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By the time Alpha and Sun withdrew from the Mildura contract in Victoria I had a vast amount of information about aged care chains in the USA including Sun Healthcare. I put this material on to floppy discs and used it to press the issues. Various modifications of the following letter were sent to aged care and pathology licensing authorities, to hospital licensing authorities in each state, to FIRB and to aged care supporting bodies in Australia. I urged them to act and press for the completion of the probity investigation commenced by Victoria followed by appropriate action to protect all Australians from similar practices.

7 January 1999

Dear -------,

Alpha/Sun Healthcare - Moran/Sun Health facilities --- Licence Objections

Implications - Sun/Alpha abandons Victoria:- I write to you again about this company in the light of events in Victoria where Alpha/Sun has abandoned its contract to build and run the Mildura Hospital in the face of a probity check which was consequently never completed but which clearly had already reached an adverse conclusion. As I indicated in my previous correspondence the aged are far more vulnerable to corporate predatory practices and this is Sun's area of expertise - an area where the accounts indicate that it has neglected its duty of care and abused the trust of citizens. As you are aware the aged care division of the department Health and Human Services has refused to acknowledge the same documents which caused Victoria to investigate and reach an adverse conclusion. I find this disturbing.

Suggestions:- I ask that you should make contact with the committee which assessed Sun's probity in the Department of Health and Human Services, Victoria. The person whom I dealt with was xxxxxxxx 589 Collins Street, Melbourne. I believe this person acted as secretary to the probity committee. I urge you to obtain the relevant documents from them as well as the correspondence between Alpha/Sun and the department. Your association will then be in a position to assess the situation and press the interests of the aged with federal and state governments.

In addressing this issue I would respectfully suggest that your association might act on behalf of senior health care consumers by asking Sun to disclose to you the allegations made by Connecticut authorities and by insurers including the documents which they used to support their allegations of fraud. It may well have been this requirement which caused Sun to back away. It is important to ensure that Australian citizens do not become the victims of corporate cost cutting for profit, or of fraudulent practices at their expense.

Timing of the withdrawal:- It is significant that the withdrawal was on 23 December when Australia and its reporters were on holiday, so that publicity would be minimal and shareholders likely to receive only the company's explanation. You should also note that the shadow minister of health was confident that there was already enough information available about Sun's conduct to render it unsuitable in Victoria. It would be disturbing indeed if different Australian states had different standards of probity.

Control of Alpha and Moran facilities:- I remind you that Sun Healthcare owns more shares than the other top 20 Alpha shareholders combined and many times that of the next largest shareholder. Alpha is therefore effectively controlled by Sun and for practical purposes is an Australian subsidiary. At least 6 Moran facilities/hospitals are directly controlled by Sun Healthcare. Sun's business reports in the USA reflect this reality and indicate that Sun also runs "long term care" facilities (presumably nursing homes) in Australia.

For your information I enclose the following press reports.

Nationwide Financial News; Finance Wire December 23, 1998, Wednesday

AAP NEWSFEED AAP Information Services Pty. Ltd. December 23, 1998
BYLINE: By Krista Hughes and Andra Jackson

AAP Information Services Pty. Ltd. AAP NEWSFEED December 23, 1998
BYLINE: By Andra Jackson

AAP Information Services Pty. Ltd. AAP NEWSFEED December 23, 1998

The events in Victoria:- These articles cover common ground and all address the decision of the Alpha/Sun group to withdraw from the contract to build and run the new Mildura public hospital in Victoria after the government was forced to address probity issues. Serious allegations had been made about the manner in which Sun Healthcare conducted its business in the USA and the consequences for patients in their care, particularly the frail elderly. This check was the responsibility of the Victorian Department of Health and Human Services. The withdrawal was announced shortly after the government indicated that the investigation was nearing completion so that its likely conclusion could be gauged. Alpha even acknowledged that the withdrawal followed "government advice that it was not satisfied with the results of a review of Alpha's major shareholder, Sun Healthcare Group of the United States". In other words it had failed or would have failed its probity check. The Victorian government strongly supports the privatisation of public facilities and the introduction of foreign health care corporations. This is opposed by the opposition. The department would have needed strong evidence to satisfy them that a recommendation which would be embarrassing to the government was required. The minister had strongly supported Alpha.


California, neglect and poor standards:- The facts cannot be disputed. Serious allegations that US patients are deliberately neglected to reduce costs and fuel corporate profits have been made by nursing representatives and by citizens groups. Many have taken to the courts It is claimed that an analysis of death certificates reveals that thousands have died as a consequence. A whistle blower Qui Tam action against Sun has been taken on behalf of the US government in California. A US senate hearing and an investigation by a US federal department have confirmed the situation in California where Sun owns many facilities. Californian state authorities have withdrawn licences from Sun facilities and they have refused to issue further licences for any Sun facilities until they are satisfied with existing operations. These events are all supported by documents available in Australia. The department has the power to insist that Sun produce other documents.

Other states too:- The allegations by the nurses that a situation similar to that in California exists in Sun facilities in Connecticut and in Massachusetts are given credence by several damning press reports describing problems in Sun's facilities. The situations described are compatible with and can be seen to be a direct consequence of Sun's business practices as described by Sun's chairman in a 1996 press interview.

The wider context:- These allegations must be seen within the context of the conduct of the majority of other large nursing home chains in the USA. Similar neglect and adverse consequences for patients in homes owned by corporate chains are documented in Florida, Alabama, Texas and probably in many other states across the USA. There are large numbers of press reports and investigations. There can be no doubt about the findings. While more dramatic these findings are little different to the allegations made and the small number of objective reviews of care available for corporate owned acute care hospitals. There is no reason to doubt that similar policies introduced into Australian hospitals will have similar consequences.

Aged care in Australia is threatened:- Worse still Moran is a nursing home and aged care provider. It will be anxious to capitalise on Sun's expertise and financially successful practices - its expertise in "cutting the fat". Alpha Healthcare has indicated its intention to enter the aged care market using Sun's expertise in nursing home care. It has strongly identified its future success with Sun's expertise. Federal authorities responsible for licensing aged care facilities in Australia have refused to acknowledge the documents made available to Victoria's health department.

Allegations of fraud:- In addition to all these documents describing the neglect of the most vulnerable section of the population, Sun Healthcare has been the subject of a now withdrawn but disturbing FBI investigation in which a senior staff member claimed that Sun's chairman personally gave instructions to defraud medicare by billing group services as individual. Sun is currently negotiating a financial settlement with authorities in Connecticut and with insurers who accuse it of fraud. It has not contested the allegations. Court documents from an action by shareholders which was settled for many millions of dollars indicate a lack of frankness and candour in its dealings. These general concerns were all known to the Foreign Investment and Review Board when the deputy treasurer approved Sun's entry to Australia in 1997 but there is now much more information about all these matters.

The probity check:- With this information it is reasonable to conclude that a probity check designed to protect Australian citizens rather than corporate interests would find Sun wanting. Had they not done so the credibility of those acting to protect citizens would be seriously damaged. The Victorian opposition were in a strong position as the governments support for Alpha was no longer tenable. An unfavourable decision in Victoria threatened to destroy corporate credibility. When they were advised that they were likely to fail the probity check Alpha/Sun had no choice but to withdraw. Their denials would be more credible and they could buy time and mount a damage control exercise.


The response:- What was the public response of Alpha/Sun Healthcare and the Victorian government? Were they honest and what do these responses reveal about their views?

Our experiences with Tenet/NME, Mayne Nickless and other corporations suggests that Alpha/Sun would refuse to accept the content of the documents, would deny them, would make unsustainable claims and would attack those who criticised them. They would believe the assertions they made and would be genuinely indignant. I quote from the various articles

"....blaming unfair treatment from the Kennett administration, Alpha Healthcare was forced to pull out of the project when its major shareholder, the US-based Sun Healthcare Group, withdrew its financial backing, after a state government review of Sun's operations."

"The US-based Sun Healthcare Group said today it pulled out of the race to build and run a new privatised hospital in Victoria because of the state government's handling of the issue."

"Sun's Australian managing director Chet Bradeen said a campaign of misinformation by the state opposition had turned the tender process into a political issue."

"Alpha said it believed the government's advice and review process was based on incomplete information and influenced by premature conclusions that were inaccurate and unfairly prejudicial to both Sun and Alpha."

I wonder what its response would have been had Victoria decided to delay the decision until more information was available. In this situation Tenet/NME strongly attacked NSWHealth and pressed for a rapid decision before all the damning facts were known.

The damage control process is further revealed. They claim.

"By the state's own admission, Alpha's tender was the most optimal solution for the provision of health services to the people of Mildura"

Most citizens might consider that a government decision to hand their care over to a foreign corporation accused of neglecting vulnerable citizens was a political matter to be strongly addressed by their elected representatives - not so within Sun/Alpha's self serving corporate world.

"It had been clear from the government's "tone" in requesting information about unsubstantiated opposition claims of poor patient care and false Medicare invoices that it thought the issue was too hot to handle, he said."

"Situations like that, where we've provided the information, the government has ... I don't think been able to evaluate in an accurate way just how the opposition has misused that information and we've been judged as guilty before proven innocent"

The health department is or should be independent of government and opposition . Sun would have been given every opportunity to provide them with documents. It seems more likely that they came to an adverse conclusion either because the documents supplied were incomplete or because the material they supplied did not address the issues.

Note the comment

"I think the government, in my view, has not treated Sun fairly and the facts fairly, and I think it's had a detrimental affect on Alpha because we've been a shareholder, and I think Alpha's been dragged down in the process."

Sun's spokesman seems to be suggesting that the government of the people should give them "fair treatment" at the expense of the interests of the citizens whose interests they are elected to serve. This goes to the heart of the problem for state licensing authorities. They are charged with protecting the welfare of citizens and their prime duty is to those citizens. The law in contrast is designed to protect the rights of individuals rather than the community. If challenged licensing authorities would be faced with the burden of proving misconduct beyond reasonable doubt, regardless of the consequences which the alleged but not yet proven misconduct would have for citizens. In the case of foreign corporations from countries where allegations of serious misconduct and massive fraud are settled by paying multimillion sums to buy "no wrongdoing acknowledged" clauses -- the task is impossible.

The response of the Victorian government which Alpha and Sun blamed for what happened is interesting.

'He (the Health Minister) blamed Alpha's withdrawal on the opposition's "smear campaign", saying the government was disappointed, but understood the companies wanted to "maintain their very high credibility".'

" A smear campaign run by the Victorian opposition against an American health corporation had forced its Australian subsidiary, Alpha, to pull out of a deal to build a privately owned hospital in Mildura, the state government claimed today."

"He said there was nothing wrong with Alpha Healthcare Ltd, the company nominated as the preferred proponent for the project"

This is a remarkable claim, made in the face of the corporate claim that it withdrew following "government advice that it was not satisfied with the results of a review of Alpha's major shareholder, Sun Healthcare Group of the United States". For practical purposes Sun is Alpha. The minister now blames the opposition and claims to be disappointed. The statements don't make sense. Someone is being less than candid and frank..

In a wonderful example of what I labelled NMEspeak in 1992 the minister talks of the companies "very high credibility" Sun is a company whose credibility is in tatters as a consequence of multiple reports of patient neglect, reports supported by government reviews and the actions of regulators. Alpha is strongly supporting Sun and welcomes its business expertise. In fact Sun is such a dominant shareholder that for practical purposes Sun has control of Alpha. Alpha can therefore be considered a subsidiary of Sun's.

There is another gem from the minister

"So the federal government's body (ie FIRB) has cleared them and one assumes the NSW Labour Government is happy with them as they have agreed to co-locate a hospital between Alpha and one of their major public hospitals."

Mr Knowles, the minister knows that the NSW government advised FIRB against Sun's entry into Australia and that much more information is now available. He also knows that the NSW health department does not have the power to reject licenses for a multinational that does not already have a criminal record. The public does not know this. In 1993 the WA Health department advised that only the Victorian authorities had the necessary powers. They urged a review of state and federal regulations to address the threat posed by corporate multinationals and the loopholes which protected them from our regulatory procedures. This advice was ignored. It is little wonder that the electorate is disenchanted! In our two party system Australians vote against parties rather than for them.

Let me conclude this criticism by quoting again from John Ralston Saul's Massey lectures page 189. Saul quotes from Emile Durkheim whom he calls "that most important of anti-democratic, anti-humanist voices". The quote is "The other task for the corporation consists in the delegitimization of common sense."

Those who have seen the documentation agree:- The shadow minister for health, Mr John Thwaites indicated in the Victorian parliament, some days before Sun withdrew that there was already enough evidence to render Sun unfit. I believe that most of the documents and information supplied to the Victorian health department are in my possession. I share Mr Thwaites opinion and so it seems does the health department. Should you have any difficulty in obtaining documents and information from Victoria please let me know.

Corporate culture:- The final point I would like to make is that the belief patterns, psychological structure of individuals, and corporate culture revealed in these reports is representative of what is happening in the US corporate owned aged care and hospital environment. Vast sums of money are made, central administration operates in palatial buildings and is well rewarded. Directors award themselves massive salaries and have lavish life styles. The directors or chairmen have great charisma and are exceedingly persuasive. They relate well and are obviously totally convinced by their own words. They believe that they care. Most staff are caught up in the enthusiasm and work very hard.

The contradiction:- Within this environment the success of a facility is measured by its profits and these are automatically accepted as reflecting high standards of care. There is a massive gulf between the reality of what is happening in the hospitals/homes and the perceptions in the central administration. Those who are critical of corporate conduct are perceived as malign and self interested. They are attacked and discredited. In reality senior corporate staff are victims of their own conviction which is unchallengeable.

Psychology and Sociology:- I have written elsewhere about the psychology and sociology of the corporate health care environment and will not repeat this here. We should not assume that the explanations and accusations made by Alpha and Sun were deliberately dishonest or misleading. I suspect that they are persuaded that their explanations are an accurate reflection of what happened. Both Mayne Nickless and Tenet/NME have behaved in the same way. John Ralston Saul expresses the same point of view. I quote

"But there is no need for a conspiracy. These are structures managed by servants. Their logic is public and self-evident. Complex long-range conspiracies require conscious leaders. To treat the technocrats as such is to give credence to their illusions about themselves." (The Unconscious Civilisation p 126)

That we can understand the human dimension of what is happening does not make these people and these corporations any less of a threat to our health care system and our patients. There is no cure for this disease. The processes which are the basis for the claimed benefits are themselves the cause of the problems which render corporatised health care an untenable means of providing health care to Australian citizens.

Yours sincerely,

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Alpha Healthcare
Overview ...... Outline ...... References ....... Dissent
This page created Sept 2001 by Michael Wynne