital's decision to stop rostering theatre nurses on weekends, claiming the move is a cost-cutting exercise which puts profit before human life.
Hospital Put Profit Before Life, Say Nurses, Sydney Morning Herald 20 May 1995

In addition a competent and highly respected nurse Sandra O'Brien played an important part in the hospital. She was highly regarded and eventually became the sixth CEO in as many years. Reports suggest that she was strongly opposed to Smedley's plan to downgrade and deskill nursing services. As part of Smedley's sweeping reforms and cost cutting strategy both O'Donnell and O'Brien were made redundant. It is likely that they would have resisted Smedley's new policies and his plans to franchise hospitals. O'Donnell left the corporate sector and became CEO of a not for profit hospital complex providing public and private care in Brisbane.

While the service provided is criticised actual care did not feature prominently in criticism of Mayne Nickless by the National Press until Smedley took control in 2000. I do not have access to local press reports during this earlier period. The Queensland Nurses were opposed to planned privatisation in Queensland and researched what was happening in Port Macquarie in 1996, using it to argue their position. They would have had access to the local press and direct contact with local nurses. Their report published in the Queensland Nurse suggests that there were ongoing problems both in the provision of services and in standards of care.

(Referring to Port Macquarie in NSW) The stated objective of privatisation was to improve cost effectiveness. However, according to the Evatt Foundation's State of Australia, the hospital now costs the NSW government 30% more to run than its own public hospitals and 'is operating less efficiently than comparable public hospitals in Dubbo, Albury, Lismore and Orange. (p.143)
Other concerns about the Port Macquarie privatisation include:
  • public disclosure of financial information is not required in their contract with HCOA;
  • the promised renal unit was not delivered;
  • numerous complaints about the poor quality of service from the Accident and Emergency Department;
  • unresponsiveness to complaints about the service from the hospital (resulting in calls for an independent ombudsman to monitor the hospital's activities);
  • increasing reliance on part-time and casual staff; and
  • operating theatres cut back from seven day to five day operation. (State of Australia p. 144)

QUEENSLAND HEALTH - FOR SALE?, The Queensland Nurse September/October 1996

The privately managed Port Macquarie Base Hospital has waiting times for elective surgery patients more than double the State average and is the worst hospital performer in NSW, according to a range of health department indicators.

The average wait for elective surgery at Port Macquarie was 4.5 months in April, compared with a State public hospital average of two months.

The proportion of urgent/high priority patients cleared within 30 days was just 36 per cent when the State average was 85 per cent.

And combined figures for elective surgery and medical waiting lists show patients wait 7.2 months at Port Macquarie, when the State average is 1.5 months.
Private Hospital Rated `worst', Sydney Morning Herald 30 May 1998

The State's first privatised hospital, at Port Macquarie, has run out of money for hip replacements and cataract surgery and will next week slash elective surgery by 50 per cent.

The $50 million hospital, managed by Health Care of Australia (HCoA), has been involved in a funding wrangle with the NSW Department of Health since last February and has, for the first time since its construction in 1995, invoked the dispute resolution process in its service contract.
Dr Refshauge's office said the hospital's funding blow-out "again demonstrates the danger of privatised hospitals" and said it was the hospital's responsibility to manage its budget.
Hospital Too Poor For Surgery, Sydney Morning Herald 27 February 1999

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The Smedley factor

After Smedley's appointment to run Mayne, staff who might oppose his policies were terminated. By the end of 2000 his policies resulted in a renewed public outcry against attempts to make the public hospital part of Mayne's franchised hospital empire. They insisted that public hospital care was different.

Nursing salaries make up over 50% of the cost of health care and if Smedley was to be successful in returning Mayne to profit he would have to downgrade nursing care further than the already reduced nursing levels that Catchlove attained. I have little doubt that O'Donnell and O'Brien would have vigorously opposed this as it was bound to compromise care. While Mayne pretended to give way on the issue in the face of public opinion it hung on hoping that it would blow over and would not give any undertakings. This was a critical issue for profitability.

Mayne's cost cutting reduced staff salaries when compared with others in the public hospital system. This brought it into bitter conflict with nursing and other unions working in the hospital. Mayne adopted the same sort of intransigent stance used by US corporations leading to threatened strikes and bad blood in the workforce. Both are disastrous for care and for staffing in an area where workers overextend themselves and gain satisfaction from their service role rather than financial rewards. Nurses are already in short supply. We are following the US trend towards a crisis fanned by corporate insensitivity. It will never be possible to adequately reward staff for the sort of work which nurses do.

There was a community outcry in Port Maxquarie about the downgrading of nursing staff, corporate policies, deteriorating services and falling standards of care. The nursing and medical professions were unhappy about what was happening. The community confronted Mayne and called for the state government to buy back the hospital. Leading the charge was the local state MP, a member of the coalition government which had signed the contract with Mayne Nickless in 1992. The Port Macquarie News reports tell the story better than I can. I do not have reports prior to November 2000, but the visit of the state premier indicates that there was already intense discontent.

One of the criticisms was that the hospital was being run by and for the benefit of an elite group in Melbourne who had no insight into the local situation and did not listen. This was one of the strong criticisms of Columbia/HCA in the USA.

I am aware of concerns about a lack of hospital organisation and documentation to ensure accurate labelling of specimens and so patient safety. I believe a law suit is pending. If these concerns are valid then it is likely to reflect an emphasis on market and profit at the expense of services to patients. Lack of supervision, deficient procedural guidelines, overworked staff, poorly trained staff and an excess of agency staff can contribute to this sort of thing.

Port Macquarie psychiatrist Dr Brian Parsonage said a so-called resource boost of two additional staff was woefully inadequate and if staffing levels at the Port Macquarie Base Hospital’s mental health unit were not addressed, lives would be lost.
Dr Parsonage said he accepted there was a finite number of dollars available for health care in the region but it was obvious the "bad marriage" between the area health service and the base hospital was determining where funds - - -
Mental health resources criticised, Port Macquarie News 15 November 2000

But being told he has to wait three years to get the surgery he needs has really got up his nose. - - - - he was expecting to join a waiting list for the operation he understands will be "an overnight job".
- - - - - Or, I was told I could pay the $1800 straight up or join a private fund."
Three-year wait for a nose job Port Macquarie News 15 November 2000

THE NSW Premier, Mr Bob Carr, accompanied by two Cabinet ministers, is expected to make several significant announcements when he arrives in Port Macquarie today.
A delegation of branch executives, including - - - - has sought to raise a number of issues, including - - - - - and a proposal for the State to buy-back the Port Macquarie Base Hospital with Health Minister Craig Knowles.
Carr visits Port Macquarie, Port Macquarie News 20/11/2000

AN elderly Port Macquarie couple have told of their distress at a lack of emergency orthopaedic services at Port Macquarie Base Hospital which forced them to travel to Taree for treatment recently.
Surgeon crisis; couple forced to drive to Taree, Port Macquarie News 1 December 2000

PORT Macquarie Base Hospital nursing staff will enter delicate negotiations with Mayne Health on Friday about potential staff "rearrangements".

The Port Macquarie News understands Mayne Health, previously known as Health Care of Australia, is sending a nursing workforce planning project officer to discuss staffing strategies with nursing unit managers.

The tactics, which have been employed in numerous other Mayne facilities nationwide, have resulted in the reduction of clinically trained nursing staff.

Their places at the bedside are taken by less-experienced, less-qualified care workers.

One hospital insider declared the strategy to be "cost cutting under the banner of insufficient nursing staff".
Nurses uneasy over staff changes, Port Macquarie News 13 December 2000

THE momentum against Mayne Health’s plans to introduce assistants in nursing (AINs) at Port Macquarie Base Hospital has continued.

The Port Macquarie Hospital Action Group met Port Macquarie MP Mr Robert Oakeshott yesterday to discuss the issue which the group’s research officer, Mr Ron Adams, called a "compromise of health care".
"The more people aware of just how this will compromise the standard of care, the more effective we will be," Mr Adams said.

"Mayne will try everything in its power to make this bid to introduce AINs successful but Mr Oakeshott’s support is a very positive first step for us."
Action group, Oakeshott to fight AINs plan, Port Macquarie News  26 January 2001

THERE’S never been a fight quite like it. It is widely accepted that the establishment of Port Macquarie Base Hospital effectively split a community in a manner never experienced before.

Six years down the track, the publicly funded, privately operated base hospital ignites the same emotions.
A critical look at privatisation, Port Macquarie News 5 January 2001

MAYNE Health’s plan to introduce less qualified care providers on wards at Port Macquarie Base Hospital is officially "under review" but may yet be swayed by public opinion.
Since the December meeting, the Port Macquarie branch of the NSW Nurses Association and the hospital’s medical staff council have approached Port Macquarie MP Mr Robert Oakeshott about the model of care adopted elsewhere across Mayne Health’s network of hospitals.
Nursing changes still under review, Port Macquarie News 12 January 2001

MAYNE Health faces another public stoush in Port Macquarie with members of the Health and Research Employees’ Association (HREA) set to turn up the heat on the corporate giant for pay equity.

The union, which represents security and kitchen staff, cleaners and wardsmen, has been negotiating with Mayne Health since May last year over the issue.
"This is part of a statewide campaign targeting Mayne Health," Mr Hayes explained.
The pay differential between Mayne Health employees and public sector hospital workers, according to Mr Hayes, is 20 per cent.
The HREA pay equity issue is the latest in a series of disputes to dog Mayne Health in Port Macquarie.

Late last year only an 11th hour change of heart, prompted by a public outcry, prevented the Mayne Health group from dumping its local fresh milk and produce suppliers while debate over the introduction of assistants in nursing to the base hospital is ongoing.
Push for hospital pay parity, Port Macquarie News  19 February 2001

Sandra O'Brien, chief executive officer of Port Macquarie Base Hospital, has been honoured for her service to nursing and health management.
Sandra O'Brien gains OAM for nursing, Port Macquarie News 26 January 2001

PORT Macquarie Base Hospital chief executive Sandra O’Brien has been made redundant just six months after her appointment to the top job.

Exactly what the new management structure at Port Macquarie’s privately managed public hospital will be as of today remains to be seen.
Whether that does anything to stem the anger and passion of staff dedicated to Mrs O’Brien is unlikely.

Her commitment to healthcare in the Hastings was recognised just five weeks ago when she was awarded the Medal of the Order of Australia in the January 26 honours list.
Her departure means that in the six years since its commissioning, PMBH has had six chief executive officers.

It is a fact which deeply concerns, among others, Port Macquarie MP Robert Oakeshott.
"Six CEOs in as many years is a dangerous recipe for instability if this worrying trend is allowed to continue," Mr Oakeshott said.
- - - - - Mayne Health management should steel themselves for even more upheaval at Port Macquarie in the near future.
Hospital chief forced out Port Macquarie News 5 March 2001

PORT Macquarie Base Hospital nurses will strike if Mayne Health continues on its path to employ TAFE-trained assistants-in-nursing at the facility.
"There’s no nursing shortage in Port Macquarie. That is a fallacy, simple as that.

"It’s all part of a cost-cutting strategy and to think otherwise is naïve," the union member said.
Further to those industrial dilemmas Mayne is also coping with the workforce backlash of yet another managerial restructure at PMBH which saw chief executive Sandra O’Brien made redundant last Friday.
Nurses' strike threat, Port Macquarie News 7 March 2001

THE problems at Port Macquarie Base Hospital, including its record on departing chief executive officers and the proposed use of TAFE-trained nursing assistants, is to be the catalyst for a meeting between Health Minister Craig Knowles and Port Macquarie MP Rob Oakeshott this week.
Talks on hospital problems planned, Port Macquarie News 7 March 2001

MAYNE Health has been accused by its own hospital board of advice of engineering the removal of Port Macquarie Base Hospital CEO Sandra O’Brien as a means of lessening opposition to its plans to introduce assistants-in-nursing.

As well, the Port Macquarie Base Hospital Community Board of Advice has accused Mayne Health of ignoring the hospital’s role as a public base hospital.
The board’s statement also:

• Contained a demand that Mayne Health explain its actions in removing Mrs O’Brien;

• Expressed its concern over an apparent move to franchising of hospitals by Mayne;

• Noted with extreme concern the departure of the hospital’s sixth chief executive in six years;
"The board is aware that as chief executive officer, Sandra O’Brien made it known that she was categorically opposed to any diminution of the skilled nursing staff mix. In fact, it is well known that Sandra O’Brien’s primary focus was to ensure that patients received the best possible standard of care," Mr Jenkins said.
On the question of franchised hospitals, Mr Jenkins said the board recognised that a franchised hospital care model may be acceptable for private hospitals which could select who they wanted to treat, but was not suitable for a base hospital such as Port Macquarie.
" ... it appears to totally ignore the [Port Macquarie] base hospital’s role as a public base hospital operating under contract with the NSW Health Department.
Hospital board demands answers, Port Macquarie News 9 March 2001

THE NSW Government has indicated a willingness to listen to proposals to buy back the Port Macquarie Base Hospital in the face of mounting community anger at Mayne Health’s approach to delivering public health care in the Hastings.
It follows recent controversy at the base hospital over the loss of its CEO Sandra O’Brien, the potential use of AINs in the hospital and possible staff cuts.
"Everyone is quickly developing concerns and a bipartisan direction is needed to protect PMBH from the national direction being taken by Mayne Health.’’
"There are growing concerns the culture has changed at PMBH with a tightening of the delivery of health services.

"It’s got to be stopped and in some way reversed.
"A Melbourne-based culture is running a hospital with no local presence, no local culture and a complete breakdown of communication.

"The alarm bells are ringing and they’re not even willing to talk about it.
Knowles discusses hospital buyback, Port Macquarie News 9 March 2001

PORT Macquarie Base Hospital is outperforming peer hospitals in the Mid North Coast Area Health Service in terms of cost per operation and clinical performance indicators.
Base hospital outperforms its peers, Port Macquarie News 9 March 2001

MAYNE Health’s management of the Port Macquarie Base Hospital has again come under fire, this time from the National Party who passed a no confidence over the running of the hospital.

The no-confidence vote, which was unanimous, was passed at the Port Macquarie Electorate Council’s annual meeting.
Nationals criticise hospital management, Port Macquarie News 14 March 2001

PRESSURE is mounting on Mayne Health over the assistants-in-nursing issue with a vote of no confidence from unions and a "low confidence" motion from doctors at the Port Macquarie Base Hospital.
At that meeting, expected to be called within the next couple of weeks, Mr Oakeshott will be encouraged to call for an urgent review by a NSW Parliamentary Legislative Council committee into the operation of the PMBH contract and community involvement, as listed in the by-laws.
The medical staff council’s "low-confidence" motion, passed at a meeting on Monday, resulted from what chairman Dr Robert Clarke said were concerns that had been building for some time.
These concerns included standard bylaws issued by Mayne Health last year for both public and private hospitals in the group, a registered nursing content of 70 per cent and most recently the "retrenchment of Sandra O’Brien".

Dr Clarke said the motion passed by the coucncil was: "The Port Macquarie Base Hospital Medical Staff Council is intensely concerned with the inability of Mayne Health to recognise the special needs of a community public hospital. The unpredictability, complexity and urgency of the clinical care required in a public hospital demand differences in staffing and general management than that of a private hospital."
Industrial unrest grows at hospital, Port Macquarie News 16 March 2001

THE PORT Macquarie Base Hospital’s Community Board of Advice has turned up the heat on Mayne Health by delivering a second vote of no confidence in the corporate giant’s handling of the hospital in the past seven days.

The board’s staggering decision comes hot on the heels of the same declaration from two health care industry unions and a publicly stated "lessening of confidence" from the hospital’s medical staff council last week.
Board slams Mayne over hospital role, Port Macquarie News 19 March /2001

It was also claimed that the by-laws of the hospital were being questioned and threatened by Mayne Health, the hospital structure was being threatened and the so-called community watchdog committee, the community board of advice, had been downgraded to an advisory committee.
The address met with unanimous support from health workers, many expressing their frustration at Mayne Health’s management style, which they claimed was based on the principle of divide and conquer.
Staff anger with Mayne Health, Port Macquarie News 21 March 2001

A CAMPAIGN to bring about a State Government buy-back of the Port Macquarie Base Hospital is unlikely to succeed.
"We are happy to talk to Mayne if they wish to discuss options with us, but we have a legally binding contract and if ever there was a deal that tied the government’s hands behind its back, then this is it,’’ the Minister said.
Hospital buyback rejected, Port Macquarie News 23 March 2001

A PARLIAMENTARY inquiry could provide the solution the community is looking for in its bid to have the State Government buy back the Port Macquarie Base Hospital, according to Port Macquarie MP Robert Oakeshott.
Hospital public inquiry sought, Port Macquarie News 26 March 2001

(The Mayor) "It’s quite clear the community strongly supports the government taking control of the hospital but it’s a matter of looking at the feasibility of such a move and the financial cost to the taxpayers of New South Wales.
"A poll was ignored by the government in the past and it will do little more than prove what we already know to be the case and that is the community would like to see the hospital return to public control.’’
Hospital poll 'no great help', Port Macquarie News 26 March 2001

MAYNE Health is investigating the treatment of a 12-year-old Kempsey boy who was allegedly told by Port Macquarie Base Hospital staff on Friday that he would have to wait four days for his broken wrist to be set.

The boy’s father has questioned the staffing levels and lack off public service at Port Macquarie Base Hospital after he was forced to drive his son to the Manning Base Hospital in Taree for treatment.
Broken wrist, but no doctor at hospital, Port Macquarie News 28 March 2001

CONTINUING community concerns over the future of Port Macquarie Base Hospital have convinced Hastings Council to call a meeting between stakeholder groups to discuss a number of issues, among them calls for the government to buy back the hospital from Mayne Health.
Council wants meeting on hospital problems, Port Macquarie News 28 March 2001

DESPITE a leaked document to the contrary, Mayne Nickless has assured employees at Port Macquarie Base Hospital redundancies are not on its agenda.
That assurance flew in the face of a fax obtained by the executive office of the Health and Research Employees Association (HREA) in Sydney earlier in the week.

That document, also obtained by the Port Macquarie News, - -
- - - -----------------------------
Meanwhile, the first commissioning CEO of Port Macquarie Base Hospital, Dr John O’Donnell, has been made redundant from his position as Mayne Health’s national director of clinical services and quality.
Mayne says hospital jobs are safe, Port Macquarie News 30 March 2001

THE future direction of Port Macquarie Base Hospital will come under the scrutiny of a NSW Upper House parliamentary inquiry.

State Opposition leader Kerry Chikarovski and NSW Nationals leader George Souris threw the Coalition’s weight behind the inquiry which would focus on the quality of patient care and the value for money in certain non-metropolitan hospitals.

"The Port Macquarie Base Hospital (PMBH) nurses and allied workers asked for the inquiry through local MP Rob Oakeshott .
Upper House inquiry into base hospital, Port Macquarie News 6 April 2001

NEW South Wales Director General of Health Mick Reid will hear for himself the fears the Community Board of Advice and NSW Nurses Association hold for Port Macquarie Base Hospital.

Premier Bob Carr made that assurance having met with board of advice chairman Chris Jenkins and local nurses association representative Mary McNamara on Saturday.

In fact the Premier went one step further and offered to intervene personally.
"We are asking that Mayne Health recognise that PMBH is a public, base hospital and it’s different to every other hospital in their group.
"They have not accepted that fact," Mr Jenkins said.
He detailed the board’s concern at the introduction of assistants in nursing (AINs) and, since Sandra O’Brien’s departure as hospital CEO last month, the diminished clinical management structure.
"The hole that’s been created by not having a director of medical services is going to eventually reflect on patient care," Mr Jenkins said.

"It is happening already. There have been numerous incidents over the past two or three weeks."
Top level hospital talks, Port Macquarie News 9 April 2001

THE NEW South Wales Legislative Council late yesterday afternoon gave the go-ahead for a review into the quality and value for money of health care services at Port Macquarie Base Hospital.
Upper House agrees to review, Port Macquarie News 12 April 2001

THE state’s powerbrokers have not ruled out additional trips to Port Macquarie to solve continued unrest at Port Macquarie Base Hospital, it was revealed yesterday. 
He said that either he or the Minister for Health, Craig Knowles, would be prepared to discuss potential solutions with the community if necessary.
Health chief told of hospital woes, Port Macquarie News 20 April 2001

TWO Australian Competition Consumer Commission investigations into Mayne Nickless should be enough of a spur to trigger a review of its management of Port Macquarie Base Hospital, according to Port Macquarie MP Robert Oakeshott.

The MP went on the attack after the hospital crisis continued last week when the Director-General of NSW Health, Mick Reid, met with stakeholders.
MP's stinging attack on Mayne, Port Macquarie News 23 April 2001

MORE than half the respondents to a community poll believe Port Macquarie Base Hospital’s Services Agreement should be reviewed.

And, according to the poll organised by Port Macquarie MP Robert Oakeshott, if the State Government review considers it appropriate, the negotiation or direct takeover of the management of the hospital should be considered.
MP's poll says review PMBH agreement, Port Macquarie News 15 June 2001

PORT Macquarie MP Robert Oakeshott has called on the State Government to force Mayne Health to reveal the profits at its two hospitals in the town.
MP wants profits revealed, Port Macquarie News 25 June 2001

MAYNE Nickless, operators of Port Macquarie Base Hospital, has agreed to "consider reviewing" the facility’s service contract with NSW Health after intervention from the state’s Director-General of Health.
Hastings mayor Cr Wayne Richards believes one of the most important outcomes of the Director-General’s intervention was that for the first time information on the performance of the hospital will be made public.
Equal treatment in health care, Port Macquarie News 25 June 2001

EQUITY for Port Macquarie Base Hospitalas addressed in the Director-General of Health’s recently revealed four-point plan has been applauded across the board.

Medical Staff Council chairman, Dr Robert Clarke and former PMBH chief executive Sandra O’Brien, who met with the director, Mick Reid, on Friday, were united in their appreciation of the new direction.
Plan for hospital future greeted, Port Macquarie News 27 June 2001

PORT Macquarie MP Robert Oakeshott has taken his concerns about Port Macquarie "becoming a Mayne Nickless company town" to the Australian Competition and Consumer Commission.
Prompted by claims from a specialist that pressure has been placed on medical staff to transfer patients between the Mayne Nickless-operated Port Macquarie private and Port Macquarie base hospitals, Mr Oakeshott said he had demanded a review of the contracts.
"And the mish-mash response from the CEO (of the hospital, Bob Walsh) telling doctors to take their patients elsewhere if they are not happy, is the exact point of concern in Port Macquarie.

"Doctors do not have another option other than Mayne Health."
Company town, says MP, Port Macquarie News 25 July 2001

The move to tackle the longest waiting lists in the state was the result of three planned meetings which culminated in Port Macquarie earlier this week
Attack on hospital waiting lists, Port Macquarie News 27 July 2001

HAVING been under the gaze of local media for years, the national current affairs spotlight will be turned on Mayne Nickless, the operators of Port Macquarie’s two hospitals, this week.
ABC crew reports on PMBH, Port Macquarie News 20 August 2001

Such allegations are not entirely new. Two months ago, the 7:30 Report detailed a series of complaints concerning admission procedures at the Port Macquarie base hospital run by Mayne Health.

Now another case has come to light at that hospital that raises further questions about the way Mayne deals with potential patients.
LYN McMILLAN: They asked what private health fund she was in and the answer was none.
MARK BANNERMAN: So what happened then?
LYN McMILLAN: Nothing.
Absolutely nothing.
JIM DALZIEL: They told us we had to take her home.
LYN McMILLAN: Take her home.
MARK BANNERMAN: It's important here to bear in mind that right up til this point, provided Eileen underwent surgery for her broken arm, a bed was available for her.

So at the point you indicated that you weren't privately insured they basically said they didn't have a bed for your mother?
LYN McMILLAN: Exactly, yes.
MARK BANNERMAN: But Eileen Dalziel's story does not end there. At home her condition worsened and, under doctors orders, she was once again taken back to the hospital. There, her family was forced to play out a terrible deja vu.
JIM DALZIEL: The woman attending, I thought was a doctor, and she came up to the bedside where my wife was lying.
And I said, "What's going to happen?"
And she said, "You've got to take her home.
"She can't stop here.
"She's too ill, she's not going to recover."
"We don't want people here that's going to die."
JIM DALZIEL: Yeah, well then she said, "We only want people here that can be made well so you've got to take her home."
I said, "We're not taking her home."
MARK BANNERMAN: Eileen was admitted to the hospital and died less than a day later.
We wanted to ask, is the contract between Mayne and the State Government weighted to reward surgical procedures over long-term medical care?

But if Mayne aren't talking, the NSW Health Commission was more open, conceding that under its agreement with Mayne Health there's little incentive to admit patients in need of palliative care.
Mayne Health denies selecting patients for profit, ABC Television 7.30 Report Transcript 24 October 2001

A member of the hospital staff was critical of extracts from this report and its inclusion here on the basis that it was innacurate and biased. I offered to include this doctors account of what happened but reserved the right to comment on it. My offer was not taken up.

But that’s unlikely, because of a shortage of dialysis machines in Port Macquarie means she won’t be able to receive the life-giving treatment she needs, close to home.
Dialysis backlog keeps Joan away, Port Macquarie News 9 November 2001

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Port Macquarie August 2004

The O'Brien's

Since I wrote this page I have learned more about Sandra O'Brien and her husband James. James had been a leading force in the union movement in NSW. He was awarded an OAM years before Sandra for his services to the union movement. James was very persuaded by the arguments for the privatisation of public hospitals and played a critical part in this as did Sandra. He was seen as a turncoat by his union colleagues and the labour party. He was threatened, vilified and victimised like most other dissidents. The several books he wrote give an excellent overview of the arguments for privatisation and of the way one set of ideologists responds to challenge. I found his books particularly interesting because his villains, and those he attacks most strongly were those who helped and supported me in my battle with National Medical Enterprises in 1992/3, and who I found behaved with integrity. During the same period the people whom I believed to be dishonest and corrupt were his heroes and mentors. Perhaps what we had both done was to challenge ideology and the response to this is now well understood.

Sandra O'Brien had a distinguished career and was also a supporter and facilitator of the privatisation. She negotiated clauses in the contracts to protect the public hospital nurses who were transferred to Mayne so that their contracts continued on the same terms. Sandra O'Brien and O'Donnell clearly had Catchlove's support and it seems that both performed well. Sandra became CEO of the hospital. With so much public concern and ideological dispute there must have been enormous pressure from one side to make this work and eagerness from the other to show that it hadn't. They must have been part of the problem for Smedley. Six weeks after receiving her AOM Sandra was fired and so was O'Donnell. She became a critic of Smedley's reforms.

I am not sure quite how the O'Brien's view market solutions at this time. They have become victims of the impersonal ruthlessness of the system - a ruthlessness which renders it unsuitable for health care. Both have been critical of Smedley and both have been active in pressing for government to block the purchase of Port Macquarie by Affinity Health and buy the hospital. James and Sandra may well have difficulty in getting previous union colleagues and nurses who are now distrustful to accept any leadership from them.

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Was care good or bad

I have also spoken to others and listened in as an overseas doctor praised the service at Port Macquarie Public Hospital contrasting this with that in a large public hospital in the country from which he came. It is clear that some saw the care as excellent. I suspect that we are looking at a common problem, the problem of underfunding, under-resourcing and bureaucratic and ideological conflict. This puts blocks all along the system and there are problems in getting in, staying in and in getting to care. Once you are in the system getting care staff remain motivated and give of their best. Public perceptions and perceptions by staff therefore differ. I have seen this in NHS hospitals in the United Kingdom, in over-stretched government hospitals in Africa and in the public system in Queensland. Many recent press reports describe access block in emergency and intensive care units across Australia and also at Port Macquarie

Submissions are being sought as part of a parliamentary committee inquiry into the performance of major regional hospitals, and specifically Port Macquarie Base. Speak out on hospital Port Macquarie News 22 March 2002

PORT Macquarie Base Hospital (PMBH) has been given a clean bill of health by a NSW parliamentary committee.

The committee praised the facility for its "standard of excellence and range of services not available in many other non-metropolitan hospitals".
It followed more than 12 months of investigation that focused on comparing the hospital with others around the state.

While some deficiencies in the practices of NSW Health were identified, the report praised the hospital and its administration by Mayne Health.
The report concluded that the root of community concern over the hospital's performance appeared to be the perception of a private corporation profiting from taxpayer-funded public health services, but that this concern was unfounded.
Top marks for hospital Port Macquarie News 6 September 2002

Mayne Health North Coast director of hospitals Bob Walsh confirmed the emergency department and the whole hospital were under extreme demand pressure over the past three weeks because of seasonal illnesses.

He said no-one was happy with access blocks and patients in corridors. Patients on trolleys Port Macquarie News 22 August 2003

She needs two mini-knee replacements but there is a three-year wait for the elective procedure at Port Macquarie Base Hospital.

And the single mother is not alone.

There are more than 500 people waiting for elective orthopaedic surgery at Port Macquarie Base Hospital, with up to 150 people on orthopaedic surgeon Dr Dean Pepper's waiting list alone. 500 wait for orthopaedic surgery Port Macquarie News 16 January 2004

PORT Macquarie Base Hospital Community Board of Advice will consider ways of applying political pressure in a bid to receive a bigger slice of hospital funding.

Board chairman Geoff Gillmore and the community could not be happy about the funding situation and its impact on elective surgery. Board pushes for funds Port Macquarie News 19 January 2004

The threatened six-month suspension of elective surgery at Port Macquarie Base Hospital has been averted thanks to a $3 million deal with the State Government. Funding Injection Saves Hospital's Surgery Program - For Now The Sydney Morning Herald 13 March 2004

A letter from the staff medical council at Port Macquarie Base Hospital to the Minister for Health, Morris Iemma, details a string of problems caused by a huge increase in patient numbers and the severity of illnesses.
In his letter, Dr Begbie criticised not only the lack of funding but a destructive row with the Health Department, which he accused of pursuing a political agenda at the expense of the hospital because it is the state's only privately owned facility treating public patients.

In particular, the department is refusing to acknowledge the overflow of patients from Coffs Harbour and Taree being treated at Port Macquarie.
"It has become increasingly clear that an agenda other than the provision of state-of-the-art health care predominate.
Doctors Threaten To Quit Overloaded Hospital The Sydney Morning Herald 26 May 2004

The other side of the problem then is what Mayne did if it did not have the money to provide services at the hospital. Did it reduce profits to provide more staff and facilities to care for more patients. Well of course not. It took large profits. They come first. Publicly owned and not for profit hospitals do the best with what they have got and complain. Corporate hospitals complain that they have not been paid for all the services and so don't provide them. This is how the market operates.

PREVIOUSLY undisclosed profit figures from the Port Macquarie Base Hospital have come to light before a parliamentary inquiry into the quality of care and value for money for patients in the state's major regional hospitals.

Testifying before the inquiry, former chief executive officer of the Port Macquarie Base Hospital Sandra O'Brien said the hospital had made a profit "from day one".

During her time it had posted profits for Mayne in the order of $2.5 million, with a combined profit of about $6 million for the public hospital and the Port Macquarie and Armidale private hospitals.
Mrs O'Brien left the CEO role at Port Macquarie in early 2001. She said that because of recent changes in Mayne's management structure she was sure profits had increased since then.
Port Macquarie MP Rob Oakeshott, said he found the profit figures "extraordinary" particularly considering the hospital had one of the longest elective surgery waiting lists in NSW.
Hospital hearing told of profits, long lists Port Macquarie News 24 May 2002

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Bureaucratic difficulties

With mixed bureaucrats, mixed systems and different perspectives anomalies arise. Nurses employed under Mayne contracts found themselves doing the same work as their NSW contracted colleagues in the hospital but for 15% less pay for quite some time. They had to go through a drawn out process of negotiation with unions to sort it out.

Nurses at PMBH covered by the public sector award will automatically receive the pay increase on or after the first full pay period this month.

But their colleagues under the private sector award will have to wait on negotiations between private hospital operators and the NSW Nurses' Association.
That's despite a four-point plan by the then Department of Health director general Mick Reid, setting down that PMBH would conduct itself and be treated in the same manner as all public base hospitals across NSW.
Nurses wait on pay rise Port Macquarie News17 January 2003

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Another problem with the market is a lack of continuity and a lack of certainty. Owners and policies change suddenly without any relevance to services. The knowledge that the money spent, the staffing and the equipment have much more to do with the profitability of the investment than with the need for these services is unsettling as staff know that all this could change suddenly if something else is seen to be more profitable or if a legal dispute about money goes one way or another. Every one's future and long term planning can be suddenly disrupted or people who perform superbly can be fired smply to meet policy changes.

The letter, signed by the council chairman, Stephen Begbie, is the latest in a series of problems at the hospital, including a threat in January to suspend elective surgery unless the State Government came up with funds to ease its financial woes. The Government responded with an extra $3 million.
"The minister and senior bureaucrats must realise that whilst ever uncertainty remains at Port Macquarie Base Hospital, the developments of such projects as radiation oncology, private cardiac catheter labs, much needed expansion of emergency department facilities, and the list goes on, will remain in limbo.

"It would be plain to even the most naive observer that highly skilled medical and nursing staff will reconsider their futures in regional health care if the future of the hospital that they have committed to work in remains shrouded in uncertainty." Doctors Threaten To Quit Overloaded Hospital The Sydney Morning Herald 26 May 2004

The NSW Government is quietly trying to buy the privately owned and operated Port Macquarie Base Hospital for about $100 million.

The move comes amid legal action by the Health Department to oppose attempts by the hospital's owner, Mayne Health, to transfer a multimillion-dollar operating contract to another private firm.
Staff also claimed they were at the centre of a political battle because the Health Department regarded the hospital as a "pariah" on the state system, caused by the department's frustration at having little control over how the hospital management operates.
Troubled Hospital's $100m Tag The Sydney Morning Herald 27 May 2004

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Who will run Port Macquarie Public Hospital

The sale of the Port Macquarie contract to a foreign dominated group organised and led by a part of US financial pariah Citigroup has revived the objections to the privatisation of the hospital. There has been intense pressure for the government to take back the hospital and they want to do so. The contract has tied the governments hands and ended in a legal dispute which could be costly.

POLITICAL hopeful Dr Greg Watters is spearheading a campaign for the State Government to take control of Port Macquarie Base Hospital.
"It is a brilliant hospital as far as staff is concerned. There is no question there," he said.
"The hospital's management has been unstable with regular changes in both direction and personnel," he said.
Labor backs a public hospital Port Macquarie News 10 October 2003

Meanwhile, Port Macquarie Base Hospital Medical Staff Council chairman Dr Stephen Begbie believes the sale of Mayne's hospital division is an opportunity to review the contract. Thousands sign hospital petition Port Macquarie News 24 October 2003

The NSW government will attempt to retake control of the Port Macquarie Base Hospital, which has been operated under contract by Mayne Group since 1994.

The Carr government believed the terms of the deal, struck by the former Greiner government, were overly favourable to Mayne and did not provide best value for taxpayers. Questions Over Contract - Based Hospitals Australian Financial Review October 29, 2003

Acting health minister Frank Sartor yesterday received a 10,000-strong petition calling for the Government to review its contractual arrangements with Mayne Health. NSW govt considers returning hospital to public sector. Australian Broadcasting Corporation (ABC) News 7 November 2003

"At the moment we are locked into a contractual agreement established by the former Coalition government of 1992," Mr Sartor said.

"That contract does not give us the right to 'buy' the hospital back.

"We need to determine whether the existing contracts will allow for a reasonable commercial transition of PMBH back to the public sector. Minister backs public hospital Port Macquarie News Friday, 7 November 2003

The issue has also been clouded by an impending court case over the sale of the hospital contract by its owner, Mayne Health, to Affinity Health. The Health Department is challenging the move. Doctors Threaten To Quit Overloaded Hospital The Sydney Morning Herald 26 May 2004

NSW Health Minister Morris Iemma said yesterday he was not optimistic that the NSW government would acquire Port Macquarie Hospital. The NSW government is in legal dispute with the hospital's operator, Mayne Health, over the company's plan to dispose of the hospital to Affinity. News; Briefs Australian Financial Review28 May 2004

 Brief Update July 2005

NSW and Affinity reached an agreement for the government to buy back the hospital and run it. It is once again a publicly owned and run hospital.

Objections were lodged to the transfer of hospital licenses from Mayne to Affinity in 2003 on the basis of Citigroup's central involvement. A probity review was undertaken and licenses with conditions were granted in 2005 shortly before Affinity sold its hospitals to Ramsay Health Care

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Veterans Affairs Privatisation

Veteran's Affairs hospitals were a federal responsibility. The privatisation process was rather different and Ramsay Health Care had succeeded is securing some and making them very profitable. The last of the veterans hospitals was the Lady Davidson Rehabilitation hospital in Sydney. It was secured by Australian Hospital Care in 1997. I do not have further information but assume it went from AHC to Mayne Health to Affinity Health and now to Ramsay Health Care as the takeovers occurred.

Australian Hospital Care has won the tender to purchase Sydney's Lady Davidson rehabilitation hospital, ahead of fellow contenders Alpha Healthcare and the MBF health fund.
The hospital is the last of the repatriation hospitals owned and managed by the Federal Department of Veterans Affairs, which announced its intention to divest more than a year ago.
AHC Wins Hospital Bid Australian Financial Review June 26, 1997

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By the 1980s Sydney was well supplied by tertiary teaching hospitals but most privatre hospitals were small and best described as cottage hospitals. Advances in health care required more sophisticated services than could be provided by these cottage hospitals. A consequence of this was that more sophicticated private care was often provided in public teaching hospitals and some advanced private care was provided in poorly equipped cottage hospitals.

The re-establishment of Medicare had resulted in a steady fall in private insurance and a far greater load of public hospital work during the 1980s. The public system was severely stretched and was coping poorly.

The conservative coalition government which had opposed Medicare and favoured privatisation was in power in NSW. Their solution to the problem was to get the private sector to build more sophisticated private hospitals adjacent to public hospitals. Private patients could be shunted into the more luxurious private facilities. Centralisation of public and private services also had advantages for doctors who could provide a better service and closer supervision of care when their offices and all their work was located close together. The corporate sector was in a position to raise the capital for such projects. Feasibility studies were done, companies became enthusiastic and soon contracts to build and run these hospitals were being awarded. Most were built during the 1990s.

The main public teaching hospitals in NSW are set to allow massive injections of private funds into the public health sector.

In an effort to reduce pressures crippling the public hospital system, five teaching hospitals are considering plans to build private hospitals either on or adjacent to their premises.

But the final decision will be made by the NSW Cabinet.
The five teaching hospitals examining the issue are Royal North Shore, Westmead, Royal Prince Alfred, Prince of Wales/Prince Henry and St George. St Vincent's already has an adjacent private equivalent.

Private hospital groups - including Health Care Corporation, Hospital Corporation Australia and Hospitals of Australia - are all believed to be actively involved in plans for private hospitals.
Several hospital administrators and doctors who spoke to the Herald yesterday all agreed that a combination of public and private healthsectors would allow:

  • Privately-insured patients to receive first-class treatment in a private hospital without clogging the public hospital system.
  • Major reductions in the travel time of doctors.
  • Medical training would improve because students would have a wide spectrum of cases within one complex.
  • Lengthy queues of uninsured patients would be shortened because insured patients would be removed from public hospital beds.

Another major advantage would be the access to "state-of-the-art"technology funded by private investors.

It follows the unveiling of a new policy towards private hospitals by the Minister for Health, Mr White, on Thursday.

Under the policy, 14 new hospitals will be built, and improvements made to 11 others.
NEW HOSPITAL NEXT TO RNS Sydney Morning Herald July 2, 1988

The move to drive public hospital patients into the private sector is gearing up as the NSW Government prepares to announce the approval of several private hospital developments.

The Government is already dealing with nine proposals for private hospitals to be built on the grounds of public hospitals as well about 20 applications for the construction and expansion of hospitals on privately owned land.
The NSW Minister for Health, Mr Collins, sees the consolidation of small clumps of private bed licences into large private hospitals as the way to reduce the massive public hospital waiting list of 40,000.

Many privately insured patients use public hospital facilities. But Mr Collins believed they could be enticed out of public hospitals if new private facilities were conveniently located and offered the same services as public hospitals.
The most ambitious project so far is Moran Operations Pty Ltd's plan for a 300-bed super hospital in the city's north-west, complete with a luxury hotel and shopping complex.
NSW TO ENCOURAGE ITS PRIVATE HOSPITALS Australian Financial Review July 12, 1989

Now Mr Collins is facing the problem of how to cut waiting lists when an aging population is increasing patient numbers every year and hospital costs are soaring.

His solution-to have private hospitals take the overflow-is shot full of contradictions, according to a Health Department options document.

It shows that it would actually cost more to move privately insured patients out of public hospitals to ease the pressing demand for beds.

If only 15 per cent of private patients moved to private hospitals for treatment, public hospitals would lose $86 million in lost private insurance payments and the charges of doctors treating the extra people who filled the vacated beds.
As a short-term measure, the Health Department is about to give private hospitals $100,000 to attract patients.

This came in response to a confidential submission from the Private Hospitals Association which described the NSW public hospital system as "in crisis ... overburdened with an increasing caseload, waiting lists are lengthening, costs are rising".
Meantime Mr Collins is sweating on the Coalition winning the Federal election and changing Medicare so as to get more people into private insurance and making them use private hospitals.

If Labor wins, NSW is still confident of gaining other States' support for changing Medicare's hospital funding.

The right of privately insured patients to be treated free as public patients in a public hospital is the major contradiction bedevilling Government efforts to get more Health money from insured patients.
STATE REPORT Sun Herald December 17, 1989

The flurry of private hospital approvals made under the NSW Government appears to have abated.

The initial enthusiasm at the entrepreneurial end of the hospital industry has turned to reticence as potential developers assess the success of recent private ventures and await a change in the economic climate.

Since the coalition parties came to power in NSW and introduced policies aimed at encouraging the consolidation of private hospital beds, 35 private hospital developments have been approved.

Of these, only three have been completed, although nine more are under construction. Seventeen are still in the planning stage while six other approved projects have been, or are likely to be, abandoned.
Mr Collins predicted the second wave of development approvals would come in several years when the private hospital sector realised the "gilt-edged"investment opportunities being offered at three proposed new teaching hospitals - Liverpool, Nepean and John Hunter.
RUSH FOR PRIVATE HOSPITAL LICENCES IN NSW SLOWS Australian Financial Review February 21, 1990

As it was, his former partner, Dr Tom Wenkart, and two other medical entrepreneurs, Dr Warwick Ruscoe and Dr Carl Bryant, seized the moment in 1988. Just as Professor John Dwyer of Prince of Wales Hospital has recently revived his plan to create a hospital-resort at Prince Henry Hospital, Doctors Wenkart, Ruscoe and Bryant contemplated planeloads of overseas tourists on a health pilgrimage to their luxury hospital resorts. The vision was state-of-the-art Taj Mahals offering high-tech medicine, all funded by private health insurance.
Since then, almost everything that could go wrong has gone wrong, despite the hordes of investment bankers involved. Only one private hospital and medical complex, at St George, seems certain to proceed. It will be controlled by the large American company, National Medical Enterprises Inc (NME), based in Santa Monica, with 170 hospitals in the US and more in Malaysia, Singapore and Spain.

While the local developers have watched the bottom fall out of the private hospital industry, more overseas investors are eyeing the rubble.
One investment banker sniffs: "These private hospitals were designed as Taj Mahals. The men behind them are salesmen with a vision. These things are designed as monuments to them. They are over-engineered and over-capitalised. You can buy private hospital beds now for under $100,000, but these new ones were costing $200,000 to $300,000 a bed to build."
It is understood Dr Bryant paid about $10 million for the right to develop St George Private - far too much, say the investment bankers. The details of his bid, and all the private hospital bids for that matter, are confidential between the various areas and the developers - despite the fact that they are building their hospitals on public land.
PRIVATE LESSONS Sydney Morning Herald October 17, 1992

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St Georges Hospital:- Private hospitals around the St. George's teaching hospital were mostly small cottage hospitals. Private surgery was being done in some of these and there was real concern about the sort of care which could be provided in this setting. There was an urgent need for a large private hospital close to St. George's hospital. The project was initiated in 1987 and awarded to a company run by a Dr. Bryant. in 1988. Dr. Bryant's group went bankrupt and sold its holdings and contract to Markalinga. It was trumpeted by the coalition minister for health in 1991/2.

Two weeks ago St George Hospital advertised for "expressions of interest"in its plans to build a private hospital in its grounds.

A consortium led by a private doctor has won the right to build a new 150-bed private hospital on the grounds of the St George public hospital. The successful consortium comprised Simdarn Pty Ltd, C.J. Bryant Pty Ltd and Dr Carl Bryant. The Minister for Health, Mr Collins, said the new facility would be in addition to a major upgrading of the St George Hospital itself.
REGULAR SHORTS : NEW HOSPITAL PLAN Sydney Morning Herald November 1, 1988

The original "salesman" behind St George Private is a Kogarah radiologist, Dr Carl Bryant, who owned a couple of private hospitals in the area and bought a few more from the Perth-based Markalinga Trust with a view to aggregating the bed licences in the new private facility. Eventually, his company, Simdarn, went into receivership and he sold the hospitals back to Markalinga.
PRIVATE LESSONS Sydney Morning Herald October 17, 1992

The previously troubled but newly revitalised Markalinga now had the contract. It would be funded by its new owner, the US company National Medical Enterprises (NME). NME was later renamed Tenet Healthcare. Markalinga was soon renamed Australian Medical Enterprises (AME).

An objection to hospital licenses for NME in NSW had been lodged in early 1992 by a community group using NSW's health care probity regulatory requirements. The objection was because of the misconduct of NME in the USA. After a very cursory examination these objections were ignored and licenses granted for existing hospitals.

Andrew Olie ran a Four Corners program exposing the company's US practices in October 1992. A US citizen sent more damning information. I lodged an objection against licenses for the St. George's hospital, also with additional material. Dr. Refshauge, shadow minister for health took the matter up in the NSW parliament. NSW Health Department realised that they had made a serious mistake and put the license for the new private hospital on hold until the outcome of legal proceedings in the USA had become clearer. If the allegations were proven then the license would have been rejected. The government was not supportive of this delay. St. George's was the flagship for their privatisation program.

The government responded by appointing a retired judge to make the decision about licenses. He was quite widely known to be at risk of improper influence and the Independent Commission Against Corruption (ICAC) had commenced an investigation of his sexual activities. The ICAC investigation was dropped when he took early retirement. The retired judge set about the process of granting a license.

I subsequently supplied the damning US documents which caused the health department to formally advise the judge to reject the license. He disregarded their recommendation and granted the license in September 1993.

My efforts produced some consternation among the doctors in Sydney as the hospital was badly needed. I met the Professor of Surgery at St. George's teaching hospital at a surgical meeting and he explained the problems he had and the urgent need for the hospital.

I concentrated on containing AME's expansion by successfully keeping them out of Queensland and Victoria. I did not produce the damning documents, which I believe finally forced Tenet/NME out of Australia until I was sure that the St. George's private hospital had reached a point where its construction would not be canceled. AME built the hospital but it was acquired by Mayne Nickless before it opened for business.

Last night the Federal Minister for Health, Dr Michael Wooldridge, formally opened the St George Private Medical Complex in Sydney's south, now owned and managed by Mayne Nickless subsidiary Health Care of Australia.
But the impression created is that of a hotel. The staff are dressed as attendants, not orderlies and nurses; the foyer is lined with timber veneer and granite; the day recovery room has work cubicles similar to those of a flight lounge.
Hotel-style Hospital And 5-star Treatment Pulls In The Patients Australian Financial Review May 17, 1996

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Westmead Hospital:- Westmead also started the process in 1987. Health Care Corporation (HCC) purchased land for the project adjacent to the public hospital and was awarded the project. HCC had difficulty in finding funding and its initial plans were rejected as "out of character". The project was put on hold indefinitely in 1992. It was reinvigorated by a feasibility study in 1996 and Alpha Healthcare which had bought HCC finally built it. This saga is described on the HCC, Alpha and Ramsay web pages.

Westmead Hospital has started negotiations with a private hospital entrepreneur for the building of private facilities on land nearby - -

Alpha Healthcare was dominated and funded by the US multinational Sun Healthcare. Sun's track record in the USA was very poor and I had unsuccessfully lodged objections to its entry into Australia with the Foreign Investment and Review Board, and also to NSW Health department regarding hospital licenses. Like Australian Medical Enterprises it eventually failed a state probity review in Victoria.

The Victorian coalition government had awarded Alpha Healthcare a public hospital privatisation project but the labour opposition opposed this and forced a probity review. I supplied some of the documentation on which the probity review based its decision. I think it likely that this set back Sun's plans to expand in Australia. They would not be welcomed by other states. Sun Healthcare entered bankruptcy in the USA and Australia. Its Australian holdings were sold off. Alpha Healthcare was purchased by Ramsay Healthcare who now run the co-located Westmead private hospital. They claim it is profitable. The bits of this story are told in the HCC, Alpha, Ramsay, and Sun Healthcare web pages on this site, as are my efforts to dislodge Sun Healthcare.

Westmead Private, acquired (by Ramsay) in the Alpha purchase last year, is close to achieving similar levels of profitability.
Nothing but the best Shares Magazine November 1, 2002

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North Shore Hospital:- This project too was initiated in 1987 following the government's adoption of a privatisation strategy. While Hospitals of Australia was interested, Health Care Corporation (HCC) was selected as the preferred operator. HCC went looking for funding

Royal North Shore has already submitted plans to the NSW Health Department for a private development on hospital-owned land at a cost of up to $60 million.

A $100 million, 120-bed private hospital is to be built on land attached to Royal North Shore Hospital at St Leonards.
Dr Spring said Royal North Shore had been considering submissions for the development for more than two years. It had selected Health Care Corporation, a company that operates private hospitals in the Illawarra region and western Sydney and day surgery centres, as the preferred operator of the new centre.
NEW HOSPITAL NEXT TO RNS Sydney Morning Herald July 2, 1988

Dr Refshauge said there were too many private beds in NSW already, especially in Sydney's northern suburbs, where there was an acute over-supply of private hospitals.

The head of Health Care Corporation, Dr Warwick Ruscoe, admitted there was an over-supply of "old-style" private beds in NSW, but rejected Dr Refshauge's pessimistic outlook.
DOUBTS VOICED OVER NEW HOSPITAL Sydney Morning Herald October 10, 1989

Since then, the original plan for a 210-bed hospital has been scaled back to a 150-bed hospital costing $60 million.
PRIVATE LESSONS Sydney Morning Herald October 17, 1992

Quite what happened to the HCC project is not clear from the reports but Alpha did not try to build it when it bought HCC so the contract must have fallen away. Hardie's did not want to inject any more money. Ramsay Health Care eventually built this high level private hospital. It opened in 1998 more than 10 years after the contract was awarded to HCC. It proved to be more costly to build than anticipated. As Refshauge had predicted it initially performed poorly. It was only when government improved payments for major surgery and illnesses by subsidising the private system with taxpayers money that it became profitable. Ramsay added more beds.

Another 324 beds are under development at Royal North Shore Hospital in Sydney and at Flinders in Adelaide, which will add $40 million in revenue in 1999 and $60 million in 2000.
Ramsay private to go public for $80m The Australian August 27, 1997

The group has two blue-chip sites under development at the Royal North Shore in Sydney and Flinders Medical Centre in Adelaide that will contribute to earnings in 1998-99.
Centre takes off SUNDAY MAIL (QLD) April 19, 1998

North Shore Private, which is co-located with a public hospital, is Ramsay's first greenfields private hospital, and Mr Grier admits Ramsay underestimated the start-up costs.
Hospitals Can't Stand Alone: Ramsay The Age March 15, 1999

Two new hospitals performed badly. "It is frustrating to report that, although North Shore Private Hospital was opened successfully, and despite that fact that its occupancy levels are high and above expectations, the continuing health fund pricing squeeze has meant a lower than acceptable rate of return from this truly world class facility," Ramsay says.
Health Stocks On The Mend Shares Magazine January 1, 2000

In order to be able to service the increased demand at North Shore Private Hospital, an additional 12 beds and increased day surgery capacity are being constructed and will be open in January 2002.
Ramsay Health Care Limited. Jobson's Year Book October 31, 2002

How things change. In 1999, Paul Ramsay, the founder and chairman of Ramsay Health Care, Australia's second largest private health care operator, was bemoaning the inability of his new state of the art hospitals at North Shore in Sydney and at Flinders in South Australia to turn a dollar, as declining health insurance membership continued to squeeze private hospital operators.

Roll forward to 2000 and the Ramsay stock price is showing a different story. Ramsay shares are in the middle of a two-year upswing that sees the stock rocket from $1 to $5.
Nothing but the best. Shares Magazine November 1, 2002

Ramsay initially struggled to make money from North Shore Private Hospital - - - - - -
Over the past 12 to 18 months we have seen progressive improvement in profitability. I expect profitability to be maintained and possibly continue to increase at a more modest rate.
Fighting Fit The Age (Melbourne) February 8, 2003

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Prince of Wales Private Hospital:- In 1987 there was a plan to shut down the adjacent Prince Henry Hospital and replace it with a private hospital. A group of staff and patients from Prince Henry formed a vibrant "Friends of Prince Henry Association". They mounted a vigorous and successful public program to save their hospital. They strongly opposed the privatisation program and circulated all parliamentarians with detailed information about NME's (building St. George's Private) conduct in the USA. HCoA part of Mayne Nickless later became Mayne Health. It secured the Prince of Wales Private Hospital in the mid 1990s.

Administrators of Prince of Wales/Prince Henry confirmed last night they had ordered a feasibility study into a private hospital near the Prince of Wales.
Earlier this year Professor John Dwyer, professor of medicine at the Prince of Wales and Prince Henry Hospitals, came in for strong criticism over a discussion paper which raised the possibility of closing Prince Henry in return for a private hospital near Prince of Wales Hospital.

Professor Dwyer said Prince of Wales needed about $150 million to bring it up to standard. There was "no way" the Government could provide this.

HCOA has another two such projects on the go, both costing about $50 million. The Prince of Wales Private Hospital will share facilities with the public hospital of the same name in the Sydney suburb of Randwick
Hotel-style Hospital And 5-star Treatment Pulls In The Patients Australian Financial Review May 17, 1996

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Royal Prince Alfred Hospital:- The Prince Alfred expressed its interest in a colocated hospital in 1987. In 1989 the project for a private hospital was awarded to Dr. Tom Wenkart's Macquarie Health Corporation, a pathology group which also owned and ran some hospitals and general practices. This company has been the subject of some criticism over the years. Wenkart had been a close associate and business partner of the notorious Dr. Geoffrey Edelsten.

The privatisation project was a grand one. The first plan was rejected by authorities and the second heavily criticised by the community. Then nothing happened. Wenkart simply sat on his hands and the site remained undeveloped for 9 years at which time the approval to build the hospital expired. I don't know if anyone else eventually built the hospital. Macquarie's Pathology business was bought by Mayne Nickless but iMacquarie Health continued to operate hospitals.

- - - the Royal Prince Alfred has told Mr Anderson it supports the general idea of an adjacent private hospital.

Last month, Macquarie Health Corporation was granted State Government permission to build a similar development on a site adjacent to Sydney' Royal Prince Alfred public hospital
NSW HOSPITAL PLAN MAY ATTRACT INVESTORS Australian Financial Review October 10, 1989

In contrast, Dr Tom Wenkart, who heads Macquarie Health Corporation (see story below), said "nothing, but nothing, has been delayed" with his plan to develop Prince Alfred Private Hospital. "We'll be up and operational by the end of 1994."

Macquarie won the right to built a 200-bed private hospital and car-park, in competition with seven other companies in 1989. It paid 10 per cent of some"multi millions of dollars" as a down payment to the Central Sydney Area Health Service, which administers RPA public hospital.
This (the original plan) was rejected by South Sydney Council, which sent the original local environment plan to the NSW Minister for Planning, Mr Webster, for gazetting.
In April this year, the council received an application from Macquarie for a 300-bed private hospital with a 150-room hotel attached, a medical centre and 80 medical suites, plus associated retail stores including a fast-food style of restaurant and parking for 1,266 cars. (The number of beds in the private hospital has since blossomed to 500.)

On July 2, the council called a public meeting at which residents objected to the look of the building, its height and overshadowing effect and the traffic impact of the complex, in operation 24 hours a day.
PRIVATE LESSONS Sydney Morning Herald October 17, 1992

Ray Moynihan: Almost a decade after winning the contract, the hospital is still not built, causing considerable anxiety to local health authorities.

Diana Horvarth (Chief Executive Officer of the responsible Area Health Service): It is really extraordinary that after nine years, there's nothing, absolutely nothing, except a fence around a car park.
Ray Moynihan: In fact this ten-year saga at the Royal Prince Private may finally be over, with news just to hand that Macquarie's 'approval in principle' to run a private hospital on that site expired, just days ago.
Macquarie Group under Tom Wenkart is experiencing difficulties Radio National with Norman Swan on Monday March 30, 1998

Plans for a $75 million private hospital on the campus of Royal Prince Alfred Hospital are in total disarray after a decade of legal wrangling.
Wrangling Puts End To RPA Plan Sydney Morning Herald March 25, 2000

The frustrating story of the medical Taj mahal planned for the Royal Prince Alfred colocation is explored in greater detail on the Macquarie Health web page.

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Other colocations:- I have not followed the remaining colocations in NSW. A March 1993 report prepared by the American Consulate outlining opportunities for American companies in Australia mentions the following planned or awarded additional colocations.


Unlike Queensland most of the colocation contracts seem to have gone to for profit market listed corporations rather than religious community groups. I do not know if not for profit groups entered the bidding.

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This page created February 2002 by Michael Wynne
Modified March 2002 and updated August 2004, August 2005
Colocation section modified with additional material added September and November 2005