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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.

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This web page examines the Privatisation of Modbury Public Hospital in Adelaide, South Australia. The contract to run the hospital was awarded to Healthscope. It was a financial disaster. Healthscope's attempts to restructure and cut costs are examined and the consequences for services and care are explored.


South Australia


The Modbury Privatisation

When is exploiting loopholes fraud?

Staff relationships

Compromised Care

Lack of Accountability

Other Privatisations



QUICK UPDATE September 2006 : Modbury Hospital


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The Modbury Privatisation

The privatisation of the Modbury Hospital in South Australia is another example of a failed privatisation. The government got egg all over its face and the private sector was able to extort additional money from the hospital to make the profit it wanted. Instead of struggling Healthscope soon after went on an acquisition spree. One must ask if this is what the public purse was funding and whether reductions in staffing enabled it.

The story is an interesting one in which government ideology triumphed over sense. The hospital was in a less privileged area and a private hospital, on which the success of the project was based was unlikely to be profitable.

The 255 bed public hospital was built in the 1970's and run by the government. The Modbury hospital board asked for and sought expressions of interest for a 65 bed co-located private hospital in 1993. In 1995 the health minister not only awarded the co-location but also contracted the running of the public hospital to Healthscope for 10 years, renewable for 20 years. No figures or evaluations are available to indicate why he did so. He has never offered a reasoned explanation.

Healthscope took over the public hospital which turned out to be a financial disaster. They then reneged on their undertaking to build the private colocated hospital and the government went along with this. The hospital board which had asked for a colocated hospital ended with a privatised profit directed hospital over which they would have had little influence. To add to the irony they never got the colocated private hospital.

Modbury and Port Macquarie both show how corporations can secure a contract by underbidding and then later force up payments and so profits by crying poor. Within 2 years Healthscope claimed they were losing $1 million a year. The company returned cap in hand. The government dared not close down the hospital and repeatedly bailed Healthscope out by increasing payments. Estimates put the costs of the hospital to the public purse at $7 million a year but no one knows for sure as even parliament, the representative of the people was denied information.

Oct 1994

"The South Australian Minister for Health has today publicly announced that our Company is the Government's preferred tenderer to construct a colocated private hospital and manage the delivery of public hospital services at Modbury Hospital. The target date for assuming management responsibility for those public hospital services is January 1995. HEALTHSCOPE LIMITED: DEVELOPMENT AND MANAGEMENT AGREEMENT FOR MODBURY HOSPITAL (Part A) Stock Exchange Company Announcements October 18, 1994

Nov 1994

We have also agreed that we will construct a 65 bed private hospital on the Modbury campus which will share facilities with the public hospital. Our commitment is subject to our obtaining finance on satisfactory terms and conditions.
HEALTHSCOPE LIMITED: CHAIRMAN'S ADDRESS (Part A) Australian Stock Exchange Company Announcements November 22, 1994

Feb 1997

Socially desirable though they may be, hospitals in lower socioeconomic areas will never be good businesses.
Nonetheless within months the government had to provide rescue funds to the private operator because the Modbury Private Hospital was losing money, allegedly due to having to treat more patients than allowed for in the contract.
Feeling your purse before your pulse The Weekend Australian 1 February 97

Sept 1998

Competition always produces both winners and losers. The first 12 disastrous months of the management contract for Modbury hospital is a case in point. The result was a publicly funded financial bail out package for Healthscope Ltd.
Privatisation and Australian Hospitals by Fran Collyer, Health Issues Centre September 1998

Feb 1999

Hospital operator Healthscope Ltd says it will not be able to pay an interim dividend and has issued a profit downgrade for the full year due to more problems with a contract to manage Modbury Hospital in Adelaide.
BRIEFS :: Healthscope review
Australian Financial Review February 8, 1999

March 1999

The battling hospital operator plunged to a heavy bottom-line loss after making an abnormal provision for all future losses on the company's contract to manage the SA Government-owned Modbury Hospital, which expires in 2010.
HEALTHSCOPE, Australian Financial Review March 2, 1999

Oct 1999

In addition, Healthscope was in arbitration with the SA Government to recover money relating to the 1997-98 year, Mr McCann said.
Healthscope Hopes For Quick Recovery, The Age (Melbourne) October 27, 1999

Jan 2000

That is tempered by a gloomy outlook for the second half due to losses on a management contract for the Modbury public hospital in South Australia. As a result, earnings in the half to June 30 will fall significantly'' below the first half.
XCHANGE :: STILL AILING, Sydney Morning Herald January 21, 2000

Feb 2000

HOSPITAL company Healthscope intends to "rev up" its business development plans following a reconstruction of its board.
Meanwhile, the company was expecting to get the first benefits from "all the hard work" at the Modbury Hospital.

After renegotiating the contract with the South Australian Government, Healthscope made provisions of $13.5 million for "every possible future loss" at Modbury.
Healthy feeling, The Advertiser February 5, 2000

May 2000

HEALTH PLANS to build a $12.6 million Torrens Valley Private Hospital are in doubt, with its future hingeing on talks between the developer and the State Government.

Healthscope, which planned to build the 65-bed facility within Modbury Hospital, could not confirm last week if the proposal would go ahead.

"The temporary private hospital was closed at the beginning of 1999 and, at this stage, the private hospital has not been progressed with," Healthscop Modbury general manager Jill Michaelson said.

"For quite some time there have been discussions in regards to the future of the private hospital between the Government and Healthscope.
PLAN FOR $12.6M PRIVATE HOSPITAL IN LIMBO, Messenger - Leader May 24, 2000

July 2000

THE operators of Modbury Hospital will not be held to a contract to set up a private hospital in the area, according to Human Services Minister Dean Brown.

He has ended months of speculation by announcing he would not force Healthscope the private company running the public hospital to set up the facility and it would not be penalised for failing to do so.

"They had the service established temporarily but there is just not the demand in the north-eastern suburbs for another private hospital," he said yesterday.
But Opposition health spokeswoman Lea Stevens renewed her attack on Modbury yesterday, saying the problems with the Modbury experiment had ensured that the Government had not proceeded with any other hospital management outsourcing contracts.
No private facility for Modbury, The Advertiser July 15, 2000

Oct 2000

THE privately run Modbury Hospital cost more to administer than a public hospital, federal Opposition health spokeswoman Jenny Macklin claimed yesterday.

A federal Labor Government would establish an independent inquiry into privatised public hospitals, including Modbury, she said.
"If the State Government agrees, then we would be happy to go along with it (federal government inquiry)," he said. Mr Dixon denied that the State Government had been bailing out the hospital.

"We are giving them a discount of $4 million a year on what it was costing the Government before," he said.
Labor queries privatised hospital, The Advertiser October 24, 2000

June 2001

Case study: The Modbury Hospital South Australia gives an example of where public authorities are forced to ensure that private companies remain profitable in order to maintain service provision
In 1997 Healthscope Ltd alleged that the contract price was insufficient to enable it to support the long term completion of the contract. Following this allegation the contract was substantially amended after the Government decided that it would be acting against the public interest in not amending the contract. It was estimated that the renegotiated contract reversed losses for the company of around $2m in 1996-7.
A response to the IPPR's Commission on Public Private Partnerships -- By Allyson Pollock et al, Published: June 2001

Healthscope like most market listed companies operates through a system of bonuses to staff who accomplish the objectives set for them. Those who fail are replaced until someone is found who will do whatever it takes. Modbury's losses were eventually brought under control by its management and by 2003 it was making a small profit. At the end of 2001 Healthscope rewarded the hospital administrator with a massive bonus. With Modbury no longer compromising its ability to raise funds Healthscope set about its frustrated plans to grow through acquisitions.

Cost containment did not stop and by 2003 Modbury was making a small profit.

Aug 2001

HEALTHSCOPE plans to acquire more hospitals after reporting a 34 per cent lift in annual profit to $5.6 million.
Managing director Bruce Dixon said the benefits of federal government initiatives in private health insurance would help the company this year. A fully franked 2.5c dividend would be paid on September 28.
Healthy return The Advertiser August 29, 2001

Sept 2001

LABOR has questioned why the Modbury Hospital's boss was given a $100,000 bonus.

Chief executive Jill Michelson, who runs the privately owned hospital, received a total of $220,000 last year, according to Healthscope's 2000 annual report.
In its annual report Healthscope says it is pleased that the Modbury Hospital has achieved a break-even result - -
Labor has vowed an inquiry into Modbury Hospital if it wins government.
Labor queries bonus, Sunday Mail (SA) September 2, 2001

Dec 2001

It was the seventh purchase in the past year by Healthscope, the operator of Adelaide's Modbury, Parkwynd and Holdfast hospitals and 15 in other states.
"We still have extra capacity in the banking facilities for growth," managing director Bruce Dixon said.
Healthscope had been negotiating with collapsed US health-care operator Sun Healthcare for about a year before buying Sydney South West.
Hospital chain buys 7th private facility this year, The Advertiser December 19, 2001

Mar 2003

MODBURY Hospital finished the previous financial year with a $1.17 million surplus, $1.2 million down on the previous year its recently released annual report shows.
An $11 million, three-year upgrade of the hospital's emergency department and operating theatres was also finished last year.

Oct 2003 More losses

However, managing director Bruce Dixon warned of more possible problems with its long-running contract to operate the Modbury Hospital in Adelaide.

Further write-backs on Modbury and a feud with insurance group Mutual Community involving three other Adelaide hospitals could affect this year's results, shareholders were told at yesterday's annual meeting.
Hospital profits need peace pact Adelaide Advertiser October 22, 2003

Our interest here is in what was done to services and to staff during the "successful" restructuring and cost cutting between 1999 and 2001. What were the consequences for patients?


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When is exploiting loopholes fraud?

In the USA corporations have identified and exploited every perceived loophole in the Medicare regulations they can find in order to make more money. They did not believe that they were doing anything wrong or that this was fraud. The US Department of justice thought differently.

There are allegations suggesting something similar at Modbury - at the very least they were thinking about it.

Feb 2000

A SOUTH Australian senator has accused Modbury Hospital of "double-dipping" the public health system by bulk-billing patients to Medicare.

Labor Senator John Quirke told a federal estimates committee yesterday the hospital was asking patients to fill out Medicare forms for procedures a breach of the health funding agreement.

The hospital, which is privately managed by Healthscope, admitted yesterday it was considering the practice to solve funding difficulties, but denied it was occurring.
Public hospitals receive their funding jointly from federal and state governments to pay for the patient services they provide.

They are prohibited from making further claims by billing Medicare for individual services.
Mrs Michaelson (from Modbury hospital) said she had heard anecdotal reports of other hospitals billing Medicare. She said she believed it was possible to bill Medicare for certain services if they did not log those services for the purposes of direct government funding.
Hospital 'cheating system', The Advertiser February 9, 2000



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Staff relationships

With downsizing and attempts to restrict care it is not surprising that problems in morale develop. When workers are seen to be shortchanged for profit then they get very angry. Ultimately it is patients who are the victims of an unmotivated work force.

Oct 1999

On 11 October 1999, nurses at the Healthscope-run Modbury Hospital decided to impose an indefinite strike. It - - is in protest at company plans to cut two weeks from nurses' annual leave entitlement of six weeks. The additional two weeks has traditionally been granted in return for nurses' preparedness to accept rostering on any shift on any day of the year. According to hospital manager, Jill Michelson, the attempted cut-back, is in response to a $A2m hospital loss, in 1998-99.
Surgery doubt as nurses vote to strike, The Advertiser October 12, 1999 (quote from ABSTRACT by Australasian Business Intelligence)

May 2000

STAFF at Modbury Public Hospital protested yesterday over the hospital's delay in paying $200,000 in back wages.

The protesters claim 40 clerical and administrative staff have been denied overtime and were paid the wrong award rate since the hospital was privatised in 1995.
She (hospital manager) declined to tell The Advertiser how much the hospital would offer the workers.
Protester Steve Brooks, 28, of Valley View said "staff morale has been terrible".
Hospital pay protest; Staff owed $200,000 in back wages, The Advertiser May 12, 2000


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Compromised Care

Despite the secrecy and the clamp down on information about care there are several reports which indicate that the squeeze on profits translated into compromised care. This was probably related to a massive 20% reduction in the number of nurses. Nursing salaries comprise at least 50% of hospital costs. The US experience has shown that this is invariably the target of corporate managers and equally invariably compromises care.

Like hospitals, any service in a hospital which does not generate profits is restructured or simply closed. Physiotherapists are key personel in many forms of surgery and in stroke patients. Their role in preventing complications and in rehabilitation is crucial in maintaining standards and securing acceptable outcomes. The government had to step in and prevent Healthscope from closing physiotherapy. Reports suggest it closed beds and reduced emergency and intensive care services.

To survive competitors must reduce costs in the same way and a coterie of words like efficiency, productivity, reorganisation are used to make culling nurses legitimate and hide the reality that nursing care is a person intensive activity where efficiency has limits.

Experience and a number of studies tell us that cost cutting will have an adverse impact on care, particularly when nurses are the target. Healthscope attempted to reduce services. Reports suggest that it cut intensive care services and physiotherapy services in the Modbury hospital. It closed beds for long periods of time. Emergency services were reduced and ambulances put on bypass.

The government had to pay more and/or force the company to provide these services - but the negotiations, like the contract are confidential. In 1999 the company was back negotiating for more money and in 2000 it set aside $13.5 million to cover the ongoing losses from Modbury alone.

Cost cutting resulted in reduced staffing and increased on call. Staff were over-stretched. There were allegations of poor care and of less than adequate monitoring of care. Documentation was inadequate and there would have been less opportunity to focus on safety protocols. Allegations suggest that morale deteriorated and there was soon conflict with the nursing unions. The press reports speak for what was happening.

Sept 1996

An article in the Leader Messenger newspaper (18-9-96) highlighted numerous concerns about the operation of the hospital, including:
  • the decrease of nursing full time equivalent positions at the hospital from 355 to 286;
  • ambulances were being told to bypass the hospital; and
  • patient complaints being 'filed away in secrecy, although they would be available to the community in any other public hospital'.

(Healthscope, not being a government authority or agency, is exempt from Freedom of Information laws. Concern about the lack of access to information has also been expressed by the SA Council for Civil Liberties and the State opposition).
Queensland Health For Sale, The Queensland Nurse Sept/Oct 1996

Feb 1997

There were reports suggesting that services were compromised in an attempt to reduce the losses,
Feeling your purse before your pulse,
The Weekend Australian 1 February 97

Oct 1998

Modbury Hospital, in Adelaide, South Australia, is faced with reductions to its casual and agency nursing staff to offset a budget over-run. - - - - - - The reduction in casual and agency staff is expected to place more burden on the existing staff.
Nurses fear cuts, The Advertiser October 10, 1998 (quote from ABSTRACT by Australasian Business Intelligence)

Feb 1999

On 10 February 1999, South Australian Human Services Minister, Dean Brown, ordered a private hospital to reinstate a service. Private operator of the Modbury Hospital, Healthscope, had - at the end of January, 1999 - cut out physiotherapy services at the hospital because they were losing money.
Order on hospital services, The Advertiser February 11, 1999 (quote from ABSTRACT by Australasian Business Intelligence)

Apr 2000

On 5 April 2000, South Australian Coroner, Wayne Chivell, harshly criticised Modbury Hospital nursing staff. This was the second time the Healthscope-operated hospital has faced his criticism, since January, 2000. He condemned them for failing to appreciate the significance of mental detention requirements, failure to carry out instructions from drowned patient, June Sanders' psychiatrist, for the inadequacy of case notes and a failure to react sufficiently urgently to her absence. Sanders drowned in September, 1997, after discharging herself from the hospital.

Chivell's report has sparked an inquiry, by SA Human Services Minister, Dean Brown, into procedures at that and other SA hospitals
Coroner not happy with procedures, The Advertiser April 6, 2000 (quote from ABSTRACT by Australasian Business Intelligence)

May 2000

THE Ombudsman has begun inquiring into the death of a patient at Modbury Hospital.

A decision on a full inquiry would be made after viewing an internal report prepared by the hospital and a clinical specialist from the Human Services Department, Ombudsman Eugene Biganovsky said yesterday.

The move came as it was learned another 16 beds will be closed and outpatient appointments reduced at the hospital.
- - Labor MP Jennifer Rankine's telling State Parliament on Thursday that patient James Queenan, 61, spent his last day of life in August, 1999 naked on a mattress on a floor of the hospital.
Ms Rankine also said that, in a separate case, a 67-year-old patient was given morphine despite his medical chart showing he was allergic to the drug.
Ms Stevens said patient services at the hospital were being reduced because demand had exceeded the activity targets set under the hospital's privatisation contract. The formerly government-run hospital is now run by private operator Healthscope under a controversial contract never fully disclosed.

"The community must be told why three to four patients a night have been sent to the Royal Adelaide Hospital and why patients requiring urgent attention are being distressed," Ms Stevens said.
Man's death taken up by Ombudsman, The Advertiser May 6, 2000,

July 2000

Modbury came under renewed fire from a doctor who contacted The Advertiser this week to complain that the hospital had minimised waiting lists by cutting back on the number of patients allowed on waiting lists for appointments.

Without allocated appointments, patients did not appear on official waiting lists even though they were waiting for treatment.

The doctor said this gave a false impression of the backlog.
No private facility for Modbury, The Advertiser July 15, 2000

Oct 2000

Labor candidate for Makin Julie Woodman said there was evidence local residents were deserting Modbury Hospital in favor of city hospitals.

Ms Woodman claimed one Modbury woman, who was due to give birth at the hospital, had been told she must bring her own bottles, formula and nappies. "She was properly cared for when she had her first baby some years ago," she said.
Labor queries privatised hospital, The Advertiser October 24, 2000

Dec 2000

The report (by Senate Community Affairs Committee) said since then concerns had been expressed about the level, variety and quality of services provided at the hospital (Modbury).

For example the Australian Nursing Federation reported that the 24-hour emergency surgery service had been reduced.
Privatising public hospitals should be abandoned
(Federal Parliamentary Inquiry), AAP NEWSFEED 7 December 2000

June 2001

The Australian Nursing Federation reported that the Hospital's 24 hour emergency surgery service had been reduced with some services being provided by on- call services.
A response to the IPPR's Commission on Public Private Partnerships
-- By Allyson Pollock et al -- June 2001

Jan 2003

MODBURY Hospital will go ahead with plans to cancel all non-urgent outpatient surgery and specialist appointments for three weeks in April.

Emergency surgery, chemotherapy and orthopedic services will still be provided but patients booked in for other treatments will be rescheduled.
Urgent talks between Healthscope, the hospital board and the Government yesterday resulted in no reinstatement of the services but the hospital agreed not to use the word "closure". A spokesman for Ms Stevens said the hospital "regretted" using the word closure because it had created confusion.

"They are not closing the outpatient department - they never intended to close," the spokesman said. "They are going into standard holiday arrangements."
The hospital said earlier it needed to scale back services because it was running ahead of schedule in the procedures it was funded to provide in 2002-03.
Modbury surgery cut-back still on. Adelaide Advertiser January 23, 2003

July 2003

PEOPLE waiting for elective surgery at Lyell McEwin and Modbury Hospitals were sent home last week after industrial action forced cancellations.
Ms Maguire said outpatient and pre-admission clinics had also been cancelled.
ELECTIVE SURGERY CANCELLED News Review Messenger July 23, 2003

Dec 2003

MODBURY Hospital has cancelled more than 75 non-urgent operations scheduled over the next six weeks after over-spending its budget, the Opposition has claimed.

From Friday, only emergency surgery will be carried out until February despite surgeons being on duty.
"Modbury Hospital has overspent its budget on non-surgical cases so far this year.
Family First MP Andrew Evans said he had been contacted by staff at the hospital who were angered by the cancellations.
Average waiting times for urgent and semi-urgent surgery also increased and the amount of elective surgery carried out was at its lowest in three years.
Cash blowout cuts surgery Sunday Mail December 14, 2003

Despite all these concerns the market and its analysts turned a blind eye. To them Healthscope became a "star performer" and its practices in containing costs at Modbury were praised because they made money. How they did this was irrelevant. Market analysts seldom look or ask.

Nov 2000

The star performer has been the smaller hospital operator Healthscope, which was 28cents in June and is now 70cents.
Private Hospitals In Recovery Ward, Business Review Weekly 7 November 2000

Sept 2001

A contract to manage the 235 bed Modbury Public Hospital in Adelaide led to losses until rationalisation of clinical services and outsourcing of cleaning and catering in 1999. Last financial year, the group experimented with activity levels at the facility, running them at high levels in the first half and then reducing capacity by 100 beds and minimising patient flows in the second period so as to allow it to define the optimum operational configuration. The contract is now being brought to account evenly over the financial year which, given its high first half skew and the stable group result (EBITDA up 3 per cent to $6.9 million) for the six months to December 2000, spells a much improved second half.
Healthscope is our preferred play since it has latent profit upside from a string of recent acquisitions, a strong management team and it is also the most vulnerable player in the sector to takeover.
Hospitals Bed Down Better Margins, Shares Magazine 01 September 2001


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Lack of Accountability

Understandably there was an outcry about the contract with Healthscope and intense criticism from the opposition and sections of the public. A parliamentary committee appointed to investigate what had happened ran into a brick wall. The hospital, the company and the government refused to release the documents the committee needed, even though the committee were entitled to have this information. The committee were unable to determine why the original co-location recommendation had been extended to include the lease of public patient care to Healthscope or the circumstances which surrounded their operation of the hospital. The committee ended by being highly critical about this failure to respond to requests for documents and concluded that it was consequently unable to report.

This arrogant disregard for the sensibilities of citizens and for responsible conduct in a civil society has I believe characterised ideological totalitarian regimes over the last century. There are many examples of the way the current ideology follows this pattern. The privatisation in Port Macquarie in NSW was for example achieved in the same way.


Even though the Committee had the power to require information and documents, copies of correspondence attached to the Interim Report highlight the Committee's difficulties in obtaining the information required to make a proper assessment of the privatisation process.

In addition, no details of how the hospital monitors and investigates complaints received were provided.

If a Parliamentary Committee cannot obtain information essential for determining whether the public's interests are being served by privatisation, what chance does a member of the public have?
Queensland Health For Sale, The Queensland Nurse Sept/Oct 1996


A Parliamentary Committee of Inquiry was unable to obtain enough information to satisfy itself that the contracts between the government and Healthscope were in the public interest. In its Interim Report the Inquiry expressed its concern that:

Healthscope, the Health Commission and the Modbury Hospital Board have not complied with its repeated requests for information. The Committee believes that the inadequate responses to its requests are totally unacceptable.
Feeling your purse before your pulse, The Weekend Australian 1 February 97


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Other Privatisations

I don't have much information about other privatisations in South Australia. The following extracts gives some idea what was being planned in 1995/7. As far as I am aware the Port Augusta privatisation did not go ahead, perhaps because of Modbury. The community refused to allow the planned privatisation at the core Queen Elizabeth public hospital in Adelaide to go ahead


Fletcher Construction, Healthscope and a consortium, comprising Woodhead Firth Lee and Benchmark Mutual Group, have been shortlisted to tender for the construction and management of a public hospital at Port Augusta in South Australia.
Three chosen for hospital tender The Advertiser March 31, 1995


South Australia is seeking to let a management contract for the Queen Elizabeth Hospital in Adelaide, - - - -
A Private BONANZA Australian Financial Review September 11, 1996


The SA Government said at the weekend that its Queen Elizabeth public hospital would not be sold to the group
(Columbia/HCA) but did not rule out the possibility of the privatisation of services, including the running of the hospital.
Adelaide base for Columbia HCA. The Australian January 28, 1997


Ramsay is bidding for the 120-bed Veterans Affairs Hospital at Turramurra, Sydney. Another tender, with five bidders, involves privately operated services for surgical patients on the Queen Elizabeth public hospital campus in Adelaide. He is also bidding for roles with Adelaide's Daw Park repatriation and general hospital.
Ramsay Hitches His Star To The Public System , Business Review Weekly, 23 March 1997


What we should remember is that the same fate did not befall our much valued western region hospital, the Queen Elizabeth Hospital, because the community, through the Keep the QEH Public campaign, would not let it happen.
QEH CAMPAIGN Messenger - Weekly Times June 12, 2002


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Healthscope did not do well competing in the general hospital market and elected to move into specialty hospitals including psychiatry and rehabilitation. With aggressive cost cutting it prospered and expanded. Some of its statements and policies in psychiatry are reminiscent of policies which resulted in a vast profits for a number of US companies. These companies collapsed in a scandal involving fraud and the misuse of patients for profit. I have devoted a number of pages to Healthscope.

Click Here to go to the main Healthscope page


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Flinders Private Hospital:- The contract for the colocated private hospital on the Flinders hospital campus was won by Ramsay Health Care in 1996. It started with the usual hype and enthusiasm but was not ideally located for privately insured patients. It cost more to build than was anticipated and then failed to draw patients or to make a profit.

Ramsay eventually sold the hospital to the not for profit Adelaide Community Healthcare Alliance (ACHA) for less than they paid to build it. It continued to drag this group down. When the banks forced ACHA to contract the running of the hospital to Healthscope, Flinders Private was part of the package.


A new A$50 million 100-bed private hospital development at the Flinders Medical Centre (FMC) has been approved by the South Australian Government, Health Minister Michael Armitage said.

Armitage said the new complex would be funded and operated by Australia's second largest private health care group, Ramsay Health Care Group, on land leased from FMC at the northern end of the existing hospital in Adelaide's southern suburbs.
"The private facility will have its own management but there will be a close working relationship between the private hospital and FMC," the Minister said.
New A$50 mln private hospital for Adelaide Reuters News April 11, 1996


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


The group's second greenfields co-located hospital, Flinders Private, in Adelaide, will be responsible for further, smaller start-up abnormal losses in the second half. But Mr Grier says both are crucial to positioning Ramsay for growth in the next three to five years.
Hospitals Can't Stand Alone: Ramsay The Age March 15, 1999


The announcement last Thursday that hospital operator Ramsay Healthcare would offload its troubled South Australian investment Flinders Private Hospital helped to buoy the stock to a year high of $1.32.

This is despite the undisclosed price tag likely to be below its present book value of $50 million, which was already written down from the $80 million it cost to build the hospital.
Sale spurs Ramsay Australian Financial Review September 26, 2000


Flinders Private Hospital is co-located with Adelaide's Flinders Medical Centre. It has 130 beds, eight operating theatres, a day surgery unit with private rooms, five birthing suites, a 10-bed critical care unit, cardiac unit, on-site diagnostic services, and radiotherapy. Since opening in January 1999, Flinders Private Hospital has experience lower than anticipated levels of reimbursement from the health funds. Occupancy levels currently stand at 50%.
Ramsay also faced up to asset revaluations, reducing the book value of two co-located hospitals (North Shore Private in Sydney and Flinders Private in South Australia) by $40 million. North Shore Private and Flinders Private, both expensive developments for Ramsay, are called co-located hospitals as they operate alongside leading public hospitals.
Private Hospitals In Recovery Ward Business Review Weekly November 17, 2000


RAMSAY Healthcare says its first-quarter profits this year are 30 per cent ahead of the same time last year and full-year profit growth could be significantly higher, following the sale of its loss-making Flinders Private Hospital.

The sale of Flinders to Adelaide Community Healthcare Alliance will reduce Ramsay's debt by about $42 million and allow it a break-even exit from the under-performing hospital.
Flinders made an $8.5 million loss before tax and abnormals, in the year to June 30.
Hospital offload buoys Ramsay The Australian December 11, 2000


Although occupancy continued to improve throughout the year at Flinders Private Hospital, profitability of this hospital has been lower than originally anticipated.
Ramsay Health Care Limited Jobson's Year Book May 1, 2001


Industry sources say the alliance's high debt level has blown out since it bought Flinders Private Hospital for almost $40 million from Ramsay Healthcare in September, 2000.
Cash crisis for private hospital alliance Adelaide Advertiser September 28, 2002


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QUICK UPDATE September 2006
Modbury Hospital

The South Australian government is following NSW in buying back its privatised Modbury hospital from Healthscope. It had been a failure all around. This is at the same time as the Federal Health Minister had started talking up privatisations again!

Sep 2006 Buying back Modbury

THE State Government has pledged $17.5 million over the next four years to transfer management of Modbury Hospital back to the state.
Negotiations for the return of the hospital to public management are continuing. The budgeted money also will go towards staff entitlements, stock and equipment purchases, transitional costs and extra operating costs.
De-privatisation funds for Modbury Hospital Leader Messenger September 26, 2006

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Web Page History
This page created February 2002 by
Michael Wynne
Modified June 2002, July 2005, September 2006