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 The many extracts on these pages are from copyright material. they are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

Privatisation and Colocation

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

I am not sure when Mayne Nickless moved into Queensland but suspect that it has owned hospitals since it purchased Hospital Corporation of Australia (HCoA) from Hospital Corporation of America. By 1999 it operated 11 hospitals. I have included a number of quotes from press reports to help tell the story, and illuminate the thinking behind the debate.

In the late 1980's there was great enthusiasm about a lavish Mayo Clinic style facility on the Gold Coast catering for wealthy Asians who would fly in for treatment. Some prominent doctors strongly supported the project. Moran Healthcare, a nursing home company was to operate the hospital. This project was ill conceived and was never going to succeed. A luxurious hospital was built but the whole project fell apart and it was never completed. The bank was left owning the buildings. In 1992 Mayne won a contract from them to run an ordinary private hospital in these buildings.

"HCOA has been awarded the Tugun contract after conducting a six month feasibility study for the hospital's sole owner, Westpac.
MAYNE NICKLESS LIMITED: RE: SIGNING OF NEW GOLD COAST HOSPITAL CONTRACT (Part A), Australian Stock Exchange Company Announcements 16 December 1992

The $300 million Tugun hospital was originally a joint venture between Itochu and AGC, each holding 40 per cent, and Moran Health Care Group with 20 per cent and management rights.
TUGUN OPERATION IS HCOA'S NEXT HOSPITAL VENTURE, Australian Financial Review 17 December 1992

Mayne also tendered for the contract to run and operate the Greenslopes Repatriation Hospital in Brisbane in 1995. The federal government had privatised the medical care for veterans and was selling off the Veterans hospitals. Australian Medical Enterprises fell off the list when doctors were supplied with documentary evidence of the conduct of its US parent. Ramsay Healthcare was awarded the contract.

Queensland coalition parties were rocked with political scandal during the 1980's. The chief of police and several ministers ended in prison. The labour government which replaced them opposed privatisation. A revitalised coalition government did not regain power until the mid 1990's and privatisation was delayed. An aggressive program of co-location and privatisation was immediately begun. They promptly awarded Mayne Nickless co-location projects at the Logan and Caboolture hospitals. A Mayne Nickless executive was made director of the Health Department. (He did resign from Mayne Nickless)

- - - agreement had been reached with the Queensland government to construct new public and private hospitals on the same site (Logan), with the private hospital to be run by HCOA
Mayne set for Qld private hospital`, Australian Financial Review 19 Jan 1995

The only local Brisbane newspaper, the Murdoch owned Courier Mail was strongly supportive of the government's privatisation policy and also of Mayne Nickless. A local academic economist writing for the paper adopted a rigid hard line economic formula for health care. Editorials, perhaps written by him reflected this position.

Attacked by the labour party before the election the coalition had promised not to privatise public hospitals. The Courier Mail advocated privatisation, quoted the minister's reason for not doing so and then hinted that promises given in response to biased electoral criticism might not be totally binding. The minister took the hint and went ahead with two projects to privatise public hospitals arguing that these were new hospitals and that existing public hospitals were not being privatised. He had not broken his promise. He also offered another four co-locations.

The State Government has opened the door for the private sector to increase its involvement in Queensland's public health system (co-location plans)

- - - - it has shelved plans to allow privately operated public hospitals - - -

(Quoting Horan, Qld Minister for Health) The labour party ran a scare campaign - - - that the coalition was going to privatise hospitals and we denied it - - - We would look hypocritical if we did that now.

- - -there is merit in governments paying private companies to build and operate new facilities for free public use.

Queensland has once again elected not to join the other states in jumping on the privately run public hospital bandwagon.
Private operators win role in public health system, Courier Mail 14 Aug. 1996

Private construction and operation of new hospitals for Queensland's free public hospital system, under tight government contracts is a sensible proposition. - - - the squawks from the Opposition need not hinder this process. They are only the sound of labour trying to make political capital - counterfeit capital at that - in the conduct of partisan politics.
Common sense on hospitals, Courier Mail editorial Sept 1996

Health Minister Mike Horan revealed yesterday that expressions of interest would be sought from the private sector for the hospitals planned for the Sunshine and Gold Coasts. (ie public hospitals)
This is a clear backflip by Mr Horan - he has misled the public," she (shadow health minister Edmond) said.
Plan for firms to operate hospitals, Courier Mail ?Sept. 1996

In an article in the 30 September edition of Business Queensland, the State Health Minister, Mr Mike Horan, elaborated on the plans of the Queensland government to broaden the role of the private sector in the construction and operation of public hospitals.
QUEENSLAND HEALTH - FOR SALE?, The Queensland Nurse September/October 1996 (Note. The Queensland Nurse studied the Port Macquarie privatisation in 1996 and used it to argue against privatisation - read extract)

In February 1997 Columbia/HCA attempted to enter Australia. A concerted effort by Australian doctors which included a team visiting the USA and objections lodged with the Foreign Investment and Review board held them at bay despite strong political support. The stand off was resolved when FBI fraud investigators swept through Columbia/HCA hospitals across the USA. They withdrew.

I had at this time been in contact with the shadow minister of health Mrs Wendy Edmond in regard to both Mayne Nickless and Columbia/HCA. Written questions were put to the minister in March 1997 in regard to Columbia/HCA's interest in Queensland, and also in regard to the probity of Mayne Nickless. The question referred to the objection to licences I had lodged but which had not yet been addressed.

Despite the revelations about Columbia/HCA which made headlines and the insight this gave into corporate health care practices the enthusiasm of the market advocates who surrounded the minister could not be contained, particularly in Queensland where the Courier Mail had been extolling the virtues of privatisations. Information about Columbia/HCA's practices had been widely circulated and in objecting to Mayne Nickless the health department had been supplied with documents showing how the US corporate marketplace worked and how widespread dysfunctional practices were, The privatisation of the Repatriation hospital at Greenslopes in Brisbane was used as justification.

Private hospital operators are locked in an increasingly intense battle to win a bigger share of the $10 billion spent on public hospitals each year.
Queensland's government advisers go further and talk of the Government never having to pay for a new public hospital again.
Health industry in the pink -- and the black, Financial Review 7 April 1997

Hospital waiting times will also be reduced through a string of financial assistance packages. The government's privatisation policy follows the success of the Ramsay Health Care Group's takeover of the veteran's hospital in Brisbane and other hospitals in Queensland. The Queensland Government says Ramsay has reduced waiting times and has improved efficiency with lower staffing levels.
Humanising hospitals Building Innovation and Construction Tech October 31, 1997 (ABSTRACT by ABIX)

In his reply to the questions the minister dodged the question by indicating that HCoA was operating satisfactorily. I subsequently wrote directly to the minister pointing out that HCoA was wholly owned and operated by Mayne Nickless, a company which had a criminal conviction and consequently could not be considered "fit and proper" within the terms of probity regulations. In his reply the minister indicated that HCoA held the licences. Queensland probity regulations did not extend to their owner. This is very different to the situation in every other state. It effectively emasculates the regulations. They can be easily circumvented by some corporate paper shuffling.

It was not going to be possible for me to evict Mayne from all its hospitals in Queensland and I let the matter lie. Instead I supplied documents and objections to contracts for Mayne Nickless to the health department and asked that they be considered by the co-location selection committees. I also supplied publicly available material to local groups, which were likely to be represented on selection committees. Mayne's close relationship with government and its support of the Federal Minister for health's plans for managed care had not endeared it to the medical profession. The nurses were strongly opposed.

The Queensland Medical Association opposed the privatisation of public hospitals and was unenthusiastic about corporate co-location. Doctors in Noosa (Sunshine Coast) badly needed a new public hospital and they were not receptive to the concerns about Mayne Nickless. They would have been represented on the selection panel. Gold Coast doctors objected to the Robina privatisation. Here there was a much greater need to upgrade crumbling facilities at the local public hospital.

Mayne were awarded the contract for the Noosa public hospital. They were less successful in the short lists for the four co-locations, having to share one with Ramsay Healthcare. Mayne were placed on the reserve list for the Herston Campus and when the charity group dropped out they were offered the Royal Children and Royal Woman's hospitals on that campus. Mayne elected not to go ahead with this. Most of the other places were awarded to local not for profit community and religious groups as was the privatisation at Robina. This support for the not for profit sector is something which I don't think happened in other states.

The second privatisation, the new St Vincent public hospital in Robina was awarded to the Sisters of Charity, a religious order. Early reports in the local press lauded the service and the care provided at this hospital. This should be contrasted with the response to Mayne Nickless' management of the Port Macquarie Base Hospital in NSW during the same period.

When the labour government regained power in 1998 it supported the continuation of the co-location program but there have been no new privatisations of public hospitals.

Listed hospital operators Australian Hospital Care and Mayne Nickless' Healthcare of Australia have each been shortlisted in the tender for the $70 million development of two Queensland public hospitals.

Both companies have made the first cut of four organisations for the design, building and operation for the Noosa public hospital.

Healthcare of Australia has also been included on a shortlist of five for the Robina private hospitals on the central Gold Coast.
Fight Hots Up For Hospital Deals In Qld, Australian Financial Review, 2 May 1997

Australia's major private hospital groups are circling six potential Queensland projects as the State Government prepares to make crucial health-care decisions.

The projects likely to cost hundreds of millions of dollars, include construction of the first two privately owned and operated public hospitals in Queensland, planned for Noosa and Robina.

There are also four potential "colocation projects, - - -
The projects are being considered for Redlands, Prince Charles, Royal Brisbane and Princess Alexandra hospitals

The Queensland projects are part of a national explosion in private hospital expansion, with further privatisationjs and colocations - - - -
"There is no doubt the private sector saves a fortune" Dr Catchlove said.
HCOA is already set to build colocated private hospitals at Caboolture and Logan, - - -
Hospital groups vie for Qld projects, Courier Mail 2 Sept. 1997

Australian Medical Association state president Eileen Burkett said she feared private operators would be more committed to profit than staff training and providing good working conditions.
Plan for firms to operate hospitals, Courier Mail ?Sept. 1996

Administrators of two major private hospitals in Brisbane have stated that the hospitals are eager to relocate.
The Queensland branch of the Australian Medical Association says six CBD private hospitals have been given preferred status for co-location at four sites currently used by public hospitals. The move may deliver substantial cost savings
City Hospitals Keen To Move To Public Site, The Courier-Mail 22 Oct 1997 --- ABSTRACT:: Business Intelligence Australia Pty Ltd (Note that almost all of the large private hospitals in Brisbane's CBD are operated by not for profit religious groups.)

The new privately run public hospital planned for Robina on the Gold Coast was a political exercise and unlikely to meet community needs -- - - - chairman of the Gold Coast Division of Medical Practice - - - said the money - - should be diverted to enhance services at Southports Gold Coast Hospital.
"The end result could be two second rate hospitals" he said.
On the Sunshine Coast, the concept of a privately run public hospital is more popular.
Robina hospital plan political - doctor, Courier Mail 23 Oct. 1997

Queensland Health Minister, Mike Horan, claims that Queensland is committed to further joint ventures in the hospitals arena. In October, 1997, the Government made an agreement with Barry Catchlove, managing director of Health Care of Australia (HCoA), to begin work on the $A51m Caboolture hospital redevelopment. A new private hospital will be built beside the public hospital redevelopment, with completion expected by May, 1999.
New Policy Offers Healthy Benefits, Business Queensland 27 Oct 1997 -- ABSTRACT ::: Business Intelligence Australia

Health Care of Australia has been given the green light to develop Queensland's first hospital (Noosa) to be built under a new private enterprise scheme, - -

The facility will contain 74 public beds - - - - - - Health Care also plans to offer 35 private beds - - --
- - - Queensland Health would pay Health Care to deliver public services on the understanding that after 20 years the state takes over ownership. - - - estimated to save taxpayers $34 million over the 20 years.
Business kicks in on health, Courier Mail 15 Nov. 1997

- - - Dr Eileen Burkett (AMA Queensland president) wrote - - - "There would appear to be a great deal of rhetoric about the advantages of privatisation with little demonstrated proof of the savings and efficiencies produced. We need more concrete evidence"

The AMAQ is concerned that multinational corporations would be included to promote incentives to management staff which are based on profits and not on the delivery of care or health outcomes.

The AMAQ is also concerned that maintenance of standards and accountability of private operators must be applied particularly with respect to quality assurance.
HCoA preferred choice for Noosa Hospital, AMAQ Dec 1997

Organisations to be offered places on short lists for the metropolitan Co-location Project have been determined.

  • Holy Spirit/Sisters of Charity consortium (Prince Charles Hospital)
  • St Andrews War Memorial Hospital Consortium (Herston Hospital Complex)
  • Health Care of Australia and Ramsay HealthCare (Princess Alexandra Hospital)
  • Sisters of Mercy/Mater Hospital, Australian Hospital Care Ltd, and Wesley-Rothschild consortium (Redland Hospital)

Collocation places, Health Ma??? Feb 1998

The Queensland Government supports the policy of co-location for hospital sites throughout the state.
Gladstone Hospital presents a good opportunity for co-location, with an added private hospital facility, providing specialists previously difficult to attract to the location. The Queensland Government, with a hospital budget claiming to be the largest of all states in Australia, is calling for tenders for hospital sites to include facilities like medical rehabilitation, mental health, day surgery as well as the general hospital and emergency standard facility
Co-location Takes Off In Queensland, Asia Pacific Hospital 1 Mar 1998 -- ABSTRACT ::: Australasian Business Intelligence

The Queensland Government has approved a $A150m co-location programme. - - - - Health Minister, Wendy Edmond, (labour party in power) said that four private hospital proposals to build on public hospital sites represented approximately $150m in benefits to the Queensland Government and 3,500 jobs in the construction stage. Edmond said she was convinced that the private hospitals would improve healthcare services for the people of Queensland;
Hospitals Set For $150m Co-location, The Courier-Mail 29 Aug 1998 -- ABSTRACT :: Australasian Business Intelligence

The Sisters of Charity Health Services have won the tender to operate a new $A48 million hospital to be built at Robina, Queensland. Construction on the new St. Vincent's Hospital is due to start in November, 1998 and should be completed by early 2000. Features of the hospital include; a day surgery unit, 20 acute beds, 30 rehabilitation beds, 12 palliative care beds, and 80 beds for mental care;
Gold Coast Win For SCHS, Hospital & Healthcare 1 Oct 1998 -- ABSTRACT:: Australasian Business Intelligence

Health Care of Australia has announced in September 1999 not to re-locate at the Royal Brisbane Hospital complex as planned. One of Australia's largest private hospital groups, HCoA operates 11 hospitals in Queensland, and was the Queensland Department of Health's preferred option to become part of the Royal Brisbane, Royal Women's and Royal Children's hospitals at Herston.
Shared Hospital Proposal In Doubt After Group's Backflip, The Courier-Mail 22 Sep 1999 -- ABSTRACT ::: Australasian Business Intelligence

OUR medical system suffers from some seriously cloudy periods.

But every so often the sun breaks through, as it did recently at Robina's St Vincent's Hospital.
She received a level of care - and caring - second to none from both the private mental health staff and the palliative care/private medical-surgical staff.

The caring helped to ease our loss and we will be forever grateful. - - -
Thanks to hospital, Gold Coast Bulletin 15 May 2001

I WOULD like to pay tribute to St Vincent's Hospital and medical centre at Robina.

Recently, I went in for a procedure and was amazed and delighted with everything.
Best of all, the staff are really amazing, dedicated people. They are courteous, friendly, yet respectful and super efficient. Nothing is a bother. You can sense they want to please you and that they enjoy their duties.
I have been a patient in various hospitals around Australia over the years and, in my capacity as a health consultant and personal trainer, I have visited many hospitals.

I consider that St Vincent's Hospital and medical centre at Robina is the best in Australia.
Best hospital in Australia. Gold Coast Bulletin 6 July 2001

"St Vincent's has been extremely successful and I am sure the new medical facility will enjoy the same success," he said.
$7m hospital unveiled. Gold Coast Bulletin 27 July 2001

A damp squib

After all the fuss about colocations the bubble of enthusiasm in the large corporate companies largely collapsed. There were few references in the local newspapers. It became clear that there would be far more private beds that were needed, particularly in the big Brisbane hospitals. My impression reading between the lines is that the sharing of facilities proved more difficult than expected. The problems were greater and the profits smaller in co-located hospitals than had been anticipated - in other words the whole concept was fueled by economic ideological enthusiasm rather than rational evaluation.

My inquiries in January 2002 reveal that Ramsay was awarded the contract at Princess Alexandra over Mayne Nickless but after examining the situation did not go ahead. St. Andrews War Memorial Hospital decided not to proceed on the Herston campus. The project was offered to Mayne who also backed out. Of the large Brisbane hospitals only The Sisters of Charity co-location project at Prince Charles Hospital went ahead. The smaller colocations were in peripheral growing communities where there were more private patients. They were adjacent to new public hospitals. Mayne's Logan and Caboolture co-locations are operating. The Sisters of Mercy colocation hospital at Redlands went ahead and is working. I have not yet heard anyone singing the praises of these hospitals and wonder how well it is working.

Social Capital

One of the strongest arguments for corporate privatisations advanced by the minister and by the Courier mail was to refer to the successful way in which the Sisters of Mercy ran a group of three public hospitals in Brisbane. They glibly equated the success of the Mater Hospital complex as a precedent and used it to discredit critics. They used it to claim legitimacy for corporate privatisation - proving that it worked! The Courier Mail argued this strongly. This was a misrepresentation which deliberately blurred the most important difference - not that between public and private - but that between for profit and not for profit

I also argue for greater involvement of the not for profit community on the basis of increases social capital and a more caring service. The corporate privatisations promise the very opposite.

Why then did the established privatisation/colocation at the old Mater Hospital in Brisbane work so well? Perhaps the long and turbulent history is important. The Sisters of Mercy founded the hospitals at the turn of the century. Fees from private patients funded the charity hospitals. It was only much later that the government funded the three public charity hospitals - but the sisters continued to own and operate them. Members of the church community were involved in the hospital, raised funds and until the 1980's made tea and cakes for the staff. Despite very poor physical facilities when compared with other hospitals, the atmosphere in the hospital drew medical students, doctors and large numbers of loyal patients. It was remarkably popular. When a new modern public hospital was needed in the early 1980's the government built it and then gave it to the sisters - a bold and trusting gesture. Because of the money from the private hospital and fund raising by parishioners the sisters always had that little bit extra to devote to the public system when government would not meet their needs.

Behind it was a genuine commitment to the community and a community which responded - in modern terms a high level of social capital was generated. The hospitals and the arrangement with government grew from a genuine shared mission to serve the community and was based on mutual trust. The sisters of Mercy ran the hospital. The religious ethic was one of service. It was not based on ideological concepts which had little to do with health care.

The initial positive response of the community to the Sister of Charity Hospital at Robina on the Gold Coast suggests the development of a similar high level of social capital.

My argument is that because these hospitals are run by and for the community the benefits in terms of building social capital and developing trust extend way beyond the actual services provided. The community values of caring and concern are given expression in the activities of the staff at the hospital. For them it is more than a job. The community responds by identifying with these values and is enriched.

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   Home . . . . Australia

Entry ... Privatisation Background .... Overview of States

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This page created February 2002 by Michael Wynne