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Entry ... Privatisation Background .... Overview of States
NSW ... Victoria ... South Australia -- W. Australia ... Queensland ... Tasmania
La Trobe ... Austin& Repat. ... Berwick ... Knox
 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.

Privatisations and colocations


The Kennett Government planned to privatise its 3,000 public beds throughout the State and had tendered off 485 beds before it lost power.
Secret Deals Sink Nursing Home Sell-off Australian Financial Review April 5, 2000

And when Thwaites spoke the words he never dreamt he would get to say - that privatisation was dead - the hall erupted in applause and cheers.

Senior staff who had been on the committees charged with progressing privatisation were among those applauding loudest. Seldom had a task been so utterly unsupported by those undertaking it.
People feel freer to talk to each other and there aren't the hidden agendas. Putting a stop to the privatisation rubbish is a good sign that hopefully there will be a bit more cooperation and less competition.'
Labor Pains - Can The New Government Fix Health?, The Age (Melbourne) November 20, 1999



  1. Politics in Victoria
  2. Victoria's Policies
  3. Putting pressure on the public system
  4. The position of the companies
  5. The actual privatisations
  6. Privatisation comes unstuck
  7. Labour in power

Politics in Victoria

During the 1980's Victoria had a labour government whose financial mismanagement landed the state in a parlous financial state. The coalition which replaced them in the early 1990's under Geoff Kennett turned the situation around by adopting an extreme form of economic rationalism. It rode rough shod over the sensibilities of its citizens and over established political processes for ensuring fairness and objectivity. While Kennett was successful economically his rigid policy of downsizing and contracting out caused considerable hardship and some of his actions were mired in controversy. Kennett's abrasive personality and aggressive style did not endear him to the community who swept him out of power in the late 1990's. The labour party has attempted to govern with social responsibility and economic sense. The legacy of health care downsizing and privatisations left by the Kennett government has been one of its major problems.


Victoria's Policies

The Kennett coalition government in Victoria adopted economic rationalist ideology more aggressively and with greater vigour than any other state. Mrs Tehan was the initial minister for health and she was followed by Mr Knowles. The labour shadow minister for health John Thwaites consistently and effectively fought against privatisation of public hospitals. Until 1996 the labour government was in power in Canberra and they were not supportive of privatisations.

In 1995 Kennett's government appointed Elizabeth Proust from Mayne Nickless to chair its privatisation planning board. There was an outcry about the conflict of interest and she wisely moved on. (CLICK HERE for more information)

The coalition privatised state community services across the board. The privatisation of ambulance services was a monumental failure with major problems exposed by the ABC's Four Corners program in 1997. The privatisation of prisons was another area which caused controversy and intense criticism. These privatisations changed the face of social services in Victoria. The privatisation of hospitals was simply another rather more contentious part of the ideology. It also failed.

The Kennett government was among the strongest supporters of multinational health care companies. When I challenged the minister on their performance and his ability to contain their practices he claimed that the contracts and regulations in Victoria would prevent the same thing happening in Australia - contracts which were later revealed to allow corporations up to 18 months to correct problems in patient care. Even the USA would not allow this.

Call For Hospitals Watchdog The Age (Melbourne) June 1, 1999
Private operators of public hospitals could be given up to 18 months to fix contractual breaches relating to quality and public safety before the State Government steps in.

Academia and the press publicly challenged and criticised the policies showing that they had failed elsewhere but ideology was its own justification. There was no turning back.

When the North Eastern Health Care Network opposed the privatisation of the Austin and Repatriation complex and produced a KPMG report in support they were disbanded and the report attacked. The government tried to prevent the release of this document under Freedom of Information, appealing decisions up to the supreme court. This dissenting view proved to be correct and many millions of consultancy fees later the delayed and increasingly costly project was abandoned.

Kennet was strongly supporting the market's opposition to Medicare. For years, well into 2001 he was still urging the federal coalition government to abolish Medicare. This was something it had reluctantly promised not to do.

The blindness with which rigid economic principles were applied by the government without reference to probity or any other community consideration are well illustrated by the contracting of public hospital casualty services to a notorious doctor whose medical practices and personal conduct had made headlines across the nation. He had been permanently suspended from medical practice by the medical council.

Tehan Set To Shake Up Hospital Funding, The Age 5 March 1993
The Victorian Health Minister, Mrs Tehan, is expected today to announce the introduction of a new funding model for the state's 162 public hospitals as part of the phased implementation of a controversial set of reforms based on the British and New Zealand health systems.

Described by Mrs Tehan as the first step towards what is generally known as a purchaser-provider health system, the funding arrangement will come into effect on 1 July.
Mrs Tehan is also considering plans to privatise the building of state hospitals, the management of hospitals and other public health services, and the wide-scale contracting out of everything from drug and alcohol services to community education.

It is no secret that companies such as Mayne Nickless are keen to expand into Victoria's public health sector.
In Britain and New Zealand, critics say that a similar sets of reforms have failed dismally, sharply reduced the quality of care by cutting services and closing hospitals.

Academic Warning On Hospital Privatisation , Sunday Age 20 October 1996
Associate Professor Richard Taylor, from the University of Sydney's department of public health and community medicine said: "They (private operators) can't run them any more cheaply than the public system can run them. And the money just goes into the profit of the company and the taxpayers are paying for it."
"In Victoria we have a totally different funding model in which the Government pays, via case-mix, for the operations that are carried out on a patient," she (Tehan) said.
The Opposition health spokesman, Mr John Thwaites, said there were no guarantees the Port Macquarie experience would not be repeated in Victoria "because we can't see the contractual details under so-called commercial confidentiality provisions".

Feeling your purse before your pulse, The Weekend Australian , 1 Feb 1997
The $65 in advance which the Bacchus Marsh and Melton public hospital in Melbourne started charging day surgery patients this month may have been a clear breach of Medicare but it points the way forward for reform-minded Liberal governments.

That is towards greater private sector involvement in health and a shift towards user-pays. The Kennett Government is getting private companies to build and operate three new public hospitals - at Knox and Berwick in suburban Melbourne and in the La Trobe Valley. As well, Victoria is effectively privatising accident and emergency departments in its public hospitals.

This has been demonstrated most graphically by the modestly named Perfect Health Medical Centres group, which is now providing, at a cost above the Medicare scheduled fee, the casualty service at Rosebud Hospital on the Mornington Peninsula. That is, a service previously provided free (via the general taxpayer) or by bulk-billing now attracts a charge.

The Perfect Health group is run by the understated Geoffrey Edelsten who cannot practise medicine himself because he was struck off the medical register. But the hospital and the Government say they are happy with the service.
Where Victoria and other Liberal States are headed becomes clear enough when the political thickets are cleared away. A report that the Metropolitan Hospitals Planning Board sent to Kennett and the then health minister, Marie Tehan, a little over a year ago argued: "Hospital-provided services should be limited to those that cannot be obtained in the private sector or services that it would be unrealistic to expect be sought in private." It pointed out that a justification for outpatient services in public hospitals was that they provided for those who could not afford to pay.

But Victoria seems to have found a way to deal with that inconvenient problem. "As outpatient services are now available in so few hospitals, the validity of this argument should be challenged as the cost of travelling to a hospital that does provide outpatient services may well be greater than the gap fee," said the report.
Victoria cut its hospitals particularly hard and extracted more money by forcing greater efficiency through casemix funding. Now it is looking to save through privatising public hospitals and shifting costs on to the Commonwealth, as occurs, for example, when private rather than salaried doctors provide accident and emergency services. But what is far from clear is that privatisation will provide cheaper or better healthcare for Victorians. Again, most of the evidence to date is to the contrary.
If one were to be generous, perhaps all this could be put down to teething problems in the early days of privatisation. Knowles says that the deal just struck for the La Trobe Hospital is very different.

But experience suggests that whatever efficiencies can be gained from privatisation in other sectors of the economy, they do not apply in health .

Hospitals may go to foreigners, The Age Melbourne 7 December 1997
SOME Melbourne public hospitals could be run by international health-care companies under a State Government plan.

The Government confirmed last week that foreign companies could bid for the new hospitals, to be built in Berwick, Knox and Heidelberg by 2001

Private companies have been called on to provide the $250 million for the hospitals because the Government cannot afford the full cost of the developments.

It is expected that the three hospitals will operate on a build, own and operate basis.
Mr Knowles said that although foreign companies would be able to tender for the hospitals, if international groups were involved it would most likely be in partnership with local groups.
Any company meeting Australian entry requirements could bid for the hospitals, Mr Knowles said.
The contracts would contain mechanisms to ensure access to treatment was provided on the basis of clinical need, he said.
If there were serious breaches of contracts, the Government would be able to move in and assume control of a hospital.

Case Studies of Public Hospital Privatisation by Meredith Carter, Health issues Centre Journal September 1998
The Victorian government has been very explicit about its endorsement of a commercial approach to public health services. Shortly after coming to office it established the Victorian Commission of Audit. The Audit Commission proposed a range of mechanisms to corporatise public hospitals including the suggestion that a proportion of the public hospital system be sold off altogether. However it conceded that current Commonwealth policies regarding the funding of public hospitals pose a major barrier to such a strategy.

Austin Bidders Shortlisted, The Age (Melbourne) January 9, 1999
The Age reported two weeks ago that a report by the accountancy firm KPMG, dated June 1997 and commissioned by the now-defunct North Eastern Health Care Network, questioned the suitability of a private company operating a public hospital.

Pledge To Reform Hospital Funding, The Age (Melbourne) February 19, 1999
A pledge not to go down the American-style health route and to improve services through a charter of patients' rights are among the key promises in Labor's health policy.

The shift towards privately built public hospitals and nursing homes would cease and the controversial case-mix funding formula would be reformed.
The Opposition Leader, Mr John Brumby, said Labor would rebuild confidence in the public hospital system by stopping the shift towards the American-style system.

We are committed to the fundamental principle that if you are sick or injured, access to an ambulance or hospital bed will be based on your need and not your ability to pay or where you happen to live,'' he said.
It (State labour party) would also put a stop to a new Austin Repatriation Centre and hospitals in the growth belts of Berwick and Knox, which are to be privately built for public patients, he said.

Critical Condition The Age (Melbourne) May 31, 1999
No one doubts the Government's commitment to the project, probably its most audacious privatisation to date. After the health care network that ran the Austin hospital questioned the Government's model for privatisation, the network was axed. A report the network commissioned from consultants KPMG and which cast doubts on the private sector's capacity to run the hospital has been discredited by ministers and senior bureaucrats at every turn.

Meanwhile, the pro-privatisation Inner and Eastern Health Care Network has joined a private consortium bidding for the project. The Inner and Eastern network is headed by privatisation champions Mr Graeme Samuel and Mr Simon Blair.

Click here for more about Graeme Samuel's views 

Cost Blowout Hits Austin, The Age (Melbourne) May 31, 1999
The head of the unit organising the Austin tender, Mr Lynton Ulrich, recently said more public hospitals would be privatised. The Government has admitted that once the Austin project is complete, 17 per cent of public hospital care will be in the hands of private operators.

Putting pressure on the public system

Kennett downsized the public hospital system and closed a large number of hospitals. He implemented a policy of privatising public hospitals and also co-locations, introducing the much criticised purchaser provider model. This was the model advocated by Graeme Samuel, the Victorian chairman of the National Competition Council. He expressed his extreme economic views in a speech to the world bank. Victoria was the first state to introduce the Diagnosis Related Group (DRG) funding system.

The government simply cut funds to hospitals and left them to sort out the mess and ration care as best they could. Unrealistic financial goals were set which forced hospitals and doctors to indulge in practices which were not in the interests of patients or the long term interests of the health system. Government public hospitals did not dare speak out but the not for profit run public St. Vincent Hospital in Melbourne cooperated with the ABC's Inside Story to document this in "Hospitals, an Unhealthy Business" (17 June 1997)

It was not long before problems in care and the provision of services started to emerge. Staffing soon became a problem. Morale declined. The consequences of understaffing are reflected in sloppy and inadequate processes to ensure patient safety. The development of disturbing infection rates in surgical operations (e.g. heart surgery) where infection is a serious threat to life speaks for the problem

The nurses and the doctors were the first to complain about care. Vast numbers of beds were closed and staff drastically reduced. The nurses went of strike in protest.

The ABC's 7.30 report (19 June 1997) interviewed the nurses, some anonymously as they feared victimisation. The program documented the consequences of Victoria's health policies. Nurses and a doctor who eventually resigned described the increased incidence of stress disorder in nurses and the depression in the workforce. Nurses described filth, cockroaches, flees, rats and cats in and around the hospitals. They claimed patients were put at risk and that the quality of care was reducing. This inability to provide patients with the care which nurses knew they needed created great stress in the work place. Many nurses resigned and neither government nor the administration responded appropriately to a system in crisis.

Disillusioned nurses left the profession in droves. When the labour party regained power in 1999 they started to reopen badly needed beds but there were no longer the nurses needed to care for the patients in them.

This is remarkably similar to the USA where corporate insensitivity and poor working conditions drove nurses out of the profession. A recent US review shows that over 90% of nursing homes in that country are so understaffed that care is compromised.

Austin To Suspend Elective Surgery, The Age (Melbourne) February 11, 1999
Hundreds of patients will have their surgery delayed after Melbourne's second-biggest hospital announced it was suspending all but emergency and urgent elective operations for two months.

The Austin and Repatriation Medical Centre is shutting many of its operating theatres for eight weeks from Easter because of a $2million budget shortfall and staff may have to take unpaid leave.
The hospital has blown its budget because it treated 10per cent more patients in the six months to December than it is funded for by the State Government.

The hospital's chief executive officer, Ms Jennifer Williams, said it was financially irresponsible'' to continue operating at the same level because it would not receive additional funding to pay for the extra operations.
The hospital agreed to make cuts of $18.6million as a condition of the State Government $7million bail-out last March that enabled the hospital to stay open.
It's a Monty Python health system that a hospital says we have had more patients needing treatment and therefore the answer is to close the operating theatres,'' Mr Thwaites said.

The hospital will give operating theatre staff the option to take unpaid leave, accrued holidays or be redeployed to other areas.

Hospital Facing More Job Cuts, The Age (Melbourne) April 9, 1999
The Austin and Repatriation Medical Centre plans to cut another 162 full-time jobs by May in key patient care areas such as cardiac and cancer services, a leaked memo has revealed.

The hospital's chief executive officer, Ms Jennifer Williams, in a memo to senior managers dated 25 February, warns them to prepare for a 4 per cent cut in the 1999-2000 budget, equivalent to $8million, and lists the proposed job cuts.

Areas which would lose at least six and up to 12 equivalent full-time positions include: intensive care, gastroenterology, surgery, cancer services, cardiac services, psychiatry, specialist medicine and rehabilitation at the Royal Talbot. The radiology and emergency departments would lose more than five full-time positions.
Already hundreds of jobs have been cut and the purpose of this is to get rid of all the unprofitable parts of the hospital prior to privatisation to make it more attractive to the buyer,'' Mr Thwaites said.
Ms Williams also said the hospital now had a $1.7 million surplus compared with a $9 million loss a year ago and it had used the extra 10 per cent government funding this financial year to treat 12.5 per cent more patients.
In the future we will have to concentrate on activities we consider are the most important, the most necessary, that we have the expertise for and that we can deliver in a cost-effective way,'' Ms Williams said in the memo.

She directs managers to justify which services can be maintained or expanded and those which can best be reduced or even abolished''.

Ms Williams, a former senior health department official brought in to stabilise the hospital's finances prior to it being privatised, has reduced staff by the equivalent of 160 full-time positions since her appointment in November 1997.

Hospitals Struggle As Cash Dries Up, The Age (Melbourne) May 27, 1999
Two-thirds of Victoria's public hospitals have been running at a loss, according to an auditor-general's report.

The auditor, Mr Ches Baragwanath, has also raised concerns about the future of many struggling country hospitals.
In his audit of all 90 public hospitals, Mr Baragwanath found that two hospital networks and 16 individual hospitals - most of them in the country - had multi-million-dollar shortfalls.
The viability of the Peninsula Health Care Network, the soon-to-be-privatised Austin and Repatriation Medical Centre, Mildura Base Hospital and the LaTrobe Regional Hospital, which is now in private hands, was also questioned.

The Government has ruled out closing any more country hospitals - - - - - -

The audit was based on the capacity of hospitals to meet their current liabilities from available assets. It found 60 hospitals were in deficit, 26 had negative cash flows and 35 had a negative working capital position.

While a $134million increase in the last Medicare agreement would help ease the financial pressures, Mr Baragwanath said his office would need to audit hospitals again at the end of June.

In a written response, the secretary of Department of Human Services, Mr Warren McCann, said the audit exaggerated the number of hospitals in trouble and failed to take into account the increase in funding, which had caused a dramatic financial turnaround''.

Labor's health spokesman, Mr John Thwaites, said the report showed that many hospitals were technically bankrupt.

Mr Thwaites said that while Mr Kennett claimed that hospitals now had enough money, the recent increase had been absorbed by such factors as inflation and wage rises and did not fix the underlying crisis in our hospitals''.

Deadly Bugs Are Infesting Hospitals, The Age (Melbourne) November 9, 1999
Dr Michael Richards, the director of the Austin and Repatriation Medical Centre's infectious disease unit, said 82 per cent of Victorian hospitals had an inadequate number of infection-control staff.
The study, by the Victorian Infection Control Surveillance project, reveals the infection rates after coronary artery bypass graft surgery at five metropolitan hospitals varied greatly, with the highest infection rate almost twice that of figures from the United States.
According to 1985 US recommendations, hospitals should have at least one infection control practitioner for every 250 beds. Dr Richards said Victorian hospitals did not even meet this outdated level.
The Health Minister, Mr John Thwaites, who opened the conference, said effective infection control was a key part of winning back public confidence in the health system. He said the Government would hire another 30 infection-control nurses.

Thwaites Stands By reasonable' Pay Offer, The Age (Melbourne) August 10, 2000
Health Minister John Thwaites knows full well that Victoria's health system is struggling to provide services to meet ever-rising demand.

In May this year he released a report that showed Kennett government cutbacks had left two metropolitan health care networks technically insolvent and other hospitals under big financial pressure.
Mr Thwaites said the government had pumped an extra $176 million into the health system and was trying to open more beds.

$26m to open hospital beds, Herald Sun April 12, 2000
SIXTY new beds will open immediately at the Austin Hospital in a State Government plan to end emergency room delays.
The government will spend $26.6 million over the next six months opening 360 new beds across Victoria.

The move comes after a Herald Sun investigation revealed more than 1000 beds-- almost one in 10 -- had been cut since 1993.
But a key health union yesterday cast doubt on the plans, saying there were not enough nurses to staff the new beds.
"The new beds can't be opened until such time as the new staff are on deck."
Health Minister John Thwaites said the new beds were allocated after consultation with emergency department doctors, nurses and management.

He acknowledged the shortage of staff and said the government had set up a nurse recruitment and retention committee to help find nurses to staff the beds.

"It took the Kennett government seven years to destroy the health system," Mr Thwaites said.

Incentives for nurses to return to work, Diamond Valley News September 27, 2000
The recruitment campaign is in response to a state and national hospital staffing crisis caused by shrinking health budgets and a decline in working conditions.


The position of the companies

The corporate for profit sector found it impossible to compete with the extremely popular Medicare system. This was a key policy of the federal labour government in power until 1996.

The number of citizens taking out health insurance and using the private system declined steadily from over 50% to 30%. Despite its ideological agenda and long term opposition to Medicare the coalition was forced to promise to support Medicare in order to regain power in 1996. This did not stop it from putting pressure on the public hospital system and so pushing up waiting lists and private insurance rates.

The corporate sector had strongly supported and funded the coalition's election to power in 1996. In order to meet its promises to the marketplace the coalition first offered large financial incentives to citizens to take out private insurance. When this failed it penalised those who failed to take out health insurance and this worked.

It only succeeded in rescuing the private sector from being marginalised in its second term in 1998. The benefits for corporate providers of hospital care did not materialise until well into 2000. Subsequent evaluations indicate that this money would have been much better and more efficiently spent by funding the cheaper public system to provide more services to those who needed them most.

During the lean 1990's corporate chains like Mayne Nickless looked for government help through privatisations and co-locations. They promoted this to shareholders as the way of the future. Coalition governments obliged, none more so than in Victoria. The privatisation fever reached its height between 1996 and 1998

By the end of 1999 the problems in privatisation were only too apparent in La Trobe. Mildura had been a politically damaging endeavour. Plans for the Austin and Repatriation redevelopment were mired in difficulties, disenchantment, costly consultancies, and a cost blow out which challenged the claims made about privatisation being cheaper. The reports from Port Macquarie in NSW and Joondalup in WA were increasingly discouraging.

Corporations had realised that running a public hospital was a far more complex process than they had realised and that profits did not come easily. The federal government's health insurance initiative was working to their advantage and they were starting to make more money. There was no longer a need to boost their share price by sustaining the myth of future profits from privatisation.

Private operator proves higher patient turnover pays off, Australian Financial Review 15 May 1995
Falling private insurance membership and a hostile environment - reflecting the Federal Government's (Keating labour government) obstinate stand in support of Medicare and its refusal to encourage private insurance - are not the sort of indicators investors look for.
HCOA operates in an immature market, where most competitors are either public hospitals or charities.
Dr Catchlove is pursuing a policy of co-location, which involves building consulting rooms next to HCOA hospitals for easier access. It also means locating new private hospitals close to or on the premises of existing public hospitals.

AHC Opens Offer Of 32m Shares At $1.25, Sydney Morning Herald 5 August 1996
Governments had started to contract out the management and ownership of public hospitals, he said. AHC was keen to take advantage of this, along with the rationalisation of the private hospital sector.

The private operators control a little more than 22,000 of Australia's 80,000 hospital beds.
"The privatisations in the next 10 years are going to involve $20-25 billion of funds being pumped in by the private sector," Dr Bryce said.

Firm Wants City Hospitals, Sunday Age 20 October1996
THE company that will run Victoria's first privately owned hospital for public patients wants to take over some of Melbourne's existing major hospitals.
- - - - preferred tenderer to build and operate the 257-bed La Trobe Regional Hospital. It will bid for the new hospital at Knox announced in the Government's health overhaul.
But the track record of private operators running public wards has been questioned by a health academic and the New South Wales Government and its auditor-general.
But the Victorian Health Minister, Mr Rob Knowles, said the Government's financing system for private operators would be entirely different.

Ramsay Hitches His Star To The Public System, Business Review Weekly 24 March 1997
Ramsay is bidding for the 120-bed Veterans Affairs Hospital at Turramurra, Sydney. - - - - - - -In Victoria, under the state's new regional health plan, he would like to offer private services for public patients on new hospital sites including Knox and Berwick.

Mayne player plans hospital spree, Australian Financial Review, 18 Oct 1997
Mayne Nickless Ltd's Health Care of Australia plans to spend up to $300 million this financial year on domestic hospital privatisations and to boost the division's revenue by 40 per cent to more than $1 billion.

Funds Crisis: Private Hospitals Now Thinking Public, Australian Financial Review 14 October 1998
The private hospital system is trying to cut back on its dependence on private health funds by embarking on joint projects with public hospitals, and contracting out its services.

Private hospitals are seeing their source of funds shrink - as the health funds suffer declining membership - while they take care of half of all surgery performed in Australia.

Publicly listed Ramsay Health Corporation Ltd has cut its dependence on private health funds to just 43 per cent.
In Melbourne's eastern suburbs, AHC has concentrated cancer work at its Ringwood Hospital, emergency services at the large Knox facility, elective surgery at Mitcham and psychiatry at Delmont in the suburb of Burwood.
The Victorian Government has the usual players looking at co-location projects in Melbourne's Berwick growth corridor, at Knox in the eastern corridor and the Austin and Repatriation Medical Centre redevelopment at Heidelberg in Melbourne's north-west.

Hospital Returns To Public Control, The Age (Melbourne) October 24, 2000
He (AHC chief executive) said the company had written off its $17 million investment in the hospital and would not consider a similar venture in Australia. The contract (in La Trobe) was unviable and we are scarred by the experience.''
Mildura Base Hospital chief executive Dane Huxley was disappointed by the end of the La Trobe experiment but did not feel it held implications for his own operation.


The actual privatisations and colocations

The privatisation process in Victoria has been a stormy one. The Coalition was totally committed and the loabour opposition totally opposed. Co-locations have not attracted the same attention and were not opposed by the labour party.

Two colocations at the Royal Melbourne teaching hospital and The Royal Womens hospital in Melbourne went to Mayne Nickless.

MAYNE NICKLESS LIMITED: HEALTH CARE DIVISION TO OPERATE PRIVATE HOSPITAL AT R.MELB. (Part A), Australian Stock Exchange Company Announcements 17 March 1994
Mayne Nickless Limited announced today that Health Care of Australia, its health care division, has reached agreement with the Board of the Royal Melbourne Hospital and the Victorian Department of Health and Community Services to operate a private hospital on the campus of Royal Melbourne Hospital. The new hospital will be known as Royal Parade Private Hospital.

MAYNE NICKLESS LIMITED: Chairman's Address At AGM (Part B), Australian Stock Exchange Company Announcements 14 November 1995
We won the right to operate and develop the privatised 110-bed Mersey Community Hospital in Tasmania, and opened the Melbourne Private Hospital. It's the first private hospital to be developed as a joint venture with a public teaching hospital, in this case the Royal Melbourne Hospital.

Mayne player plans hospital spree, Australian Financial Review, 18 Oct 1997
Last week HCoA was named as the prefered bidder in the privatisation of Frances Perry House, located within Melbourne's Royal Women's Hospital, in a deal believed to be worth about $50 million.
Dr Catchlove said this would provide an ideal fit with HCoA's Melbourne Private, a 120-bed co-location facility within Royal Melbourne Hospital.
Other projects likely to be put out to tender this financial year in Victoria include the development of the Berwick Hospital, the Austin and Repatriation Medical Centre in February, Knox Private Hospital and the privatisation of Mildura Base Hospital.

Update July 2005. These colocations were sold to Affinity Health in 2003 and probably sold on to Ramsay when it bought Affinity in 2005. Ramsay is also reported as managing the Mildura Private Hospital.

The La Trobe public hospital privatisation was the first to go ahead, the minister promising that his contract would avoid the problems encountered in Port Macquarie. The contract was awarded to Australian Hospital Care (HCA).

Within a very short time after opening the hospital went into the red. Things went from bad to worse. The company experienced huge losses from the hospital which threatened its viability. It eventually abandoned its contract and handed the hospital back to the government to run. The LaTrobe and Modbury privatisation in South Australia, more than any of the others, were the nemesis for privatisation policy.

Click Here for the La Trobe story

The Mildura public hospital privatisation was to be awarded to Alpha Healthcare whose dominant shareholder was the US company Sun Healthcare. There was an outcry from the community and from the labour party. I had much earlier lodged an objection to licences should Sun Healthcare enter Victoria but this had been conveniently pigeon holed. When information about Sun Healthcare was tabled in parliament a probity review occurred and Alpha backed out when it was clear that the review had found them wanting. The contract was eventually awarded to Ramsay Healthcare - a contract which it was once again claimed was "very different" to La Trobe which we heard earlier was "very different" to Port Macquarie.

Click the links for more information about Alpha Healthcare and Mildura -- and the effort to get Sun Healthcare out of Australia.

Hospital Returns To Public Control, The Age (Melbourne) October 24, 2000
Mildura Base Hospital chief executive Dane Huxley was disappointed by the end of the La Trobe experiment but did not feel it held implications for his own operation.

The contract under which Ramsay Health Care operated Mildura was "very different" to that held by Australian Hospital Care.

Private Hospitals In Recovery Ward, Business Review Weekly 17 November 2000
Ramsay has four main groups of hospitals: psychiatric, rural, veterans and the big co-located private hospitals. The veterans hospitals account for 52% of its revenue, and have been a more lucrative area than other hospital business because of the higher rates paid for care by the Department of Veterans Affairs. Across the group, occupancy rates are averaging 80%. The company's newest venture is another Victorian Government hospital privatisation in Mildura, however Grier is keen to emphasise that it is a very different contract from the one signed by AHC for La Trobe; there is scope to generate a return on capital.

Update on Mildura July 2005

In spite of all the hype about this being different to the other failed privatisations the contract for the privatisation of the public hospital in Mildura was not a success, although the colocated Mildura Private Hospital which Ramsay managed was profitable. The public hospital broke even for a while but them made large losses. Ramsay went cap in hand and was rebuffed. In the resulting dispute Ramsay first offered to give the hospital back then threatened to withdraw services. The minister threatened to enforce the contract through the courts. The government backed down first and agreed to pay more.

There was also a dispute about the government appointed board which the community felt was too cosy with Ramsay.

Ramsay Health Care Limited Jobson's Year Book May 1, 2001
The development of the new Mildura Base Hospital was completed and commissioned in September 2000. This new 153 bed privatised public hospital, which replaced the older existing public hospital in Mildura, is managed by Ramsay Health Care under a 15 year service contract.

The Mildura Base Hospital will provide a wide range of services to the people of the Sunraysia District including acute surgical and medical specialties, emergency services, obstetrics, aged care, mental health, palliative care, rehabilitation, hydrotherapy, and diagnostic services.

In addition to the management of the Base Hospital, Ramsay Health Care has also signed a management agreement to manage the Mildura Private Hospital.

Ramsay Health Care Limited. Jobson's Year Book October 31, 2002
By the conclusion of the financial year, Mildura Private Hospital had achieved its projected breakeven position.

Nothing but the best Shares Magazine November 1, 2002
This hospital was meant to be the cornerstone of a whole new division of privately operated public hospitals, but now remains one of a kind in the Ramsay stable. At least for Ramsay shareholders, there is some consolation that in the hands of Ramsay management it turns a small profit.

Budget deficit looms for Mildura hospital Australian Broadcasting Corporation (ABC) News October 9, 2003
The Mildura Base Hospital is this year expected to return a budget deficit for the first time since being privatised three years ago.
Mr Huxley says Ramsays has a 15-year contract and it will not walk away from that, but he will be joining the hospital's push for a better funding deal from the Victorian Government.

MP wants hospital committee elected Australian Broadcasting Corporation (ABC) News July 12, 2004
There has been a call for Mildura Base Hospital's advisory committee to be elected, instead of being appointed by the Victorian Government.

The hospital, in the state's north-west, is Victoria's only privately run public hospital, and has an advisory board appointed by the Government.
But the Member for Mildura, Russell Savage, says the board is too close to the hospital's private managers, Ramsay Healthcare, and has lost its objectivity.

Mildura hospital plans services cut Australian Broadcasting Corporation (ABC) News February 1, 2005
The operator of Mildura's public hospital says it will start cutting services next week because of a $2 million funding shortfall.
Hospital manager Dane Huxley says operator Ramsay Healthcare says it has become frustrated at the State Government's lack of response to its requests for support and now has no option but to begin to reduce services.

We'll quit, says hospital operator The Age February 2, 2005
Mildura Base Hospital chief executive Dane Huxley said last night the company had been in talks with the department since the middle of last year about the perceptions of inadequate funding. "The company has made it clear to the department that if it is not prepared to fund the hospital appropriately, then it would be prepared to be released from its contract," he said.
But Health Minister Bronwyn Pike said the hospital had received a "massive" funding boost, and talk of service cuts was "completely unnecessary", especially before the review. - - - - - - "But it is also true that over the past several years the hospital has been funded to perform more procedures than it actually has done."

Threat of legal action on Mildura hospital The Age February 3, 2005
THE State Government has warned Ramsay Health Care that it will hold the company to its contract to operate a rural public health service, and would consider legal action if it breached its agreement.

Surgery threat Herald-Sun February 4, 2005
Ramsay Health Care, which operates the Mildura Base Hospital, has threatened cutbacks after the State Government rejected its calls for a funding boost.
But Health Minister Bronwyn Pike said there would be no contract renegotiations, and has warned of legal action if Ramsay breaks conditions of its contract.

Hospital welcomes budget boost Australian Broadcasting Corporation (ABC) News March 22, 2005
Mildura Base Hospital says a $1 million budget top-up announced by the Victorian Government yesterday goes a long way to addressing this year's funding shortfalls.
Chief executive Dane Huxley says negotiations will continue on a more appropriate funding arrangement.

The Austin and Repatriation teaching hospital privatisation was a very large and complex privatisation. It was unpopular with the electorate and ultimately with the medical profession who were gagged from speaking out. It illustrates very well the problems encountered in privatisations. There were endless delays, large consultancy fees, and an enormous cost blowout. The local community swung against the government. The labour party promised to stop the privatisations and they did so when they gained power in 1999. They were royally welcomed by the staff of the hospital complex when they won power and came to announce that the privatisation threat was over.

The press reports provide a very interesting commentary on privatising hospitals and the issues.

Click Here for the full story about the Austin and Repatriation privatisation and for references.

Privatisation and Australian Hospitals by Fran Collyer, Health Issues Centre September 1998
Many others are currently undergoing this transfer to the private sector including the Austin Repatriation, La Trobe, and Knox hospitals (to be built by 2001), and proposals for others such as the base hospital in Mildura, hospitals at Epping and Berwick in Victoria, and hospitals at Noosa and Robina in Queensland.

MAYNE NICKLESS LIMITED Forms Joint Venture with Ramsay Health Care, Australian Stock Exchange on 24 Feb 1999
- - - - formed a 50:50 joint venture to bid with the Inner and Eastern Health Care Network for the contract to build, own and operate the new Austin & Repatriation Medical Centre in Heidelberg, Melbourne.

The Austin and Repatriation Medical Centre is one of Melbourne's premier tertiary acute teaching and research hospitals which the Victorian Government is seeking to fully redevelop through private sector involvement.

The Berwick privatisation The Berwick privatisation went ahead slowly and was soon behind schedule. Ramsay Healthcare was announced as the preferred tenderer in early 1999. The negotiations were bogged down and Ramsay eventually backed out of the project. The government now entered into a contract with the not for profit Catholic Mercy group to build and run the hospital but that too eventually came unstuck. Government then bought the site for the hospital. They have now put the building of the hospital out to tender. They plan to lease the hospital back and run it themselves. The privatisation aberration has delayed the project for several years and Berwick will not get its hospital until some time in 2004.

Click here for more information about Berwick and for references

The Knox privatisation This was a privatisation that was abandoned before it got off the ground. The coalition government was already going slow on the project when it lost power. The labour government had promised to build a public hospital here but when they won the election they reneged on their undertaking. There is a need for a public hospital in Knox and the local population are understandably angry. They are mounting a strong push to get the hospital back on the political agenda

Click here for more information about Knox and for references

Health industry in the pink -- and the black, April 7, 1997 Australian Financial Review
The Victorian Government has announced new hospitals will be built and/or run by private operators in Berwick, Knox and Epping.

Colac Hospital ripe for sell-off, Thwaites warns, The Age, Monday, 20 Oct 1997
The State Government was planning to privatise Colac Hospital, making it the third country hospital to be run by private operators, the State Opposition said yesterday.


Privatisation comes unstuck

La Trobe was the first privatisation to collapse with Australian Hospital Care indicating that it was running scarred and that it would not enter any more privatisation contracts.

Problems with the privatisation process increased with longer and longer delays in getting projects up and running and large cost blow outs. Funds were drained away in consultancy fees. The community were not on side and the medical profession became steadily more disillusioned. By the state election in 1999 only a fraction of the planned hospitals were under way. The others were mired in controversy.

The state AMA had initially had reservations about the privatisation process but had gone along with it. They called for an ombudsman to protect the interests of patients but the government refused. The experience of doctors involved in the planning of the Austin and Repatriation privatisation finally persuaded them that patients could not be protected and that research and teaching would suffer.

Hospital doctors involved in the process of privatisation were gagged by draconian commercial in confidence agreements so that debate on the privatisation was muzzled. They had not been consulted about privatisation and most were opposed to the process. The AMA eventually came out strongly against the privatisation of public hospitals.

Existing privatisations left a hangover of costly tidying up to shut down the old facilities and tidy up the mess. In the region of $800,000 was spent on consultants to sort out and get rid of the old hospitals in La Trobe and Mildura which were now empty.

Call For Hospitals Watchdog The Age (Melbourne) June 1, 1999
The Australian Medical Association yesterday called for an independent hospital ombudsman to scrutinise privatised public hospitals.
But the plan was immediately rejected by the Health Minister, Mr Rob Knowles.
The AMA's call coincided with a report in The Age yesterday revealing that the privatisation of the Austin & Repatriation Medical Centre had been hit by huge cost blowouts and delays.

Sell-offs The Big Difference, The Age (Melbourne) September 9, 1999
The Health Minister, Mr Knowles, said that by seeking private sector involvement, new facilities would be available much sooner.

This has not happened. Ms Carter puts it bluntly: Big announcements, nothing happened. A lot of the grand plans have been fizzers.''

The timetable for the Austin & Repatriation Medical Centre redevelopment, as well as the building of hospitals at Berwick and Knox, has not been met. The estimated cost of rebuilding the Austin & Repatriation Medical Centre has increased from $150million to up to $350million, and the bidding process seems to be at a stand still. There is unrest among senior medical staff over the future of research and teaching and growing dismay with the secrecy of private contracts.

Already built are the Northern Hospital in Epping, the La Trobe Regional Hospital and the Broadmeadows day hospital.

The future of St Vincents, a city hospital under threat for some time, remains unclear.

State Paid Consultants $7.5m Over Hospitals, The Age (Melbourne) September 15, 1999
The State Government has spent more than $7.5million on consultancies to privatise public hospitals, and has paid a senior health bureaucrat a salary package of about $400,000.
Labor's health spokesman, Mr John Thwaites, said the Government had its priorities totally wrong. It can find money to give lucrative contracts to lawyers and consultants to sell off our public hospitals but it can't find money to open hospital beds,'' he said.

It is disgraceful that at the same time the Austin Hospital was in financial crisis and forced to put off hundreds of staff and reduce services, the Government was wasting money on consultancies to sell off the hospital.''

Hospital Takeover Stalled As Talks Drag On, The Age (Melbourne) September 17, 1999
The State Government has experienced problems and delays with three of its hospital privatisations.

The United States-based Sun Healthcare pulled out of its bid to build and operate the Mildura Hospital late last year, and earlier this year The Age revealed big cost blow-outs, delays and concerns by medical staff over the privatisation of the Austin & Repatriation Medical Centre.

AMA Rejects Privatisation Policy, The Age (Melbourne) October 16, 1999
The Australian Medical Association Victoria had previously not opposed allowing private operators to run public hospitals, provided there were safeguards to protect patients, research and teaching.

Its new policy, issued yesterday, says the association now believes it is impossible to safeguard patient care because Victoria's public hospitals were already the leanest in the country and a private operator would only be able to make a profit by reducing standards.
The only way they can do that (make a profit) is to compromise the quality of care to patients, research and teaching,'' Dr Zimet said, referring to the Austin.
Clinical staff who now worked considerable unpaid overtime out of public duty would not do so when this would benefit private shareholders, he said.

AMA (Victoria) is now of the view that the operating risks, in terms of range and quality of services, are of such a magnitude, that they can only be safely borne by the public sector,'' the policy says.

Privatising public hospitals should be abandoned, AAP NEWSFEED December 7, 2000
In Victoria, Australian Hospital Care was contracted by the government to build, own and operate a new Latrobe Regional Hospital to replace the closed Moe and Taralgon public hospitals.

But in October 2000, Australian Hospital Care announced the Latrobe Hospital would be transferred to the Victorian government after it reported a loss of $6.2 million in 1999 and losses of $2.7 million were forecast for the current year.

Hospitals Bed Down Better Margins, Shares Magazine 01 September 2001
Ramsay has also discontinued a number of development projects including the Berwick Community Hospital privatisation, the Princess Alexandra collocation and the Austin Repatriation privatisation project.

$420 an hour for hospital shutdown, Herald Sun October 3, 2000, Tuesday
Mr Cooke has been employed by the government to wind down the defunct Mildura public hospital, which has been replaced by a privately run medical complex.

Hospital closure slug; Consultants to cost taxpayers $300,000, Herald Sun October 4, 2000
CONSULTANTS will earn up to $300,000 to shut down the defunct Mildura Base Hospital.

Premier Steve Bracks said the Kennett government left him no choice but to spend public funds winding up the hospital by replacing it with a private medical complex.
He (Thwaites) said the privatisation of the hospital meant closing the existing medical service and settling a range of complex financial matters.

These include collecting debts owed to the hospital, paying creditors, selling assets, determining entitlements to former staff and administering the Sunraysia aged hostel and Redcliffs nursing home.
Mr Bracks said the Kennett government also employed Mr Cooke to liquidate the old La Trobe Valley Hospital, which cost $500,000. LOAD-DATE: December 3, 2001


Labour in power

The privatisation of public hospitals and the Austin and Repatriation complex in particular was one of the factors causing the electorate to dump the coalition government in 1999. Labour were immediately faced with the task of fulfilling their election promises. The first of these was to stop the privatisation of the Austin and Repatriation complex. It was enthusiastically welcomed by staff at the hospitals. This meant raising capital to rebuild the hospital at taxpayers expense.

The second popular step was abolishing the Kennett government privatisation unit in the Health Department.

Labour agreed to the continuation of exiting projects and existing contracts. It would continue negotiating the Berwick and Knox privatisations. It continued with colocations, although the industry had become much less enthusiastic.

Health Boom On Hold The Age (Melbourne) October 20, 1999
The expected boom in health-care privatisation is now in doubt after pledges by the incoming state Labor government to freeze all future hospital sales, including the high-profile Austin and Repatriation hospital deal.

Although the Health Minister elect, Mr John Thwaites, has indicated he will honor existing contracts, the freeze will stymie growth for a business predicated on the progressive roll-out of the coalition's privatisation agenda.

Labor Pains - Can The New Government Fix Health?, The Age (Melbourne) November 20, 1999
THREE years ago, John Thwaites was banned from the Austin hospital. It is customary for hospitals to give the Opposition health spokesman full access. But this was the height of the Kennett Government's closed-door policy. Public servants were gagged and unquestioning compliance rewarded.
Thwaites dared to attack the Government's plans for the Austin and Repatriation Medical Centre in Heidelberg, and an over-zealous hospital manager decided the Labor health spokesman wasn't welcome.

What a difference an election makes. Last month, eight days after being sworn in as Victoria's new Health Minister, Thwaites returned to the Austin.
And when Thwaites spoke the words he never dreamt he would get to say - that privatisation was dead - the hall erupted in applause and cheers.

Senior staff who had been on the committees charged with progressing privatisation were among those applauding loudest. Seldom had a task been so utterly unsupported by those undertaking it.
Everyone was just delighted,'' says Dr Peter Thurlow, chairman of the senior medical staff and a member of the privatisation steering committee. This privatisation process was just an oppressive process for the ARMC (Austin and Repatriation Medical Centre).''
After a final round of applause, Thwaites made his way through a throng of staff wanting to shake his hand and thank the man who had slain the privatisation dragon.
Labor's health manifesto at the election hammered home that the coalition had cut 10,000 hospital staff, including 3500 nurses, shut 1400 hospital beds and slashed capital works budgets.

But when the shock election result came in, a central figure in the health system observed that Thwaites's worst nightmare is to be Health Minister''.
Ultimately, the Government will be vindicated in not taking the previous government's route, but it will mean substantial sums of money will have to be found to make that public investment.''
Despite the inevitable tensions ahead, Thwaites is benefiting from a new air of optimism among public health workers. The change of government has boosted morale, says a senior doctor at a major hospital.

People feel freer to talk to each other and there aren't the hidden agendas. Putting a stop to the privatisation rubbish is a good sign that hopefully there will be a bit more cooperation and less competition.''

Health Unit To Be Axed: Minister:,The Age (Melbourne), November 20, 1999
The Health Minister, Mr John Thwaites, will abolish the Health Department's privatisation unit after the Government decided to cancel the privatisation of the Austin Hospital.

The Infrastructure Investment Unit within the Department of Human Services was set up in 1996 by the Kennett Government to privatise five public hospitals: the LaTrobe regional, Mildura, Berwick and Knox hospitals, and the Austin and Repatriation Medical Centre.
Mr Thwaites said yesterday the privatisation schemes had been ill-conceived and ineptly handled. There was $10million allocated for this year and much of that has already been spent, most of it in consultancies and very high legal, public relations and accounting fees,'' he said.

The Government will honor the contracts for the private operation of LaTrobe regional hospital and the Mildura Hospital and continue negotiating with the preferred bidder for the Berwick hospital.

But after a month in office, Mr Thwaites was unable to determine how far advanced the Knox Hospital project was.

Hospital Returns To Public Control, The Age (Melbourne) October 24, 2000
Mr Thwaites denied the move to take over the La Trobe Regional Hospital had implications for the Mildura Base Hospital, which is also privately operated and is due to be officially opened on Friday.

He said the government believed the privatisation of public hospitals was misguided'' but it was committed to honoring existing contracts.

By the same token,'' he said, we will not bail out companies.''

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