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.

Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.

The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organisation.

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Corporate Practices

Health care

Hospital Corporatisation
Entry to Privatisation
Privatisation Background
Australian states
Pathology & Radiology
Gen. Pract. Corporatisation

Path to this page

General Practice

GP Corporations

Primary 1995-2004
Primary 2005-2009
Revesco/Gribbles and       Healthscope

Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
CLICK HERE to open it in another tab or web page.

Content of this page
This web page reassesses Primary Health Care 5 years after I last did so. It has continued to be very successful. It has grown rapidly by acquisitions in health technology and a risky takeover of a larger competitor as well as by expansion of its existing businesses. On the one hand its policy is congruent with government policies and it is widely admired in the marketplace. On the other it continues to have an uneasy relationship with establishment doctors and some competitors.

The suggestion is that underlying the marketplace battles and victories there is a deeper and more profound cultural conflict. This web page examines Primary's success on the marketplace battlefield within a cultural context. This context is underpinned by what we know about the behaviour in other corporate endeavours where similar cultural conflicts lay behind growth strategies and takeover battles. The possible consequences for community and care, as revealed by these previous experiences in the USA and Australia fuel my anxiety. There is however no evidence at this time that Primary has done anything illegal or wrong. It is revealed as a superb strategist and a logical proponent of the culture it embraces. Others including myself are critical of this culture in health care.

 Australian section   

Primary Healthcare

2nd Page 2005 to 2009

Update June 2009  

The two web pages

There are two web pages about Primary Health Care on this web site. The first was written in 2002 and last updated in 2004. Much has happened since that time. Primary has gone from strength to strength and is now a major player in the health care marketplace in Australia. There is so much additional information that I thought it would be better to create an entirely new page to cover developments over the last 5 years. This page is intended to stand on its own and there will be some issues that are addressed on both pages. Almost all extracts used come from publications subsequent to the last update.

Click Here to go to the to the web page describing Primary’s progress prior to 2005.


To go to the first web page examining Primary prior to 2005 CLICK HERE

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Why no updates since 2004

By the end of 2004 most general practice companies were not making money from General Practices. Primary Health Care was making money but seemed to be struggling to recruit doctors. The enthusiasm for GP corporatisation seemed to have died and the issues seemed to be dead. For some reason interest has revived and there seems to be more discomfort at the coalface. GP corporatisation is on the march again.

I have therefore decided to revisit this issue to see what has happened and why. Primary and Healthscope, the two groups with a strong commercial focus seem to be of most interest. This update brings together the information publicly available about Primary Health Care since 2004 and organises it around the issues.

Primary's founder and CEO Ed Bateman sees his commercial model of care as a solution to difficulties experienced by individual medical operators in the current environment. There are good organisational and patient care reasons for integrated services and larger group practices overseen by a broader supportive GP structure. As this web site shows there are good reasons why this should be driven by the needs of patient care and community service and not by the marketplace. Primary's chairman Ed Bateman has used this need for change as an argument for corporatisation.

We are a diverse society and have a diverse health care force. How services are best structured will vary from community to community and there is no size that fits all. A service driven by competitive commercialism and an excess of commercial efficiencies too often imposes a formula.

The severely dysfunctional and fraudulent Columbia/HCA compared its role in health care to that of Walmart (giant department store) in the USA in the 1990s. Bateman compares Primary to Woolworths. Another press report has compared Bateman’s approach to Westfield. These comparisons are worrying enough to justify revisiting the issues.

Nov 2004 Like Woolworths

Prof Dwyer's suggestion (as to how this problem could be addressed) came following the comments made by the MD of Primary Health Care, Dr Edmund Bateman, who said small medical clinics are not viable because they are as the "corner store" is to Woolworths. His corporate health company is successful because the medical centres have pharmacies, pathology and physiotherapy under one roof, making patients' health care plans easier to be implemented.
GOVT-FUNDED COMPANY TO RIVAL CORPORATE MEDICINE Australian Doctor (News Bites Summary) November 26, 2004

Dec 2008 Like Westfield

Westfield model
You might say Bateman has championed the Westfield model of medicine in Australia. It's all about costs, the right sites and foot traffic.

The demise of the High Street retailer has been matched by the demise of the High Street doctor to some extent. To the chagrin of retailers on the strip, if you want to shop you are more likely to go to Westfield where you can park and get a range of offerings.

For retailers they may be turfed off with the rents and ruthless treatment of their landlord but they are enticed by the foot-traffic - as are the doctors who work in Primary's 40 medical centres around the country.

Bateman's GPs get paid quite a bit more than High Street GPs. It's a bit of a meat market but there is little administration, a centralised waiting room and the medicos are on a profit-share deal where they can charge more for small procedures. They bulk bill too, and often run a few extra offerings such as pathology and radiology out of the centres.
Walking a financial tight-rope Sydney Morning Herald December 12, 2008

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The criticisms of corporate health care -- a reminder

The thesis of this web site, based on an examination over 20 years is that the market and health care are essentially incompatible. (download pdf file) The paradigms under which each functions best are contradictory. The necessary conditions for a market to work are not present in health care in several respects. Commercial activity in the sector should therefore be constrained. The sector should be dominated and the patterns of thinking should be set by those whose primary focus is care and community.

Because the share market and private equity are essentially powerful impersonal mechanisms, which take little account of community values and norms, public companies and private equity ownership pose a particular risk for the community in regard to sick or aged citizens. Strong pressures in this market have compromised care and led to the misuse of vulnerable and trusting people.

Those responsible for making commercial decisions are distant from the bedside. They are able to rationalise their decisions, or alternately distance themselves from the human and community consequences. The existential pressures in the system reward those who do so and select for those most adept at this. These non-reflective characteristics are ill suited to the health sector.

One of the necessary conditions for a successful market are customers who are informed, capable and in a position to restrain corporate excess. Even with the internet, patient’s, the customers in health care, do not meet this criterion.

I have qualified my thesis by indicating that when some other directly involved group has the patients’ interests at heart, when their interests and those of the patients coincide, and when they are in a position to exert economic leverage then the pressures placed on care can be reduced. Independent doctors are in a position to fill this role. Their ability and willingness to do so is impaired when their independence, their economic interests, their careers or the well being and quality of life of their families can be manipulated by corporate or other interests. This is what happened in the USA.

In contrast, Australia’s specialists at least have maintained their independence. During the late 1990s they refused to enter into contracts with Mayne Health and AXA - contracts which would have compromised their independence. Only a few years later the doctors used the economic leverage that they had retained to bring Mayne Health to heel.

We need to ask whether many general practitioners have allowed their independence to be eroded by forming economic links, by signing contracts that impeded their ability to act, and by agreements that removed their leverage.

Success in the marketplace is assessed on two interrelated factors, profitability and growth. Long term corporate investors are primarily interested in growth. Successful companies are those that generate a strong enough income stream, and a share price that allows them to borrow enough money to grow by mergers and takeovers. They accumulate large debts.

Pressures on care are strongest at two points.

During the phase of expansion these companies enthusiastically develop commercial formulas for improving profitability. These formulas may distort or otherwise compromise care.

Unacceptable cost cutting strategies occur when companies that have accumulated large debts come under pressure. Lenders are reluctant to roll over loans when, due to changing market circumstances, a company’s share price falls. They are also at risk when the profit stream decreases or increased interest on loans must be met. Cost cutting usually means a loss of staff and skimping on equipment. The market welcomes and rewards this cost cutting without considering its human consequences in health care.

Entrepreneurialism is a risk taking exercise. Success comes from taking risks and from surviving near failures. Failure is as common as success. It’s often a giddy up and down roller ride and it has been for Primary. Should patients and their doctors be a part of this? Should they be bought and sold for the benefit of investors who have no interest in their welfare? Are the repeated changes and recurrent restructuring beneficial or harmful for health care?


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It is not my intention to allege, nor does this web page allege that Primary Health Care is providing substandard or in any way unsuitable health care or that it is socially dysfunctional. I have no means of knowing, nor do I have information to show that this has happened.

I have made a study of corporate health care and as a consequence am critical of the corporate mechanism of providing health care. It has in other contexts resulted in substandard care, the misuse of patients for profit. In other situations it has been socially dysfunctional. I have studied this and have suggested that there are social processes at work that put pressure on care and make this more likely to happen.

Primary has embraced the corporate market model and what I have done on this page is to bring the publicly available information about the company and its management together. The page examines the extent to which the factors I have identified are suggested by press reports. It considers the extent to which these suggest that Primary fits into and is subject to these social processes.

In my view the social and commercial conditions that might result in dysfunction do exist and we need to watch carefully. Isolated instances of problems will develop in any system and some are suggested in the reports available. Much more information would be needed to show that these were common or due to Primary’s business strategies. I have no personal experience of Primary.


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Primary Health Care Overview

Primary has been a growth company and consequently attracts institutional investors. Institutional investors have strongly supported the company and make up the bulk of its larger investors.

Institutional investors look for growth and Primary has grown rapidly by takeovers since 2004 when I last wrote. In 2005 it outbid IBA to buy Health Communications Network and in 2008 it acquired the much larger Symbion by skilful corporate manoeuvring. It has accumulated a large debt in doing so, and has struggled to reduce this by selling off some of Symbion.

As indicated in 2004 Primary, like its competitors, does offer doctors attractive financial inducements. Some concerns have been expressed about the nature of its contracts. It is therefore important to consider whether we are looking at golden handshake agreements that become golden handcuffs binding the doctors to the corporate mission and limiting the ability of the doctors to act for the community and for their patients when this is required. We don't have copies of these contracts so must deduce what is likely to be in them from what is available.

While there are a number of side issues I will explore, this update focuses on what has happened to Primary Health Care and how this impacts on doctors. It brings together the fragmented debate on these issues using extracts from available reports.

In 2004 I developed a list of red flags. The problem with these was that they also picked out those companies that were commercially successful. This was because dysfunctional companies pursued profit over care and were consequently successful. It did not reliably distinguish those who became financially successful in a socially acceptable way from those who did not. If you want to compare the press reports with the red flags please go to the link or open it in another page.

While the press reports document the corporate financial manoeuvring on the battlefield, there was a deeper, more profound and more complex cultural conflict that pervaded every facet of this story. Different cultures with different ways of understanding, different norms and contradictory values jostled for the allegiance of participants, and struggled for dominance. This is readily apparent from the reports. The nature of the battleground ensured that the weapons and strategies used were entirely commercial and corporate. In the cultural conflict one protagonist was heavily armed. The battlefield was steeply sloping and the outcome was probably inevitable. There is now only some desultory skirmishing as the victor mops up.

The acquisition of Symbion Health Care by Primary was a major victory for marketplace culture but the cultural war goes on. In mid-2009 Primary still carries a huge debt in the face of a global recession and is vulnerable. To survive and consolidate its culture it must maintain control of its doctors and keep them tied to its mission. If professional and community cultures are to retrieve the situation then they must regroup, organise themselves, plan intelligently, and choose battlefields where they have the weapons, the field is not as steep and where their resources are not squandered. No war is won by fighting rearguard actions on battlefields chosen by adversaries. The difficulties are increased because the sort of collateral damage that occurs in corporate battles is not acceptable within these culture's value systems. A good example of collateral damage was the tawdry spat between Healthcope's and BUPA. There are some reports which raise the spectre of this in Primary's takeover of Symbion Health.

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History of the company

The following summary must have been written about 2006.

About 2006 Rough history

The company was incorporated in New South Wales in 1994 as Hygristor Pty Ltd, and by 1998 it had developed into the public entity known as Primary Health Care Limited.

1998 - The company acquired John R. Elder Pty Ltd. Primary Health Care Limited listed on the Australian Stock Exchange.

1999 - Primary Health Care acquired Darkrow Pty Ltd, which traded as General Clinical Laboratories, which was at the time the third largest provider of pathology services in New South Wales.

2000 - Sydney Diagnostic Services (NSW) Pty Ltd, trading as SDS, a provider of pathology services in New South Wales, was acquired.

2005 - Primary Health Care acquired both Health Communication Network Limited (HCN) and Abbott Pathology Pty Ltd (Abbott).
Career One Accessed June 2009

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Primary Health Care Strategies

A good 2005 review in BRW describe Primary and particularly Bateman’s thinking and strategies.

Jul 2005 Strategy and micromanaging who doctors see

It is eight years since Primary Health Care was listed on the Australian Stock Exchange. It was established in 1975 by Bateman as a service company to his then suburban general practice and he has been its driving force before and after the float. Its capitalisation on listing was $90 million and is now more than $900 million. On recent prices, Bateman's 21 million shares are worth $190 million.

It has been an extraordinary story. The company now has 24 medical centres, mostly in Sydney's metropolitan area, and is expanding in Adelaide, Melbourne and regional New South Wales. About 5%, or 800, of Australia's general practitioners work in Primary centres. Most services are bulk-billed. In addition, Primary owns SDS Pathology, which Bateman says is the third-largest pathology provider in NSW. The centres accommodate a host of specialist doctors and allied professions such as physiotherapy, laser eye clinics, dental practices, radiology departments and pharmacies.
The question most frequently asked about Primary is how Bateman has been able to expand the business so profitably. Even after last year's increases in Medicare rebates, which Bateman says will add 5% to profit - general practice has never been a great income provider. For a bulk-billing doctor to make $110,000 pre-tax income a year (assuming they pay about 50% of their total revenue on business overheads) requires seeing four patients an hour, eight hours a day, for 48 weeks a year.
How is Primary different? First, Bateman understood early that the old way of general practice, with two or three doctors in partnership, had a limited future. Primary's business is fully integrated, includes ownership of the property and the provision of a comprehensive range of health and medical services. Sheer convenience means SDS Pathology will pick up the referrals from a Primary general practitioner - likewise radiology, medical specialists, physiotherapy and so on. Most prescriptions would be filled by the in-house pharmacy, which is typically happy to pay a good rent because of the large number of customers
Second, Primary's focus is unrelentingly on the efficient provision of services. One example is his response to a rumour that has been circulating, that Primary charges pharmaceutical representatives who make presentations to doctors. Bateman says: "Primary does not charge pharmas [pharmaceutical companies] for marketing in its centres. Primary spends a considerable amount of effort in keeping pharmas out of its centres. Pharmas' marketing causes income loss to Primary. Time taken by them with doctors is time doctors are not providing services to patients. This causes a reduction in income for doctors and the company, and less service to patients."
Doctor in charge BRW July 7, 2005

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Politics and Business

It is difficult to know what influence Primary has politically and whether it donates to political parties. Primary’s policy of building large one stop medical centres is music to current politicians ears. It meshes with their policy to establish "super clinics" around the country. Primary’s reliance on Medicare rebates without the unpopular gap payments would also endear them.

That Primary’s was appointed, in 2007, as a preferred provider to supply medical services "to a range of Federal Government Agencies including Centrelink, Medicare, Dept of Human Services, Child Support Agency, Health Service Australia and others" is not surprising. It is likely that they were the cheapest too so it was no contest.

2007 A government contract

Work includes pre-employment, return to work, medicals and vaccinations for 26,000 employees plus pathology provision.
Tender win - Federal Government Agencies Primary Health Care Announcement January 29, 2007

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Edmund Bateman and family

Primary’s commercial skills are widely admired. While the media shy Bateman has owned less than 20% of Primary shares, it is still very much his company. He makes the decisions. Now aged 65 he has groomed his sons, two of whom are active in the company. Bateman has other business and property interests. I have expressed the view that the marketplace selects for those who will succeed there, and that these are not necessarily the best people to be providing health care. Press extracts may give us some insights into the sort of man he is. The press is not always accurate but this is the only information we have.

Jul 2005 Bateman . the story, the man, the risk taker and the recluse

Dr Edmund Bateman, probably Australia's richest GP, was born into a middle-class family on Sydney's lower North Shore and was educated by Jesuits at St Aloysius College in Milsons Point. His father was a doctor, his mother a barrister whose family had links with the NSW Labor Party; Bateman's grandfather, Greg McGirr, was a Labor member of Parliament and a Deputy Premier of NSW.

Bateman studied medicine, graduating from University of Sydney in 1965, the year he married. His wife, Belinda, was at University of Sydney at the time. They have four children, two of whom are employed by Primary. James Bateman, the eldest, is the company's chief operating officer. Henry Bateman is internal counsel.
From that point, helped by clever financial manoeuvring that included well-timed borrowing overseas in the early 1980s, the medical direction was set.

Medicine is not the only business in which Bateman has done well. Family companies own eight rural properties in New South Wales, ranging from cattle (breeding stud and commercial), sheep (wool and fat lambs) to a piggery and cropping.
Some of Bateman's success clearly comes from a willingness to take risks. Borrowing overseas in the early 1980s to fund expansion of medical centres was, by any definition, a risky venture. But he was able to take a strategic view of the way the medical business was heading.

Bateman is tough in his business dealings, which is evident not just from various court cases but from occasional market battles, like last year's unsuccessful bid for IPN, from which he emerged with a profit none the less.
More surprising, in view of Bateman's position in the industry, is that he is not well known around the medical profession
More than most professions, medicine is a club and doctors almost always have networks of people they have worked with, known through medical training or in previous jobs. Bateman is not a player in medical politics, nor a networker.
Doctor in charge BRW July 7, 2005

Sep 2005 Bateman the businessman

Edmund Bateman might present to outsiders as an old-fashioned GP who would tend to his patient flock without much fuss or flare, but to investors and a succession of competitors he has proved himself to be one of the most capable business minds in the country.

Bateman is described by some as a recluse, he rarely gives interviews and prefers to "show not tell". But he also likes a fight, especially if he believes he or his company have been wronged.
At the helm of Primary Health Care he has built a company with the biggest portfolio of medical centres in Australia, a network of GP offices that runs incredibly efficiently and has thrown up double-digit growth rates year after year.

He has already doubled the number of GP centres to 20 and now has unveiled a timetable to take that figure to more than 40 by the end of 2007.

Add to that a growing pathology business and Bateman sits atop a company that has seen its market capitalisation more than triple since 2001 to well over $1.25 billion.
Healthy appetite for expansion Australian Financial Review September 9, 2005

Dec 2008 My way or the Highway

Bateman - labelled variously as ''abrasive'', ''ruthless'' and worse - concedes that even his sons claim his style is ''my way or the highway''. Fear of failure, he says, is probably his most potent driver.

There is a good deal of antipathy too between the GP and his arch rival on the stock market, Sonic Healthcare boss Dr Colin Goldschmidt.
Walking a financial tight-rope
Sydney Morning Herald December 12, 2008

Sep 2005 The succession

His (Bateman) son James is chief operating officer, while youngest son Henry is the head of the company's medical centres.

"I think succession will be up to the board. At the end of the day it will be the best person for the job and I don't think they [the board] would be the first people to go with the idea as well.

"Clearly they [James and Henry] are candidates because they have experience and have been here, as have other people, other people would be candidates as well."
Healthy appetite for expansion
Australian Financial Review September 9, 2005

Sep2008 Family bonuses - shareprice falls

It seems that dad Ed Bateman has made a bit of a statement about who his favourite is by handing older son James a $3 million bonus in light of his extraordinary and professional work during the $2.7 billion takeover of Symbion Health. After the one off bonus, James salary was a handsome $3.38 million - nearly nine time last years.
Poor Henry, meanwhile, was given only a $500,000 bonus for his efforts during the Symbion battle, earning a total of $713,997. - - - - - just over three times higher than last years.
Primary shares are now trading at less than half their peak of early financial 2008.
Just a hint of primogeniture at Primary Australian Financial Review September 30, 2008

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Current operations 2009

Primary Health Care’s web site lists its current operations. These include.

87 Medical Centres with 6 million general practitioner consultants per year

87 Pathology Labs with 782 Collection Centres

161 Diagnostic Imaging sites (claims to be Australia's second largest diagnostic imaging network)

Primary is the leading provider of clinical and practice management software for Australian general practitioners and specialists.

Primary owns and operates the Sydney Eye Clinic and the Sebban Eye Clinic, as well as Cosmetic Clinics, Dental Clinics, and Ear Nose & Throat Clinics.

Primary’s Medical Centres are marketed as providing radiology, pathology collection, physiotherapy, exercise programs, fracture management, rehabilitation providers, dieticians, social workers, counsellors, psychologists, naturopaths, podiatrists, audiologists, patient educators, consultant specialists doctors, licensed day surgeries, specialist skin cancer clinics, and Workcover occupational health care clinics.

Health Communications Network (HCN) has its own web site <> The site describes the software developed and sold for GP’s, specialists, hospitals, radiology and pathology. These are integral to HCN’s thrust into ehealth.


2009 The income stream

The company generates revenue by charging GPs a percentage of their revenue. Other practitioners, including dentists, chemists and pathologists, are charged a fixed fee. PRY is also a leading pathology and radiology player, and sells health technology software to medical practices and hospitals.
Company Overview Invest Smart Accessed June 2009

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Expansion since 2004

Primary has continued to expand its general practice, pathology and radiology operations. Two major acquisitions have dominated its growth. All of Bateman’s corporate skills were called on to secure these prizes.

The purchase of the medical software company Health Communications Network (HCN) in 2005 was a major and commercially successful enterprise. It was a change of direction and gave Primary direct access to the desktops of the vast majority of doctors in Australia.

Bateman is never far from controversy or conflict with the medical establishment. The profitable advertisements included in the software roused the ire of many as did the sale of (de-identified) patient data to parties with a commercial interest.

The other major acquisition was the takeover of the much larger Symbion Health in 2008. This was a major and risky undertaking in the face of a tumbling world economy. It involved a year of stalking, corporate brinkmanship, extensive borrowing, complex financial deals and the resale of parts of Symbion.

In the face of a falling market, the many transactions were accomplished "just in time" as things miraculously fell into place - fortune favoured the brave. Primary's shares had dropped from a high of $11 to less than $5 during this period. Doctors and their patients went on the ride. Controversy surfaced again as Primary moved its micromanagers into Symbion’s health services to generate synergies and introduce its financially more successful market practices into Symbion's businesses.

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The Takeover of Health Communications Network (HCN)

HCN Background:- HCN was an independent private company formed and funded by government to foster ehealth and the use of technology in healthcare. It developed and marketed the software for this. One wonders if the "health sector" would have been as comfortable as indicated below, had they known that the company formed would fall into the hands of a commercial enterprise that would trade clinical information in the marketplace - even if it was de-identified and legally sanctioned.

Feb 1995 Background to HCN

The Health Communication Network (HCN) is an initiative of Health Ministers, both State and Commonwealth. The HCN sets out to improve the flow of health information in a safe, secure and effective manner.
Since 1992, the HCN project has undertaken consultations, studies and demonstration projects to provide tangible and supportable evidence of the uses and benefits of the HCN.
In July 1993 Australian Health Ministers agreed to the establishment of the HCN as a company by 1994 with an independent board. A company was considered the most appropriate vehicle because the health sector has clearly indicated it does not feel comfortable with Government, neither Commonwealth nor State, dealing with its information and secondly, the Health Communication Network is to be set up on commercial grounds.

The development and implementation of the Health Communication Network has to date been funded by the Commonwealth Government ($1.8m in 92-93, $2.0m in 1993-94 and an estimated $6.6m in 1994-96). The Health Communication Network company will repay the costs associated with its infrastructure development and operational subsidy;approximately $7.0m.

The HCN will be established as a company in January 1995, with a board reflecting expertise in health, business and communications.
Reply to Question No 1873 re HCN
Senate Hansard Page: 1108 February 28, 1995

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The battle for HCN:- In 2004 IBA, a company already heavily involved in the sector made a bid for HCN but was outbid by Primary Health Care. Primary recognised the access which this gave them to doctors in Australia, and the potential revenue to be gained from advertising. HCN was not making money at the time which may be why they were eager to sell. Primary raised the money from the market.

Nov 2004 IBA makes offer

IBA Health Limited (ASX:IBA) Australia’s largest e-health company following on from its recent push into global markets has acted swiftly to consolidate its growing position in the Australasian health sector by announcing a proposed merger with Health Communication Network Limited ("HCN"). The merger would be implemented by way of an off-market takeover bid for all of the ordinary shares of HCN.
IBA Health announces offer for HCN shares
IBA web site November 3, 2004

Apr 2005 Who is IBA

IBA is a leading facilitator of electronic transactions between hospitals and government authorities, and the acquisition of HCN would have positioned the company to capture the lion's share of GP transactions as well.
Primary purge on HCN management Australian Financial Review April 15, 2005

Dec 2004 Raising $101 million

In addition today Primary successfully completed a $101m placement to domestic institutions at $7.60 per share.
ASX Release December 10, 2004

Jan 2005 HCN welcomes Primary's offer

Primary won the unanimous recommendation of HCN after it trumped rival IBA Health's bid with a last-minute $111 million offer for the health software provider in December

Primary's all-cash $1.75 per share offer for HCN, which is the Australian market leader in clinical and practice management software to GPs, was above the conditional $1.72 all-scrip offer by IBA.
HCN urges shareholders to accept Primary offer Australian Associated Press Financial News Wire January 4, 2005

Feb 2005 HCN in poor shape.

PRIMARY Health Care has acquired Health Communication Network in surprisingly worse financial shape than anticipated, with the software provider announcing yesterday that it had slipped into the red.

HCN has posted an unexpected $1.3 million loss for the six months to December 31, raising doubt about whether its full-year forecast of a $5.5 million profit is achievable.
One analyst, who did not want to be identified, said that he had long believed that HCN's financial targets were a stretch and that Primary would struggle to make a return on the $1.75 per share - or $100 million - it had paid.
Primary finds HCN in worse health
The Age February 15, 2005

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Management Purge:- Primary carried out a management purge. Many of those in the original company might well have been financially naive and more concerned with the medical and societal benefits of new technology than their profitability. A company with Primary’s market focus would want to change this.

Apr 2005 A management purge

Primary Health Care has completed a management purge at Health Communication Network, just two months after it finalised its acquisition of the general-practice software maker in a $100 million deal.

The purge, carried out late on Wednesday, is believed to have claimed up to two-thirds of senior management positions, including that of long-time managing director Mike Gregg.
The move came as the health-care services provider looked to align the general-practice management software developer within its broader business strategy.
Primary, which provides medical-centre management services to general practices, is expected to leverage HCN's large installed base to boost sales of billing, collection and administration, payroll management, and medical and consumable ordering services to its customers.
Primary purge on HCN management
Australian Financial Review April 15, 2005

Aug 2005 The changed focus

Primary managing director Ed Bateman said Primary was changing HCN from a company that developed products before having a market for them, to one that concentrated on products people wanted to use.
Primary number to double The Australian August 10, 2005

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The purchase was soon successful for Primary. Eighty percent of GP’s currently use its Medical Director and many others use prescribing, pathology, radiology, knowledge base and other ehealth programs.

The tax dispute:- Primary became embroiled in a dispute with the tax office about deductions relating to its takeovers. Primary’s 2008 Annual Report suggests that this is still being appealed.

Jul 2005 Tax dispute

The dispute relates to claimed tax deductions for expenditure on the purchase of intellectual property with the company's medical practice acquisitions.
Australian Company News Bites July 4, 2005

Jul 2005 Deductions disallowed but will appeal

PRY has now received a Notice of Decision on Objection from the ATO that it has not allowed the Objection for the year ended 30 June 1999.

The directors obtained independent professional advice that PRY is entitled to the claimed amounts and have therefore decided to proceed to legally appeal the Objection Decision immediately.
Primary Health tax deductions rejected Ralph Wragg Australian Business News July 4, 2005

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Advertisements:- There was a lot of unhappiness in the medical profession about the nature of the advertisements to which medical users were subjected. This undoubtedly reflects cultural differences between health and markets. Doctors have traditionally not advertised and they are consequently uncomfortable with this.

Mar 2005 Unhappiness and unsolicited advertisements

Some independent GPs have expressed concern about a large corporate medical practice owning their prescribing software.

On the same day as the 11 February takeover was finalised, thousands of GPs using HCN's Medical Director software were sent e-mails or faxes offering "attractively priced" vaccines via Primary's pathology company, SDS Pathology.
Primary wastes no time with sales pitch to GPs
Australian Doctor March 3, 2005

Mar 2005 GP's don't want advertisements but do not want to pay more

ALMOST 50% of GPs support a ban on drug company advertising in prescription software as concerns grow that such advertisements are not adequately regulated.

Research company Blue Moon Healthcare recently conducted a survey of 80 GPs on their attitudes to the software ads and found 54% disliked the embedded adverts, 48% wanted them banned and 54% said the adverts popping up during consults made them "uncomfortable".

However, on the issue of cost, most said they were not willing to pay extra for an ad-free version of the software
GPs split on software ads
Australian Doctor March 9, 2005

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The sale of patient data:- There was criticism by doctors and by the Australian Consumers Association of the commercial sale of de-identified information from Medical Director’s medical records. This was not illegal but was another pointer to underlying cultural differences. Doctors would feel very uncomfortable, and so might the patients and the community of which they are a part.

Jul 2005 The Australian Consumers Association

The Australian Consumers Association raised concerns about drug ads on doctors' software and the sale of patient information automatically extracted from Medical Director.

After an investigation, federal Privacy Commissioner Karen Curtis found the practice was not illegal, as all data was "deidentified" before HCN sold it to researchers and marketers.
Doctors get relief from ads on screen
The Australian July 5, 2005

IBA gets back in the act:- IBA attempted to compete with HCN by offering GP’s software with joint ownership, no advertisements, and access to development. They would not sell patient data. It was supported by the Medical establishment, some of whom became directors. IBA tried to exploit the cultural differences and the different ethical systems.

Jun 2005 IBA challenges HCN's Medical Director

IBA Health aims to loosen the grip of rival software maker Health Communication Network on GPs' desktops, by floating NxtHealth, which will be half-owned by the doctors who buy its services.
"The creation of NxtHealth is in direct response to demands for better service, higher quality products and to ensure medical providers benefit from the modernisation of healthcare IT," he said.
"For the first time, doctors, practice managers and divisions of general practice will be able to profit from the downstream chain of value created through their daily decisions and use of IT."

IBA Health will offer medicos up to 50 per cent of NxtHealth equity by issuing share options, called Doctors' Options Certificates.
Former Australian Medical Association president Professor Kerryn Phelps and respected GP lobbyist Dr John Aloizos will join the board as non-executive directors.

IBA Health chief executive Steve Garrington said NxtHealth would give doctors "unprecedented involvement" in developing the commercial products they used, and a means to set ethical guidelines and standards.

In particular, he said, GPs may be interested in switching to software that didn't include pop-up ads.
Battle for GPs' desktops The Australian June 14, 2005

Jun 2005 IBA's product

NxtHealth - to be launched as a subsidiary of IBA Health this week - will attempt to attract doctors to a re-branded version of the Plexus clinical and practice management software by avoiding the more controversial aspects of Medical Director - pop-up ads and mining of de-identified patient data for sale to marketing companies. The move comes two months before the delayed release of rival software Medical Director 3.

With consumer groups and Federal Health Minister Mr Tony Abbott castigating the sale of patient data, IBA Health also said it would set up an independent ethics committee to monitor the activities of NxtHealth.
GP ownership at core of practice software battle Australian Doctor June 17, 2005

Jul 2005 IBA to give doctors control

Cohen (IBA) hopes the profit-share arrangement and other add-ons - including a review of the programme by medical ethics committees - will be enough to entice many doctors to switch from Medical Director.
Doctor in charge
BRW July 7, 2005

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IBA unsuccessful:- IBA did not dent HCN’s dominance and its practices. The criticism of the advertising continued. There were rulings that this was legal. Medicines Australia failure to act decisively.

Bateman argued that software was no different to medical journals which relied on advertising for revenue.

Jul 2005 The battle goes on

Pharmaceutical promotion that appears in prescribing software should be banned because it leads to expensive prescribing habits and unrealistic consumer expectation say the authors of research published in the current issue of the Medical Journal of Australia.
The call to ban pharmaceutical advertising in prescribing software follows analysis by the authors of advertisements displayed by Medical Director version 2.81 (Health Communication Network, Sydney, NSW) in early 2005.
Also in the same issue of the Journal, Tilman Ruff, Associate Professor in the Nossal Institute for Global Health at the University of Melbourne, and Hadia Haikal-Mukhtar, Melbourne GP, agreed that such advertising was an inappropriate intrusion in the patient-doctor interaction. They say the disproportionate amount of money spent on advertising is an issue for the pharmaceutical industry, doctors and the rest of the community in terms of distorted priorities and large opportunity costs
Call for Advertising Ban in Prescribing Software AMA publication July 17, 2005

Jul 2005 Drug advertisements do not comply with standards

ALMOST all drug advertisements that make promotional claims in doctors' prescribing software do not comply with ethical standards for medical advertising, according to research.

The research, published in the Medical Journal of Australia, examined ads in Medical Director, a leading software package used by general practitioners.
"Common problems included missing information, illegible generic names, and claims that were unsubstantiated or that appeared not to be in accord with the public literature," the journal article says.
Software ad ethics under fire The Australian July 19, 2005

Jul 2005 Regulator finds advertisements breach code

The federal drug regulator has found several pharmaceutical companies in breach of the industry's code of conduct over pop-up computer ads featuring misleading health claims, inadequate information and illegible generic drug names.

The ads, which are contained in the computer program used by about 90 per cent of Australian doctors, popped up as GPs typed in prescriptions and could often be seen by patients.

One breach included an ad from Pfizer about the anti-inflammatory drug Celebrex, which claimed in December there was "a large body of medical evidence showing no significant increase in cardiovascular disease".

In fact, studies had indicated the drug put users at an increased risk of heart attacks and strokes, prompting the Therapeutic Goods Administration to order that the drug, when marketed in Australia, must carry warnings of cardiovascular risk.

Although advertising prescription medication directly to consumers is banned in Australia, patients could see some drug ads, because GPs were encouraged to use computers to communicate with patients about their health.
Drug ad pop-ups ruled out of order
The Sydney Morning Herald July 26, 2005

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Primary makes a concession:- Primary eventually removed some of the most intrusive advertising.

Aug 2005 Pop up's removed

MEDICAL Director has axed controversial pop-up ads from the latest version of its prescribing software after complaints from GPs using the system.
Dr Edmund Bateman, managing director of Primary Health Care, which owns HCN, said there had been no change to the price of MD3.
Medical Director axes pop-up ads
Australian Doctor August 19, 2005

2006 Only the less effective!

Subsequently, Medical Director 3 eliminated pharmaceutical promotion from one of the 24 clinical functions where it was present in Medical Director 2 -;while the script was printing. It can be argued that this was probably the least influential position in which to place advertisements because it occurs after a doctor has decided what to prescribe, not before.
Pharmaceutical Advertisements in Prescribing Software: What Should be Done? By Ken Harvey Health Issues 2006, Number 87, pp. 11-15 1

Advertisements finally removed:- When Medicines Australia finally took some action the advertisements were removed. At the same time fees were increased. Some were unhappy about this and the way it was done. This was a small victory for one culture and the market made its point.

May 2009 All advertisements finally removed

The Health Communication Network (HCN) has been criticised by GPs for its recent price hikes of its software fees and a new payment system requiring all doctors to pay a full-time licence fee.

The complaints follow a move by HCN last month which saw the software maker remove advertising from its practice software Medical Director, as a result of GP pressure and a ruling by Medicines Australia.

However 6minutes has received complaints from GPs saying that HCN is disadvantaging practices which use overseas doctors who may only be allowed to work very limited ‘after hours’ but who will still need to be paid for.
GP outrage over HCN fees 6 interesting stuff for doctors May 26, 2009

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Other growth activities 2005 to 2009

Primary continued the expansion of its general practice clinics by buying and building as well as recruiting. It has concentrated on building large one stop Medical Centres where the public can access multiple different health services. This is the model Mayne Nickless and Columbia/HCA advocated.

There is appeal and logic to this when the motive is service and not profit and when it is directed to improving services and care. The problem, I see, is that it, too often, has become a game of pass the parcel (ie patients) and milking them (or their insurers) to boost the profit stream and fuel growth. There are too many instances where they have been caught up in the corporate roller coaster, misused and their care has been compromised. I have no information to suggest that passing the parcel has been a problem with Primary. The press reports certainly indicate that Primary has been on a corporate roller coaster and some at least have been unwillingly taken on the ride.

Primary also developed its diagnostic imaging and radiology services. These and other services were sited in Primary’s medical centres. Doctors were encouraged and expected to use them.

Aug 2004 Consolidating medical practices

It (Primary) plans to double the size of its operation over the next two to three years. It has already merged 450 general practices into 21 medical centres. It has let a takeover offer for Independent Practitioner Network lapse. The group's share price rose by $A0.16 to close at $A6.15 on 3 August 2004
PHC to double in size on 43pc profit rise
The Australian (ABIX abstracts) August 4, 2004

Aug 2005 Expansion on track

PRIMARY Healthcare says it is on track to nearly double the number of medical centres it operates by 2007.

The company yesterday delivered a 55 per cent rise in full- year net profit to $27.9 million on strong earnings growth at 21 of its 24 centres established before June 30, 2003.

Primary shares surged to close up 35c, or 3.6 per cent, at $9.95.
Primary number to double
The Australian August 10, 2005

Sep 2005 Harvesting massive earnings

Primary Health Care has harvested massive earnings from its medical centres, but despite it being the biggest player in the space it still has only a 3 per cent market share.
Healthy appetite for expansion
Australian Financial Review September 9, 2005

Nov 2005 New clinics in ACT

A MEDICAL centre will open in Phillip and start taking its first patients in March. - - - - - - - The publicly-listed company has based its success on bulk billing which should strengthen GP bulk billing rates in the ACT
Another $4 million medical centre will open off Egan Court in Belconnen on February 1.
Two new medical centres for Canberra
The Chronicle (Canberra) November 22, 2005

Aug 2008 50 big clinics by end of 2009

"It is anticipated that there will be nine new large-scale centres by the end of calendar year 2009, giving a total of 50 large-scale centres," Primary said.
Primary Health expects higher earnings Sydney Morning Herald August 26, 2008

Meanwhile, Primary has continued to roll out its large scale medical centres, with 43 of these centres now operational.

Nov 2008 Primary and Symbion combined

42 large scale Primary centres and 41 Symbion smaller sites at Nov ‘08

13 Symbion centres now merged into Primary sites

70% of GP’s (FTE) retained into Primary sites from these merged centres
Annual General Meeting November 28, 2008

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The acquisition of Symbion

Symbion was one of the residual companies formed when Mayne Health broke up. It was much larger than Primary and competed less successfully in its general practice, pathology and diagnostic service sectors. It also owned two pharmaceutical businesses that were of less interest to Primary. There were obvious synergies to be gained but Symbion was an unwilling suitor.

Primary’s management was seen as superior by the marketplace and a merger as desirable. I doubt that Symbion's reluctance was primarily commercial and suspect that cultural differences caused Symbion to shy away from the union and resist it for as long as it could.

Since action by doctors precipitated Mayne's break up, Symbion had been run by Robert Cooke who had learned to worked cooperatively with main stream doctors who had strong leverage. It required all of Bateman’s skills to manoeuvre Symbion into a position where it had little choice and he would have control.

First move Symbion:- In September 2006 Symbion approached Primary with a proposal to buy its Pathology operations. Primary asked for more than Symbion would pay.

Sep 2006 In negotiations

PRIMARY Health Care confirmed last night it was "in negotiations" with an unnamed party after the stock was placed in a trading halt earlier in the day.
Primary makes it No.2
The Sydney Morning Herald September 12, 2006

Sep 2006 The proposal fails

HEALTH care giant Symbion has walked away from talks with Primary Health Care after declining to pay nearly $400 million for its SDS Pathology business.

After foreshadowing last week that Symbion's proposal could "come to nothing", Primary told the Australian Stock Exchange yesterday that it had rejected the bid.
It is understood Primary believed it would incur additional costs to its overall business if it were no longer running SDS pathology.

These costs, which stem from staffing overlaps between SDS and other Primary activities, were apparently not reflected in SDS Pathology's earnings figures.
Symbion dumps Primary Health takeover talks
The Australian September 22, 2006

Primary counters with its proposal:- Bateman might well have distrusted Symbion’s less commercial management style. As indicated above Symbion’s Robert Cooke had been the conciliator who had rescued Mayne by bowing to the doctors after the aggressive Peter Smedley had caused the doctors to walk away from its hospitals. He had given them a far greater say in the way services were provided. This may well be why Symbion was less profitable. This was not Bateman’s style and he would have wanted control. He is recognised as a micromanager ("his way or the highway").

Primary bought a stake in Symbion then returned with a proposed merger of equals but with the Primary team leading this. The market applauded this. Perhaps unlike Cooke they had forgotten Smedley. Symbion rejected this offer.

Feb 2007 Primary buys into Symbion and makes offer

Primary (PRY) now has a 6.7 per cent stake in Symbion worth $165 million, a cost too great for the smaller company to hang on to as an investment or to bide its time. It initially disclosed a 5.25 per cent stake on Monday and lifted it on Tuesday

Primary says it has made a 'confidential proposal' to Symbion - - - - .
Primary Stalks Symbion SHARE CAFE February 2, 2007

Feb 2007 Proposes draft merger under Primary management

After further discussions, the Managing Director of Primary, Dr. Edmund Bateman, provided a draft proposal to the Chief Executive Officer of Symbion, Mr. Robert Cooke. There were some changes made, as a result, and a non-binding proposal was then forwarded to Mr. Robert Cooke on 21 December 2006.

The essence of the proposal is for "a merger of equals", not a takeover. The merged company is to be lead by the current Primary team.
Primary, contrary to press reports, has not purchased additional shares in Symbion since its announced holding of 6.7% on 29 January 2007.
PRIMARY HEALTH CARE LIMITED Primary comments on the Primary/Symbion proposal following the recent press coverage: ASX announcement February 7, 2007

Feb 2007 Market sees Primary as the better management

Symbion shares jumped the day after the PRY approach was made public and hit $4.26 before easing to finish around $4.13 yesterday.

In contrast, PRY shares have gradually edged higher, rising from $13.20 to close yesterday at $13.89, a big vote of confidence from investors.

Symbion has rejected the approach saying the PRY approach was too 'lowball' but that's not how investors and some analysts are seeing it.
Symbion management might not want to merge at the current price but they will have to realise that the best value is to effect a merger somehow and allow PRY management to run the ship
Primary Stalks Symbion SHARE CAFÉ February 2, 2007

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Symbion tries to sell itself to Healthscope:- In a desperate attempt to escape Symbion chose what Cooke might have considered the lesser evil. By the end of 2007 Symbion had negotiated a merger agreement with Healthscope. Primary immediately borrowed $500 million to buy 20% of Symbion. When the proposal was put to a shareholders’ meeting Primary held the 20% of shares needed to block the merger. Almost all other shareholders supported it.

May 2007 Symbion and Healthscope agree to merge

Healthscope Limited ("Healthscope") to acquire Symbion Health Limited ("Symbion Health") for a combination of cash and Healthscope shares for an implied value of between $4.30 and $4.50 per Symbion Health share inclusive of any Symbion Health 2007 final dividend.
Symbion Health Directors unanimously recommend the transaction in the absence of a superior proposal and subject to receipt of an independent expert’s report confirming that in its opinion the transaction is in the best interests of Symbion Health shareholders
Healthscope and Symbion Health to create Australia’s pre-eminent healthcare services provider ASX release May 29, 2007

Jul 2007 Primary is not going to allow this

PRIMARY Health Care has increased its stake in Symbion Health, threatening to spoil an agreed $2.8 billion buy-out from Healthscope.

Primary Health had built a 14 per cent stake in Symbion, the Sydney-based company told the Australian Stock Exchange yesterday. The company first revealed a 5.8 per cent stake on July 20 and revised its estimated holding three times yesterday.
Primary Health Care threatens to spoil party The Age July 28, 2007

Sep 2007 Bateman blocks merger

There was much drama at the extraordinary meeting of Symbion Health shareholders this morning when the mercurial Ed Bateman from Primary Healthcare sent his proxy along to tell the meeting he was indeed going to use his 20% stake to scupper the merger with Heathscope. And that’s what he did.
Primary is capitalised at $1.5 billion and Bateman owns 17.5%. The company has borrowed more than $500 million from NAB which is costing it $3 million a month in interest. It could have walked away with a $40 million profit on its stake and an 11% stake in the combined company.

Ed Bateman really doesn’t care. He thinks he’s running a private company. Investment banker John Wylie sacked him as a client earlier this year after he inappropriately bought and then sold shares in Symbion during takeover negotiations.
Bateman plays his $500m card and scuttles Symbion merger Crikey September 11, 2007

Oct 2007 Primary's shares drop

Primary shares were hammered by investors in yesterday's easier market.

They fell 37c to $11.37 ahead of the release. That's within 70c or so of the 52 week low of $10.63.
PRY Again Nixes HSP/SYB Deal SHARE CAFÉ October 23, 2007

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Primary makes hostile takeover offer:- Primary now mounted a hostile takeover. Symbion's board refused to endorse the acquisition until Primary had secured over 50% of Symbion, when they bowed to the inevitable. It had taken more than a year but Bateman's entrepreneurial skills and his willingness to take risks won out. Symbion's own shareholders had realised that Primary's management would prove more profitable for them. Employees had little say and Cooke had no choice.

Nov 2007 Primary mounts a hostile takeover

Primary Health Care Limited ("Primary") announced today its intention to make an all cash offer of $4.10 per share ("the Offer Price") for all of the outstanding shares in Symbion Health Limited ("Symbion") ("the Offer"). Primary owns approximately 20% of Symbion.
Primary’s Offer values Symbion at approximately $3.5 billion on an enterprise value basis - - - .

Feb 2008 The final bid

Last week Primary made its final bid for Symbion of $2.7 billion and said it would declare the takeover bid unconditional if it secured more than 50 per cent of Symbion by tomorrow.
Primary Net Profit Falls By 24% SHARE CAFE February 11, 2008

Feb 2008 Symbion concedes and accepts

Primary Health Care (PRY) has all but won control of Symbion Health (SYB), with the announcement that the company now owns 52.27% of the takeover target, up from 49.70% on Friday.

Symbion said it would recommend shareholders accept the $2.1 billion offer if Primary gained formal acceptances of more than 50.1% and declared its bid unconditional.
Shares in Primary closed down by 20 cents at $10.22 while Symbion rose by 10 cents to finish at $4.07.
Finally! Primary Gains Control Of Symbion SHARE CAFÉ February 12, 2008

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The debt problem:- In the process Primary accumulated a large debt. Press reports refer to this as a $2.7 billion takeover whereas Primary and its lawyers both use the figure $3.56 billion. I don’t understand where the extra $860 million came from!

With the economic downturn, and reduced profits because of the costs of the merger and debt payments, Primary’s share price halved from over $10 before the sale to around $5 a few months later. Its future depended on successfully rolling over its debt, selling two of Symbion's’ pharmacy subsidiaries profitably into a falling market and raising capital from the marketplace to pay off debt. It had taken a huge gamble and some analysts were wary. With a lot of luck and faith in Bateman’s successful track record this was accomplished - probably just in time.

In 2009 Primary went to the market again to raise $315 million from institutional investors and $96 million from its own shareholders.

Feb 2008 A $1.23 million capital raising to pay for the takeover.

Primary Health must raise $1.23 million (?billion surely) to help fund the $2.65 billion acquisition, which is based on $4.10 for each Symbion share.

In its $1.23 billion capital raising, Primary has launched an eight-for-five renounceable pro-rata entitlement offer at $5.40 a share.

It has said the funds will be used to finance or refinance obligations arising from the acquisition of Symbion, including the repayment of money Primary owes in bridging loans.
A bitter pill for Primary Health Care The Herald Sun February 16, 2008

Mar 2008 Capital raising successful

Primary Health Care Ltd has completed the retail component of a share offer to help pay for its $2.65 billion takeover of Symbion Health Ltd.

Last month, Primary announced a $1.23 billion underwritten accelerated renounceable pro-rata entitlement offer at $5.40 per share.
Entitlements not taken up by retail shareholders were sold through a bookbuild on March 19.
Last month, Primary raised about $958 million under the institutional component of its $1.23 billion share issue.
Primary completes part of share offer Sydney Morning Herald March 20, 2008

June 2009 Lawyers describe financial complexity of takeover and support by banks

Primary Health Care's A$3.56 billion hostile acquisition of Symbion Health Limited involved complex financial structuring, which was finalised on 30 April 2008.

Minter Ellison handled the financing for the transaction, acting for lead banks Credit Suisse, nabCapital, ABN AMRO, Calyon, and Deutsche Bank. The MLAU's jointly underwrote acquisition facilities of A$2.318 billion to finance Primary's takeover (including a A$100 million working capital facility).
Primary Health Care's acquisition of Symbion Health Limited Minter Ellison Lawyers accessed June 2009

Jul 2008 Sale of Symbion's vitamins business

French drug maker Sanofi-Aventis SASY.PA has agreed to pay A$560 million ($544 million) to Primary Health Care Ltd for Australia's largest distributor of vitamin supplements, Primary said on Monday.
Shares in Primary closed Friday at A$4.75.
Sanofi-Aventis pays $544 mln for Primary Health unit International Business Times Companies July 21, 2008

Aug 2008 Sale of Symbion's pharmacy business

The new owner of the pharmacy business, bought today for $505 million, is the local arm of Hong Kong-based conglomerate the Zuellig Group, signalling the company's first foray into the Australian health-care market.
The total sale price of the two assets was $1.065 billion, marginally less than the $1.1 billion offer that was offered for the businesses by a private equity consortium of Ironbridge Capital and Archer Capital.

Primary allowed the offer to lapse at the end of February, but was then faced with tightening debt and equity markets that threatened to significantly drag down the sale price.
Primary sells Symbion pharmacy for $505m Sydney Morning Herald August 19, 2008

Apr 2009 $765 million of $1.065 to pay off debt - and rolls over debt.

During the period Primary completed the sale of the Symbion Consumer and Symbion Pharmacy businesses (C&P), with cash proceeds of $765 million applied to the reduction of debt during the period. Primary has taken up its option to roll its $1.538 billion syndicated debt facility until February 2010.

Apr 2009 Profits down

Medical centres and pathology provider Primary Health Care Ltd has confirmed its full year earnings guidance, despite reporting a 44 per cent drop in first half profit.
Primary confirms year earnings guidance Sydney Morning Herald February 9, 2009

May 2009 Looking for more money from the market

Pathology services and medical centres operator Primary Health Care Ltd plans to raise up to $361 million from the sale of new shares, and use the proceeds to pay down some of its debt.
It is also seeking up to $96 million through an offer of shares to eligible shareholders at the same price, under a share purchase plan (SPP).
The company currently has debt facilities totalling $1.54 billion, comprising a syndicated bank facility for $1.44 billion and a working capital facility for $100 million.
The facilities, which mature on February 13, 2010, were drawn to $1.5 billion at December 31.

At December 31, Primary had a current debt of $1.5 billion and total liabilities of $1.76 billion.
Primary to raise $361m to repay debt Yahoo Finance May 28, 2009

May 2009 Money raised successfully

Primary said on Friday it had raised $315 million, more than its goal of $265 million.
The 63 million shares were issued at $5.00 each, reflecting a small 0.8 per cent premium to its share price of $4.96 at the close of trade on Wednesday.
Primary Health raises $315m in funds Yahoo Finance May 29, 2009

Jun 2009 looks for more

Primary Health Care Ltd will open a non-underwritten share purchase plan at $5 per share, the same price as that paid by institutional investors under the recent placement, on June 16.
Primary Health Care to open SPP June 16 Business Spectator June 10, 2009

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A milestone for Primary and for Health Care in Australia :- Primary and analysts both believed that the purchase of Symbion was a major milestone in the fortunes of this company. It will significantly change the ethos and structure of health care in Australia, Some analysts expressed their reservations about the risks taken, but, while remaining wary, most accepted that Bateman had pulled it off. It is still overextended and risks remain.

June 2008 Transformational for Primary

The year has been transformational for Primary, following the successful $3.5 billion acquisition of Symbion Health Limited (Symbion), which was consolidated with effect from 1 March 2008. During the acquisition process, Primary’s stated intention was to divest both the Consumer and Pharmacy (C&P) businesses of Symbion Health Limited. Subsequent to year end, Primary has announced the sale of these businesses, with cash proceeds of $765 million, which will be applied to the reduction of debt.
Integration of the Symbion medical centre business is ahead of expectation. The Symbion margins are already showing improvement. It is anticipated that there will be nine new large scale centres by the end of calendar year 2009, giving a total of fifty large scale centres.

Jun 2009 The largest step

The largest step to-date in the development of PRY happened in March 2008, when the $2.6B acquisition of Symbion was completed.
Company Overview Invest Smart Accessed June 2009

A risky roller coaster:- Entrepreneuralism is a risky business requiring steely nerves and an adrenaline addiction. Bateman took a huge risk accumulating a massive debt in a tumbling Australian and global marketplace. He could not predict what was going to happen or the likelihood that he would be able to pull off all the complex deals. A failure in any of these would have brought the house down. Somehow his luck held and it all fell into place. Bateman must have had an adrenaline rush when he had to reveal that he would probably get $322 million less than planned for the sale of Symbion assets. Somehow he avoided this.

Primary still carries a large debt which puts it at risk if the economy does not rally.

Aug 2008 An Olympic diver's performance

LIKE a 10-metre platform diver at the Beijing Olympics, Primary Health Care has managed to twist, turn and somersault its way through the year before entering the water with just a little splash.

But the company's annual results received lukewarm applause, with its share price falling 7 per cent before closing down 15c, or 2.8 per cent, at $5.25.
Lukewarm response to Primary's result Sydney Morning Herald August 27, 2008

Dec 2008 The risks taken

Once again there are people going bust everywhere. And Bateman could easily have been one of them, had his timing on closing the debt-heavy takeover deal for Symbion been a few months later than it was.

As it is, he rolled the dice and bet his company once again, and he looks like he's winning - not just with the $2.7 billion bid, but with the brokers and the banks. For a start, Bateman won the year-long battle for Symbion with a lower takeover offer, albeit cash, than rival suitor Healthscope.

Soon after, he belted out a billion dollar rights issue, managing to get the brokers Deutsche, ABN and Credit Suisse to cop the risk in February just as equity markets were beginning to really get rattled.
Then, as the annus horribilis set in, and investor confidence wilted with every jarring leg-down in global asset prices, Bateman foxed the markets again.

In the face of increasing scepticism that he could fund his newly-merged medical powerhouse, he and his bankers from Caliburn somehow jagged a $560 million buyer for Symbion's consumables business in French mob Sanofi-Aventis in mid-July.

Then they got Hong Kong drug distributor Zuellig over the line for the $505 million sale of Symbion's pharmacy operation in mid-August just before the stock market took another nasty turn for the worst.
Bateman had struck an option with his bankers to roll the $1.1 billion debt depending on the profits from the Symbion sales. Had these occurred been two months later, you could have turned off the drip.
Bateman had punted and won again.
Walking a financial tight-rope Sydney Morning Herald December 12, 2008

Feb 2008 Primary got a big scare in February 2008 (Fortunately for Primary it did not happen)

PRIMARY Health Care now expects to get $322 million less than expected from selling takeover target Symbion's consumer and pharmacy businesses.

The multi-million dollar discrepancy surfaced in a revised balance sheet Primary issued to institutional investors yesterday.

Figures that appear in the latest document contrast markedly with those disclosed by Primary in a similar paper on Wednesday.

A bitter pill for Primary Health Care The Herald Sun February 16, 2008

Feb 2009 Analysts still wary

Cashflows will be impacted by extra provisioning, warn the analysts. Overall, the analysts suggest it's probably best to remain a little bit on the conservative side, for now.
PRY - Citi rates the stock as Buy, High Risk SHARE CAFE February 10, 2009

May 2009 Primary is still overextended and vulnerable

Symbion was a big bite, costing Primary $3.5bn. It financed the deal with a massive $1.25bn 8-for-5 rights issue (at $5.40 a share), $1.5bn in debt, and the sale of Symbion’s pharmacy and consumer assets for $760m. What it kept was Symbion’s medical centre, radiology and pathology assets.
Uncomfortable position
Defensive businesses can usually support a bit of debt, and this one is no exception. But Primary owes $1.5bn compared to its current market capitalisation of $1.7bn. It’s hardly a comfortable position when capital is scarce and the banks are nervous. Primary’s debt needs to be refinanced by February 2010 and another dilutive rights issue is a real risk if the banks take their bat and ball and go home.

Bateman has already pulled off a neat trick with Primary’s debt. After hedging most of it at an interest rate of 10.1% until March 2009, Bateman bet that interest rates would fall sharply - and they have. As of March this year, the interest rate Primary pays will revert to a floating rate of BBSW plus 1.75%. If rates remain low, Primary will pay interest of about $80m in 2010, compared to the $130m we expect in 2009. Of course, there’s no guarantee rates will stay this low.

While Primary’s revenues are pretty defensive, it’s worth noting the government has the health care companies in its sights. In the 2008 budget, the government tightened up payments for pathology testing, with the aim of saving $180m over four years. It’s almost certain that further changes to health care funding will be made in the 2009 budget (due on 12 May), and these changes could have adverse effects on Primary (and its competitors). Bateman’s talking tough and has suggested he’ll start asking patients for ‘co-payments’, as they’re known. But universal bulk-billing is also one of the reasons his medical centres are so popular, and charging patients could conceivably backfire.
Primary Health Care’s big bite The Intelligent Investor May 6. 2009

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Primary’s business culture - winning the culture battle

Primary is seen by the market as having superior management skills and these are widely admired. Its economic success is attributed to its micromanagement of every aspect of the business. Prospective employees, and the doctors whose contracts will now be taken over by Primary might see it very differently. Theirs is a different cultural heritage and they are used to controlling the provision of medical services. Primary’s micromanagement style was likely to have a major impact on their working lives and might challenge their value systems.

In securing the planned synergies Primary would be reducing staff. It had a huge debt and would have been in cost cutting mode. This was likely to have a significant impact on Symbion’s operations and on their employees. The possibility of an adverse impact on services and care must be considered. Quite apart from differences in management, conflict and unhappiness in the workforce is likely to have an adverse impact on the services. Bateman’s problems were unlikely to end with the successful purchase.

Doctors were not the only professional group to feel the pressures.

Dec 2008 Unions and radiographers act

He's (Bateman) got another brawl on his hands too, this time with The Health Services Union which is up in arms over his heavy-handed approach to slashing costs in the Symbion assets. Industrial action by radiographers and support staff in Melbourne is disrupting business amid claims Bateman is sacrificing patient care on the sacred alter of cost reduction.

A further brawl is brewing over Symbion's old imaging business at Epworth Hospital in Melbourne. Unfortunately for his adversaries though, Ed Bateman seems to relish a brawl.
Walking a financial tight-rope
Sydney Morning Herald December 12, 2008

Apr 2009 The commercial objective - and using incentives

The imaging business (referring to Primary) specifically is undergoing significant structural change with a real reduction in workforce numbers occurring and the introduction of productivity incentive schemes for staff.

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Primary’s cultural war with doctors

Before looking at what happened with Symbion we should look at the tensions that have existed between Primary and doctors as well as Primary’s strategies to recruit and keep doctors. Doctors are relatively independent individuals and are used to running their own practices. Corporations like Primary prefer to manage the centres their way.

Medical practitioners are responsible for the care of their patients. A company which seeks to "micromanage" every aspect of the medical centres where they work is likely to impact on this responsibility.

The doctor patient relationship and continuity of care are considered important both for the quality of care and for professional fulfillment. Primary discourages (? forbids) a system of appointments so that patients are generally seen as doctors become free. This encourages a higher turnover and is more profitable. Most doctors do not like an overcrowded waiting room any more than an empty one. They feel pressured to see too many patients and not keep people waiting for too long. They feel that they cannot care properly for patients in this way.

If however - and I am not claiming that Primary does this - patients are shunted into the next available doctor (like a post office) or encouraged to do this, then this might seriously impact on continuity of care and professional satisfaction. In all practices there is a balance between spreading the load and continuity, but where is the line drawn?

Aug 2005 Micromanaging the business

Deutsche Bank health care analyst Mr David Low said Primary had made profits from corporate medical centres because their management team "micromanages" every aspect of the business and the medical centres were quick to cash in on Medicare incentives.
Medical Director axes pop-up ads
Australian Doctor August 19, 2005

Dec 2008 Keeping the doctors wealthy

Bateman's GPs get paid quite a bit more than High Street GPs. It's a bit of a meat market but there is little administration, a centralised waiting room and the medicos are on a profit-share deal where they can charge more for small procedures. They bulk bill too, and often run a few extra offerings such as pathology and radiology out of the centres.
Walking a financial tight-rope
Sydney Morning Herald December 12, 2008

May 2009 Primary's system more profitable

Without the hassles of managing their own practice, and with patients funnelled to them using the no-appointment system, Primary claims its doctors earn considerably more.
Primary Health Care’s big bite The Intelligent Investor May 6. 2009

May 2009 A doctor suggests Primary won't get GPs to join it

Regarding your recent interest in Primary Healthcare, as a practising GP my general observation is that the morale of GPs working for PRY is generally not good. In my locality a lot of GP's they were able to attract to work in their centers were those who were close to retiring age and this was an opportunity for them to take the $1/2 million and run after the 5 year contract term was up. Most of them have no intention to renew their contracts. There is already a huge shortage of GP's in many areas and I would suggest failure to recruit GPs is their biggest obstacle to growth.
Feedback comment on an market analysis of Primary by a doctor The Intelligent Investor May 2009

Jul 2005 "Guarded" medical opinions

Around the medical community, though, opinions of the company and its tough managing director are more guarded. Part of that is history. In medicine, people have long memories. Stories such as a Primary director, Michael Christie, coming to the attention of the Health Insurance Commission nearly 10 years ago because he at times saw 100 patients a day, are still recounted.
What doctors do know about Bateman is that he does not back away from litigation. A search of legal databases reveals a whole range of court action over the past 10 years, initiated either personally or by the company.

Among them, Primary has sued several doctors who have sold practices to the company but not completed their agreed term.
In 1997, Bateman was awarded $81,000 in damages plus costs, in a defamation case he pursued involving a column written by a former AMA president, Bruce Shepherd, in the magazine Australian Doctor. Among other things, the column referred to "bulk-billing emporiums".
Doctor in charge BRW July 7, 2005

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Getting doctors on side

Each doctors walks a personal ethical tight rope between his or her responsibility to patients and their own financial, career and family interests. Care depends on their managing this precarious balancing act successfully. US politician and market focused health reformer, Joseph Califano recognised their human fallibility - by manipulating their financial interests and careers most doctors could be pushed off the tight rope and into some one else's pocket. US Corporations got the message quickly.

In the last cultural battle when Mayne Health carried the corporate standard Mayne Health (Catchlove and Smedley) failed to bind doctors to the corporate mission and instead alienated them. Specialists who traveled more often to the USA had seen the corporate trap. Mayne was incredibly inept and did not properly learn from the US experience. When the crunch came the doctors were still in control. Mayne and then Symbion had to come to the table and deal with them. The specialists held the trump cards.

Primary has not made that mistake and knows what happened in the USA and Australia. It has been systematically binding its doctors to its mission with contracts, incentives, options and confidentiality clauses. Although they comprise only 5% of General Practitioners these doctors cannot take their patients and walk away without making major personal sacrifices. They are trapped and unlikely to do so. Understandably Primary has taken steps to protect its commercial interests. The profession have never been cohesive enough and prepared to make the sacrifices needed to fight this sort of war. Suicide bombing is not their style.

Buying Doctors:- Corporations pay doctors large up front sums for their practices as well as the opportunity to make more money. Clearly they will take steps to protect this investment and ensure that they get their money's worth. A little bird told me that the current buying formulas in 2009 are

I have no way of checking the accuracy of those figures. If correct then Primary gives more and expects more. The big question is how much control over care and service does each company expect the doctors to give up?

Sep 2005 The going price in 2005

GPs are being offered as much as $350,000 plus half their Medicare earnings over five years to move to Primary Healthcare, as corporate health care companies move from buying doctors' practices to just buying doctors.

Last week, Australian Doctor obtained a letter signed by Dr Edmund Bateman - managing director of Primary Healthcare - offering the upfront cash for a GP to leave their practice and move to Primary.

In a statement, Dr Bateman told Australian Doctor the average amount of recent "GP goodwill acquisitions" had been $300,000.
$350,000 to sign with Primary
Australian Doctor September 23, 2005

Corporate medicine unpopular
But GPs have traditionally disliked ‘corporate medicine’, and Primary has its fair share of detractors for exactly that reason. So how does it get them to join up? The company has previously ‘bought’ GPs, paying them an average of $500,000 each to close their practices and transfer to Primary. In return, doctors signed on for five years, splitting patient billings fifty-fifty with the company. Without the hassles of managing their own practice, and with patients funnelled to them using the no-appointment system, Primary claims its doctors earn considerably more.
Primary Health Care’s big bite The Intelligent Investor May 6. 2009

Share Options:- In 2004 I dealt with the carrots offered to doctors to entice them to sell to Primary and the way in which options were given to doctors to encourage them to keep their eye on the corporate ball. In my view financial enticements such as shares, options and joint ventures, while not classed as kickbacks, which are illegal, nevertheless operate in much the same way to tie doctors loyalty to the corporation. No organisation can operate successfully without the loyalty and support of staff. Loyalty based on shared cultural values and objectives is always desirable. When the loyalty of doctors is secured using financial ligatures then their ability to act for their patients when corporate and care priorities conflict is compromised. This is particularly likely to happen when there is cultural dissonance.

Corporations seek to offer doctors the same enticements they offer employees. Doctors understandably don’t want to be left out. Clearly it is legitimate to get the doctors to identify and support the company and superficially there is nothing intrinsically wrong with this provided their objectives are congruent. It becomes a trap when speaking out and/or resigning in protest in regard to unacceptable practices carries a financial or personal price tag. Not only do they lose their options but there is a penalty for premature termination of a contract - large enough for Primary to enforce this through the courts.

Public documents record the issue of options.

Jan 2004 Options for doctors

PHC is to offer to grant options to individual medical practitioners who, as independent operators, provide medical services to patients at medical centres operated by the PHC group.

Each option entitles the holder to subscribe for one ordinary, fully paid share in the capital of the company. The maximum number of options to be offered is 1,764,000

The amount payable on the exercise of each option is $5.05. The exercise price has been calculated as the average weighted market price preceding the offer.
Each option will lapse if the medical practitioner ceases to receive medical centre management services from the PHC group.
The issue of options to such medical practitioners is seen as a significant development by the Company in the maturing of its core medical centre business. The proposal aims to give such medical practitioners a sense of ownership and allow them participation in the Groups future. The plan rewards long-term commitment.
Issue of Options to Medical Practitioners
ASX Release January 27, 2004

Feb 2005 Options for employees

Primary Health Care Ltd issued 450,000 options issued to reward the long term commitment of employees on February 7, 2005. There are 117,473,650 ordinary shares quoted. There are 8,491,500 options unquoted.
PRIMARY HEALTH CARE ISSUES EMPLOYEE OPTIONS Australian Company News Bites February 7, 2005

Oct 2005 More options for doctors

Each option entitles the holder to subscribe for one ordinary fully paid share at $10.46 exercisable by July 6 2007. The maximum number of new options to be offered is 1.915 million.
Australian Company News Bites October 5, 2005

Contracts:- In the section I wrote in 2004 I drew attention to concerns expressed in the press about the clauses in contracts. Clauses that may impact on a doctors ability to speak out include, confidentiality clauses, penalties for leaving a practice, and clauses which prohibit doctors from practicing in the same region if they break the contract. Doctors with families lose their patients, have to leave homes, schools, friends and communities, and then start all over again somewhere else. What worries those doctors I have spoken to, who are unhappy, most is the confidentiality clause and Bateman’s reputation for aggressive enforcement. Whether these fears are justified is another matter.


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Symbion’s Doctors

Doctors are very much a part of the establishment and generally are reluctant whistle blowers. At the same time disputes do occur and cultural changes accompanying takeovers can precipitate these. In acquiring Symbion as the economy slid into recession, Primary took a big risk. Some have been critical of this.

The extent and nature of such disputes does give an indication of the way the wider medical community experience Primary and its business practices.

Primary needed to capitalise on synergies as quickly as possible. That meant staff losses and increased anxiety. The stage has also been set for intense cost cutting. The community needs to keep a wary eye on the services provided. Reorganising to capitalise on synergies can be a convenient smoke screen for doing the unconscionable - not of course to suggest that Primary's management would do so intentionally. My concern is the frequently demonstrated human fallibility that allows us to do "whatever it takes" without seeing the consequences.

Synergies and cultural obstacles:- At least one report indicates that Symbion doctors seem to be concerned about Primary's culture. Nine pathologists defected and joined Sonic. Because of contracts we don't know how many others would have done so if it was without cost to them. As the extracts below reveal the market looks at profitability. What we really need is a comparison between the standard of care and the quality of services in Primary and Symbion's centres. That is the sort of information we never get and analysts never report.

Apr 2009 Optimising synergies and introducing Primary's "medical centre controls and procedures"

The decrease (in profits from medical centres) is expected and reflects the acquisition of the lower-margin Symbion medical centres in March.
Integration of the Symbion medical centre business is progressing well and is ahead of expectations. A total of 14 Symbion centres have been merged into the Primary operations.

Doctor retention from these merged Symbion sites remains strong at approximately 70 per cent of GPs.

Symbion state office operations have been closed.

Operational improvements and efficiencies have been quickly made with the introduction of Primary's system of medical centre controls and procedures.

The backfilling and upgrading of certain Symbion sites is now underway.

May 2009 Symbion's Medical Centres not profitable - cultural disparities - Symbion Pathologists defect

Symbion’s medical centres had been poorly managed for years. Only 10 of its 54 centres were profitable and EBITDA (earnings before interest and tax, depreciation and amortisation) margins were, on average, almost one-quarter of Primary’s 60% margins. Primary has now merged 14 of Symbion’s centres into its own, and has begun upgrading the remaining Symbion sites, moving doctors into centres with spare capacity. In the first half of 2009, Primary announced that the margins of the former Symbion centres hit 36%, more than double previous levels.
Having built his chain of medical centres in the face of stiff industry opposition, he’s not known for his bedside manner. His abrasive style and corporate approach have made him enemies, so it was hardly surprising when nine Symbion pathologists defected to Sonic after Symbion was taken over. Integrating the very disparate cultures of Primary and Symbion will remain a key challenge
Primary Health Care’s big bite The Intelligent Investor May 6. 2009

The Bunbury Experience:- There has clearly been considerable unhappiness in Bunbury (Western Australia) following Primary’s acquisition of a Symbion clinic there. The press have covered the issues but none of the doctors have been prepared to speak out about staff and professional grievances. Medical and Community groups have done this for them. In such situations there are usually some grounds for disquiet.

What is important is whether similar discontent has surfaced at other facilities acquired from Symbion, and what the reasons for this have been. While there may be rumblings, this information is not publicly available.

Sep 2008 Summary dismissal of a doctor who objected

The doctor shortage in the South west has been dealt its latest blow with the unexpected and instant dismissal of a long standing and highly respected GP, according to the Greater Bunbury Division of General Practice.

Dr Mike Munroe’s employment contract at Forrest Family Practice was terminated on September 11 following a disagreement with Primary Health Care, over its decision to reduce the hours of reception staff at the practice.
Division chief executive officer June Foulds said Dr Munroe would be greatly missed and his departure exacerbated a long standing shortage of doctors in the Bunbury area - - - - .

"The sudden dismissal is very disappointing because it has left hundreds of patients without access to a GP and not allowed any patient handover to occur" Ms Foulds said.

"An important value of high-quality care general practice is continuity of care especially for the elderly and chronically unwell who build up long standing relationships with their GP."
"Dr Munroe was a highly respected doctor who served between 150 and 200 patients each week, and his sudden departure is being felt greatly by his patients and colleagues."
Doctor shortage worsens in region Bunbury Herald September 23, 2008

Sep 2008 Staff unrest and a 2nd doctor resigns in protest

BUNBURY’S doctor shortage has reached dire straits with the news that two doctors have left Forrest Family Practice in the last fortnight.

Well-known doctor and skin specialist Fred Pretorius has told the practice he will follow Dr Mike Munroe out the door later this year.

According to the Greater Bunbury Division of General Practice, Dr Munroe’s departure leaves 150 to 200 patients searching for a doctor.

The news comes on the heels of statistics showing Bunbury’s ratio of GPs to residents is one of the worst in WA.
Mr Castrilli said the recent resignation highlighted the heightened staff unrest at the Forrest Family Practice.

The practice on Spencer Street was taken over by Primary Health Care in May 2008 - the largest corporate owner of General Practices in Australia.
City GP crisis Bunbury Mail September 24, 2008

Sep 2008 Bunbury Division of General Practice speaks out

Bunbury has lost its second doctor in as many weeks, exacerbating the already dire GP shortage.

Dr Fred Pretorius of Forrest Family Practice resigned in protest following the dismissal of Dr Mike Munroe from the practice on September 11, according to Greater Bunbury Division of General Practice chief executive June Foulds.
Dr pretorius is the only GP in Bunbury who specialises in skin checks for ailments such as skin cancer, disrupting the treatment of a whole other group of patients.
Doctor resigned in protest, says Division Bunbury Mail September 24, 2008

Sep 2008 Staff and patient unrest - fears for patients

There has been staff and patient unrest following news of the instant "dismissal" of Dr Mike Munroe and the resignation of Dr Fred Pretorius - - - - .
The South Western Times understands the news has caused staff unrest at Forrest Family Practice, prompting fears hundreds of patients will be left without access to medical treatment at the Bunbury practice.

Dr Pretorius - - - - ,said the loss of long serving Dr Munroe caused a lot of angst among remaining practitioners.

"I felt general dissatisfaction with Dr Munroe’s dismissal and the way it was conducted," Dr Pretorius said.

The South Western Times understands the practice’s office manager also resigned.

Bunbury practitioner Dr Ern Manea said the termination would be hardest felt by local nursing homes which Dr Munroe regularly attended.
He (Bateman) could not say when a GP would be employed to fill Dr Munroe’s position.

"My preferred position is to not have any doctors leave - ever" Mr Bateman said. "But having said that, I’ve got obligations I’ve got to maintain regardless of the shortage of Gps por otherwise."
Concern at medical practice departures South Western Times September 25, 2008


Sep 2008 Patients feel the impact

Doreen Casey was a patient of Dr Munroe’s for 20 years and has said she was disappointed and upset to hear he left the practice.

She said that Dr Munroe was more than just a doctor to her and her family, but a friend.
"We need doctors down here and for them to just say ‘you can go’ - its easy for them to say that, they don’t live here" Mrs Casey said.
Grandmother shocked over news Bunbury Mail September 24, 2008

Oct 2009 Community group expresses its concern and anxiety about the changes

A consumer group has expressed grave concerns for the safety of Bunbury residents due to the growing doctor’s shortage.

The consumer Reference Group for the Greater Bunbury Division of General Practice said they feared for peoples health and patients would suffer because the corporate owners od Forrest Family Practice were putting financial gain ahead of patient care.
Rev Newing (from the group) said the group had a number of people contacting them. Expressing concern over what to do now their GP had left.

"There’s been a flood of not just complaints, but overwhelming concern. They feel threatened," Rev. Newing said.

We want Primary Health Care to know that as consumers we believe providing good health care is not about seeing more people, its about continuance of care."
Doctor shortage a growing concern Bunbury Mail October 8, 2008

Oct 2008 Patients the meat in the sandwich

PATIENTS of Doctor Mike Munroe have been left in limbo, trying to find another doctor to trust since he left Forrest Family Practice.

Tania Murphy and her family went to Dr Munroe for more than 10 years.

Her parents Marleen and Bob Poletti went to Dr Munroe, as did her husband, brother and children.

They followed Dr Munroe when he moved to Forrest Family Practice and he delivered her son Kieran.

Dr Munroe left Forrest Family Practice almost a month ago where he served between 150 and 200 patients each week.

Now, the family is trying to find a doctor who they feel comfortable with.
"You get to know your doctor and to trust your doctor, and it doesn’t make good sense to let a good doctor go," Mr Poletti said.
Patients left in doctor limbo Bunbury Mail October 8, 2008

Oct 2008 Community angered

CORPORATE medical centre operator Primary Health Care has been accused of exacerbating regional workforce shortages following the sacking of a West Australian GP.

According to the local division, the doctor’s dismissal from a former Symbion practice in Bunbury - now under Primary ownership - has angered the local community and left remaining GPs "scurrying" to provide care for their former colleague’s patients.

Primary Health Care did not respond to Medical Observer’s requests for comment.

According to Greater Bunbury Division of General Practice CEO June Foulds, Dr Mike Munroe was instantly dismissed early last month following a dispute with the new owners over the number of receptionists employed at the 10 GP Forrest Family Practice. He appeared to be given no opportunity to conduct patient handover, she said.
Division concern over Primary sacking of GP
Medical Observer October 3, 2008

Country and City:- The press reports say it all. As revealing is the paucity of comment from the doctors as well as past and present staff who have corporate contracts that Primary has taken over. None have spoken out to defend Primary. This suggests the nature of these contracts. We don’t really know the details of what happened. That medical and community groups were prepared to speak out so strongly speaks for the argument that something unsatisfactory has happened.

This is a country community and news spreads by word of mouth. Contracts and threats of litigation will not prevent people from knowing. Had this been Perth, where Primary has other medical centres, or some other larger city it is unlikely that the unhappiness in the medical clinic would have been recognised or the doctors so strongly supported by the community and the press.

It is important before drawing too many conclusions to know whether what seems to be happening in Bunbury has occurred at other medical centres around the country. Is this a pattern or simply an aberration. Such information will only come from whistle blowers.

Culture has changed:- I well recall when my father, a GP in a 5 doctor country town, probably not unlike Bunbury, sold his practice many years ago. The candidate he selected first did a locum for him and then for the other doctors in town. His patient’s trusted him to ensure that his replacement would be competent to care for them. The contract was not signed until my father was satisfied that his replacement had been vetted by and was acceptable to his patients and the other doctors, and that he would be contributing to the community. Care was centred on the community and he had a responsibility to all of them. How times have changed - but incredibly in Bunbury a residue of this still exists.

In my view responsibility for care of the sick and the aging when they experience misfortune or are incapacitated is the responsibility of the community. Its what we do for others. It makes us human. Health professionals are members of the community and provide this service on their behalf. That the community have delegated this to government and the marketplace is unfortunate but understandable given the complexity and costs now associated with it. Its essential character nevertheless remains and the health professions primary responsibility is to the community. This is a community service provided on behalf of the community. It is not something which can be packaged and traded on the share market.

What is so very wrong is the lengths that both government and business have gone to, to prevent the members of the community (health professionals and others) who provide the services to the community from talking publicly to other members of the community and keeping them informed about what is being done on their behalf. This may work for business and politicians but it is not going to work for the community.

Another thought:- Bateman is no fool and one wonders what his thinking here is. A letter to one of the Bunbury newspapers asks exactly this.

2008 A letter expresses the community's incredibility

I have extreme regard for Dr Munroe for, as my GP, he diagnosed - - - -
Over the years he has built up so much trust between them (patients) and also the remaining doctors and staff at - - - .

I just cannot believe the thoughts behind the actions taken by Primary Health Care's decision leaving so much stress to so many people and the doctors, staff and the well-being of the patients in this region.
Dismal blow to the community Published Letter by Lindsay Robinson, Eaton - Newspaper and date not known

"Bateman is a superb corporate strategist. He has been described as ruthless. His skills in stalking and outmanoeuvring his opponents are revealed in his take over of HCN and of Symbion. However, this clinic in Bunbury is not the sort of one stop megacentre he favours. If there are plans for a large one stop medical centre for Bunbury, perhaps these doctors and this clinic are in the way. Alienating staff and community at a time when Primary needs to maintain an income stream makes no sense. Is this is an example of ''my way or the highway''?

Perhaps I have been reading too much trashy cops and robbers fiction but he did not deny that his own sons said this.

Primary has to pay off the debts it now carries in a time of recession. If Bateman does not succeed he faces failure. He admits the fear of this is what drives him. How far does it drive him?

If Bateman plans a megaclinic for Bunbury he is likely to move quickly. He needs the money.

Dec 2008 My way or the Highway

Bateman - labelled variously as ''abrasive'', ''ruthless'' and worse - concedes that even his sons claim his style is ''my way or the highway''. Fear of failure, he says, is probably his most potent driver.
Walking a financial tight-rope Sydney Morning Herald December 12, 2008

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Final Comment

A personal bias is acknowledged:- When I first entered medical practice (not in Australia), I worked in a city where a substantial amount of medical care was provided under contracts. Doctors received less money for each patient but were guaranteed a large turnover. The more patients they saw the more money they made. This encouraged what is now called 5 minute medicine. The situation was misused by a number of doctors and this was at the expense of the care patients received.

Some over-serviced, others provided substandard services and GPs in the system saw more patients than they could safely treat. Some suffered adverse outcomes as a result and I found myself picking up the pieces afterwards. I knew many of the doctors personally. The system attracted the sort of doctors who could readily explain away any criticisms and delude themselves - the least suitable. While some were nice sociable guys, people I had trained, remonstrating with them resulted in their criticising me to others and my being ostracised. I realised that this was a common defensive response to criticism but my practice suffered.

I was in no position to speak out and like others have done I solved the problem by going elsewhere.

Over the last 20 years I have watched corporate medicine grow particularly in the USA. I found that exactly the same things happened with doctors there when they entered into lucrative contracts with big corporations. Those who were unhappy went elsewhere and those prepared to make themselves wealthy by going along with this were attracted. The same forces that attracted a certain type of management attracted a certain type of doctor and ensured that they were supported. (Tenet Healthcare, then called NME, is a good example) No one spoke out.

I therefore have a strong bias against corporate medicine and a strong bias against medicine practiced under contract. That may colour my analysis and readers should take account of this.

Are we really different:- It is naive for Australians to claim that we are somehow different or that our doctors would not behave like this. We are all human. Our society and our doctors embrace the whole spectrum of human characteristics. While we as individuals may express our surprise and anger, history indicates that under the same conditions many of us would behave in the same way. Unless we recognise the problem and confront it, or there is some uniquely different factor operating in Australia then there is a risk that we might behave similarly. I argue that neither corporate management in in the USA, nor the doctors there, nor those in my past experience, were malign.

They did not accept that what they are doing was undesirable. In fact company executives at Tenet Healthcare seemed genuinely aghast at the community's anger. They felt that what they were doing was not only legitimate but commendable. That was why they were successful. They were simply human and were behaving humanly. Characteristically some continued to believe this even after they were convicted of fraud, blaming a beat up by the press for their fall from grace.

In Australia Mayne Nickless senior staff displayed the same pattern of denial after their criminal conviction for collusion on prices in 1994. The revelations about their behaviour in executing the fraud give a wonderful insight into the process. They knew but did not want to know so did not know - a peculiar but recognised process called "compartmentalisation". These were prominent and well respected businessmen and this had gone on for many many years. When they could not make money this way they turned to health care! Few questioned their suitability. We see the same phenomenon in the recent fall from Grace of Richard Pratt, the successful packaging millionaire from Melbourne. Another Australian example where we saw similar patterns of behaviour was Gribbles.

These examples may also colour my analysis of what I read and fuel my suspicions. The reader should decide whether my concerns are justified and whether Primary and its leaders might be at risk. I simply do not know but believe we should be watchful.

Transparency and Accountability:- We don't know what is happening or, as the letter writer above expressed it, "the thoughts behind the actions" because corporations are accountable to shareholders and not community. Transparency impairs competitiveness and without commercial confidentiality many would become vulnerable and fail.

As a consequence we simply do not know exactly what is happening in any of the corporate run services and will not know if anything is amiss unless and until people can and do speak out. This is a service provided to sick members of our community and the providers should be responsible to us. We are justified in being suspicious and asking questions when we don't know what they are up to.

Success is no guarantee of service:- Corporations built vast health care empires in the USA. They were widely admired by politicians, the public and many doctors. Patients flocked to them even though care was often substandard and very expensive. What they did was accepted and few spoke out. It was the exceptional person who at great cost to themselves spoke out - or the occasional action by some independent socially conscious individual - that opened the flood gates to expose what was happening.

When I asked a whistle blower colleague in the USA how this had happened to the medical profession, and how he had become involved he advised me to read "The Firm" by John Grisham. The process of being sucked in is described.

Silence therefore does not mean that things are as they should be. A lot of noise similarly does not always mean that things are bad. It may simply indicate that people can and do speak out. The community is at work and things are as they should be. They are seeing that change occurs.

When there is noise in the face of constraints on the flow of information then we should get worried. It is a sign that things may be amiss and we should look more closely.

Recruiting doctors has not been a problem:- Although there was an undercurrent of discontent and some strong critics in the USA, companies had no difficulty in recruiting doctors or in retaining them. Once they had become part of the financially rewarding system they stayed and signed new contracts. Even when unhappy few would accept a lower income by going elsewhere. That a company has retained doctors and that doctors sign up when their contracts expire does not give an indication either way. Primary claimed that 70% of Symbion’s doctors were retained but we do not know how many were still under the contracts signed with Symbion, contracts they might not be able to break without a penalty.

Sep 205 Doctors almost all renew contracts

Predictions that there would be a mass exodus of doctors from the corporate practices when five-year contracts that were signed in the 2000 corporate practice boom ended had proved false, Dr Kosterich said.

"In Western Australia, most doctors from corporates have come out of their contracts and between 80% and 85% have remained [contracted]."

Dr Bateman claimed that while the contracts of most GPs who initially signed for Primary had now ended, less than 1% had left the company.

The state of play

About 5% of GPs are now signed up to the major corporate players
$350,000 to sign with Primary Australian Doctor September 23, 2005

Nov 2008 Symbion doctors stay

70% of GP’s (FTE) retained into Primary sites from these merged centres (Symbion)
Annual General Meeting (Primary Health Care) November 28, 2008

Advice for doctors:- If I were asked for advice, by a doctor thinking of joining one of the corporations, then I would advise them to speak to colleagues and be sure to include doctors who had left the company as well as those who had not. I would urge them to examine the contracts carefully, get independent legal advice, discuss with colleagues, and consider whether situations could arise that would create a conflict of interest for them - or that might restrict their right to treat their patients in a optimal manner. I have never seen any of these contracts myself.

Click Here to go to the web page describing the Primary story prior to 2005.

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Web Page History
This page created June 2009 by
Michael Wynne